Lessons learned from the Danish Mega projects By Kim Smedegaard Andersen, Technical Deputy Director, Femern A/S
Companies in Sund & Bælt Holding A/S The Danish State Ministry of Transportation Sund & Bælt Holding A/S Sund & Bælt Partner A/S Brobizz A/S A/S Storebælt A/S Femern Land Works A/S Øresund Femern A/S Øresundsbro Konsortiet (50%) KSA 2
Kim Smedegaard Andersen Client 2017-date, CEO Sund & Bælt Partner A/S 2016-date, Technical Deputy Director and Contract Director, Immersed Tunnel & Installations 2009-2011, Design Manager, the Tunnel Project Contractor 2006-2009, Pihl & Søn, Multimedia House in the harbour of Copenhagen, Design & Build Consultant 2001-2004, Rambøll, Project Manager, The Opera in Copenhagen Client 1993-2001, Øresundskonsortiet KSA 3
Connecting Central Europe and Scandinavia KSA 4
Storebælt, Øresund & Fehmarnbelt KSA 5
Key words for the major projects Significantly improved travel time. High frequency - seldom closed Very high capacity Connects Europe via the TEN-T-Corridors Changes behaviour and provide new opportunities for optimising and driving growth Long-term growth potential in the form of significant improvements for travellers and companies KSA 6
Danish State Guarantee Model as applied in our large-scale infrastructure projects Design, Construction, Operation, Financing etc. are carried out by a SPV, owned by the state. Construction costs etc. are financed almost 100 pct. by debt, raised in the capital market. All funding has a strong state guarantee (irrevocable guarantee for the full and timely payment of interest and amortisation). Debt is repaid with income generated in the project (from toll and railway fee). Approx. 30 year repayment period. No state subsidy. KSA 7
Danish State Guarantee Model as applied in our large-scale infrastructure projects Example: The fixed link across the Øresund The Danish/ Swedish State Lenders Amortisation & Interest Payments Loans State Owned Limited Company Contractual payments Equity + state guarantee User payment (Toll, etc.) Users Contractors (design and build) Contractors, Operation & Maintenance KSA 8
Characteristics of the State Guarantee Model The cost of the project is effectively paid by the users (Road and Rail) The cost is not a burden on the state budget (off-budget financing accepted by Eurostat) The financing cost is very low due to the guarantee (provided high-rated Guarantor). Important parameter in longterm projects. KSA 9
Characteristics of the State Guarantee Model The state carries the ultimate risks, including demand risk, and has the up-side potential of the project. Risk sharing with private sector in construction phase Private sector organisational models used to increase efficiency in project management, including unified responsibility for construction, operation and financing The state keeps the strategic control with the Project. KSA 10
Further information http://femern.com/en/tunnel/finance/the-state-guarantee-model KSA 11
Planning cross-border mega projects Ever longer planning phases, especially for cross-border projects? From State Treaty to construction work: 1991-1995: Øresund Fixed Link (5 years) 2004-2011: Brenner Base Tunnel (8 years) 2008-2019: Fehmarnbelt Fixed Link (12 years) KSA 12
Index 1995 = 100 Traffic development on the Øresund Link 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Passengers Lorries GDP KSA 13
Øresund and the environment: Key lessons learnt Court cases are costly. Do thorough environmental studies before construction Engage critics head-on with documented facts and invite them to participate Carefully monitor contractors during construction KSA 14
The Fehmarnbelt Fixed Link The Third Mega Project: Connecting Denmark and Germany
The history The promises made in the Øresund Treaty The Treaty between Denmark and Germany The Bridge was the preferred solution The Immersed Tunnel was the preferred alternative KSA 16
The Fehmarnbelt project s decision process Government agreement on Øresund: 1991 Feasibility studies: 1999 Supplementary studies: 2000-2007 Danish / German state treaty signed 2008 Danish Planning Act: 2009 Danish Construction Act: 2015 Conditional contracts signed 2016 German plan approval expected: 2018 KSA 17
The State Treaty between Germany and Denmark Treaty on a fixed link signed September 2008 Ratified by the Danish Parliament in April 2009 through the Act on the Planning of a Fixed Link A 20 km corridor from Puttgarden at Fehmarn to Rødbyhavn in Denmark The preferred technical solution is an immersed tunnel 4-lane motorway and electrified double-track (4+2) Coast-coast and the Danish landworks financed, constructed and owned by Denmark German landworks 88 km from Lübeck to Puttgarden financed by Germany Financed by tolls on the car and rail traffic Upgraded 115 km railway between Ringsted and Rødbyhavn financed by the fixed link KSA 18
Key project features Project features Tunnel length: 18 km Tunnel type: Immersed tunnel (tube) Modes: Twin track railway in separate tubes and a 4 lane motorway with emergency lanes KSA 19
Prepared for tomorrow? 10 out of 89 tunnel elements are special elements with safe operation and maintenance access Keeping high availability for the users Access to plant rooms and across the different tubes Prepared for developments without compromising operations Room for implementation of new technology and for future modes of transport
Why? Flexible and seamless transport: No waiting time and no shunting No need for booking in advance No impact of weather conditions No traffic jams in the summer Open 24/7/365 Faster transport: Minimum 45 minutes time saving between Rødby and Puttgarden More capacity for the increasing traffic between Central Europe and Scandinavia KSA 21
Why? Improved railway and greener transportation Completely new opportunities for the railway international traffic, freight and commuting Hamburg-Copenhagen in 2 ½ hours instead of 4 ½ hours by train Freight traffic avoids 160 km detour Increased attractiveness of the railway and less CO2 emissions KSA 22
Why? Economic development after the opening Connecting European markets and Europeans Connecting and improving railway transportation in Europe Enhanced opportunities for cross-border cooperation Goods, knowledge and labour culture, science and tourism More economic activity and more jobs Direct employment effect Jobs at the construction sites and jobs for suppliers Jobs in maintenance and operation after the opening KSA 23
Railway traffic prognosis 78 freight trains & 40 passenger trains passing the tunnel per day KSA 24
Economic benefits of the Fehmarnbelt Fixed Link 850.000 new customers for Copenhagen Airport resulting in 800-1.300 new jobs Tourism boost to Copenhagen: 500.000 more overnight stays Combined societal benefits valued at 26 billion DKK (EURO 3,7 billion) in 50 years An interconnected economic super-region around the Baltic Sea with 9 million consumers KSA 25
When? (1) Danish Construction act (Danish Plan Approval) 28 April 2015 (2) Conditional contracts with main contractors 30 May 2016 Construction start (3) German Plan Approval 2018/20 KSA 26
The approval process in Denmark and Germany KSA 27
Approval process in Denmark and Germany Denmark Germany 2008: Denmark and Germany sign the State Treaty 2009: Ratification in the Folketinget (97 % yes, 3 % no) 2013-14: Environmental Impact Assessment hearing process: 1,600 pages and 43 responses 2015: Adoption of the final Construction Act in the Folketinget 2009: Ratification in the Bundestag (80% yes, 20 % no) 2013-15: Plan approval application hearing process: 10,000 pages and 3,100 responses 2015: A new public hearing round was decided in Germany 2016: Renewed public hearing: 14,000 pages 2018: Final plan approval decision (Administrative decision) 2018-19: Court cases? KSA 28
Tender proces, Civil Works Contracts Activity Competitive Dialogue Date Status Industry day March 2012 Introduction meeting August 2013 Submission of the Civil Work Contracts, Stage 1 September 2013 Pre-bid conferences and site visit, Stage 1 November 2013 Technical bids, Stage 1 April 2014 Dialogue, phase 1 May Sept. 2014 Submission of the Civil Work Contracts, stage 2 October 2014 Stage 2, Technical and priced bid December 2014 Dialogue, phase 2 January March 2015 Stage 3, Indicative bid May 2015 Stage 3, Adjusted bid September 2015 Signing of Conditional Civil Work Contracts May 2016 KSA 29
The companies in the joint ventures KSA 31
Competitive dialogue: Objectives Dialogue objectives: 1. Discuss all matters regarding the contract (including and especially requirements) 2. Discuss clarifications 3. Discuss topics suggested by tenderers (agenda made in advance) 4. Discuss the quality of the tender. Main objective: Do the bidders understand what is required by the Owner? KSA 32
Competitive dialogue... The Owner and the bidding parties have a positive impression of each other expect to improve the working environment after signing of contracts in a partnership Reduce risks and cost and the tender documents are adjusted to fit common solutions by the bidders make room for innovation Improved competition in marked. A feedback report provide the bidders with input to improve their bid KSA 33
Competitive dialogue Sitting with the experience we feel we would have failed the tender process without the Competitive Dialogue The process requires skilled persons on both sides of the table - knowing the financial, legal, technical, environmental, administrative and not least the political difficulties within a major infrastructure project Created a good basis for a win-win contract KSA 34
Lesson learned Advanced Planning of Procurement Process worked very well It is a time consuming process There is a need for clear split of responsibility within the different teams within the Owners organisation Heavy burden on bidders to produce information for Dialogue Meetings Technical dialogue goes hand in hand with dialogue on costs The tender process shall be well planned with the political process National approvals and processes can be difficult to syncronice KSA 35
Trans European Network - TEN KSA 36
Malmö - Copenhagen - Hamburg a stronger region It is all about creating a new region Investors are looking for size and opportunities when they invest and settle in new locations To achive the best results we have to work together, which requires that we connect To compete globally we need to cooporate and commit ourselves and each other and develop the region step by step KSA 37
Co-operation agreement - signed on best practice KSA 38
Learning from Brenner An organisation in parallel with the Client is of great value for the project Communication is as important as engineering The Brenner project connects 3 states, 3 regions and 3 railway infrastructure managements Don t forget the people around the project to make them connect to the project KSA 39
Working with ever more complex surroundings Great Belt Fixed Link Øresund Fixed Link Fehmarn Fixed Link Client companies must handle ever higher expectations towards Citizen involvement Social responsibility Strong budget control and financing models Environmental protection Climate adaptation Workers health and safety Operation and Maintenance experiance (O&M) Safety for the users of the infrastructure Increasingly reliant on skilled advisors and consultants with multiple areas of expertise: Engineering, legal, regulation, finance, environment a holistic view is a central demand in relation to consultants skills KSA 40
Activities in Sund & Bælt Holding KSA 41
Optimal O&M conditions 1. Risc based O&M model 2. Documented structures & systems and procedures 3. Use of digital O&M system with links to GIS/BIM/3D-models 4. Big data from robots/drones/iot sensors/system data 5. Effective reporting and Insights integrated with the ERP-system 6. Advanced cognitive data analytic KSA 42
Dashboards KSA 43
Data by Robot - site inspection KSA 44
Data by Drone - site inspection and IoT KSA 45
Thank you for your attention KSA 46