Case Studies: Coen Tunnel

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Project Overview
Coen1.jpg
Figure 1: Overview of the Coen Tunnel Project-- the existing tunnel (left) and the new tunnel (right)
The Coen Tunnel, The Netherlands
Project Type: Both
Contract duration: 30 Years (2008-2037)
Budget:
EUR 571 M (This is the initially planned budget)
Project Time Line
Plans initiation: early 1980s;
PPP Model Government Decision: 2004;
Call for Tender: Sept. 2005;
Competitor alternative solutions: 2006;
Final selection: 2007;
Contract Approved: April 2008;
Financial Close: June 2008;
Construction completion: 2013


Introduction

The Second Coen Tunnel project is the first and largest (estimated value EUR 300 million NPV) Competitive Dialogue (CD) procured service-led infrastructure project in the Netherlands. It involves the maintenance of an existing, forty-year old tunnel and the construction of a second tunnel alongside the current one. More specifically, the project concerns the widening of approximately 14 km of highways at the north and south entrances to the existing Coen Tunnel, and expanding the tunnel’s capacity from two lanes to three in each direction plus two further reversible lanes, enabling five lanes of traffic in one direction during peak hours. The road works (and subsequently operations and maintenance) consists of reconstructing one interchange, the main motorway, access roads, emergency lanes, an infrastructure fuel station, and parking facilities. The project used innovative technology (the RotorTug concept) to transport the tunnel elements from construction site to tunnel location, significiantly improving the maneuverability of tunnel elements which benefits the safety of the tunnel elements and all surrounding objects.

The Project is the cornerstone of a series of infrastructure capacity enlargements aimed at improving access to the main road network of the Northern Conurbation of the country (Noordelijke Randstad) and addresses daily bottleneck problems, which affect security on the road as well as having a negative impact on the environment. Discussions to increase the capacity of the tunnel were initiated in the early 1980s. These plans were not further developed until 2000, partly due to a lack of funds. In 2000, extra funds were made available for improving the national infrastructure, enabling the Coen Tunnel’s capacity to be expanded. Formally there was a governmental agreement in June 2004 that the Coen Tunnel contract would be a PPP.

The Contracting Authority (Public Party)

The Dutch Highway Agency – Rijkswaterstaat- was the authority responsible for contracting on behalf of the public sector and, following this, the implementation of a new project monitoring system.

The project was procured as a Public Private Partnership to design, build, finance and operate. The PPP contract was awarded under the competitive dialogue procedure in accordance with the Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.

The Concessionaire (Private Party)

The Coentunnel Company is a PPP consisting of Dura Vermeer, TBI-Bouw, Vinci concessions, Besix Group, CFE, Arcadis, and Dredging International. Construction was carried out by Dura Vermeer, TBI-Bouw, Arcadis, Vinci Grand Projects, and Besix Dredging International, and a key subcontractor was Croon Maintenance.

Financing is achieved through senior debt (EUR 550M) provided by Fortis, Bayern LB, Royal Bank of Scotland, Bank Nederlandse Gemeenten (BNG), KfW IPEX-Bank and the European Investment Bank (EIB). Mezzanine-loans (EUR 21M) were provided by Fortis and BNG. Equity bridge-facility was offered by Fortis.

Users

The Coen Tunnel is a major road link and open to all road traffic (private users, public transport, cyclists and freight transport). Freight transport is related to the Amsterdam and IJmuiden ports’ connections to the hinterland.

Key Purpose for PPP Model Selection

The government assumed the potential for advantages in terms of finance, and innovativeness before procurement of the PPP. This was in the context of the central government’s policy of transferring tasks and financial responsibilities from the public to the private sector.

The Coen Tunnel project is not included in TEN-T but certain aspects of the network are. These include:

  • 2008-EU-90001-S: Study on the external costs and charging for terrestrial modes on the Paris-Amsterdam corridor;
  • 2010-NL-93302-S: Implementation study to prepare a Public Private Partnership to improve maritime access to the TEN-T network at Amsterdam.

Project Timing

Constructing the Second Coen Tunnel and the new Westrandweg (A5) ensures better accessibility to the northern part of the Randstad (the urban agglomeration of the western Netherlands) and better access to the western port area of Amsterdam. The importance of environmental impact is stressed.

The project falls under the requirements of Annex I of the EU Directive 97/11/EC on environmental impact assessment, and has been the subject of a full EIA including public consultation. (The EIA process followed fully meets the relevant requirements of EU Directive 97/11/EC. Further, the Birds Directive (79/409/EEC) and Habitats Directive (92/43/EEC) are incorporated into Dutch law through the “Natuurbeschermingswet”).

The contract has been set at 30 years, from 2008 to 2036. The competitive dialogue was less promising than expected due to the risk aversion demonstrated by the parties involved.

Project Locality and Market Geography

The Second Coen Tunnel is located in the northern part of the Dutch Randstad. Furthermore, Amsterdam port’s connections to the hinterland have had to be continuously upgraded and refined, introducing minor and major adaptations and innovations on a regular basis.

Coen2.jpg

Figure 2: The site of the tunnel, at the north side of Amsterdam

Procurement & Contractual Structure

Tendering

The procurement was divided into five stages: Pre-Qualification; Scheme of Action; Consultation; Dialogue; and Tender Submission. The three middle stages together form what amounts to the actual competitive dialogue (CD) stage according to the European Directive. The Dutch Minister of Transport decided to apply the CD procedure because of the technical and financial complexities of the project.

Five consortia met the qualifications criteria and were therefore invited to participate in the dialogue. Important elements covered in the dialogue were the Scheme of Action, Critical Aspects, Risks and Optional Requirements. At the end of the Scheme of Action stage, the five candidates each had to submit an initial dialogue product (an assignment): namely, their Action Schemes for carrying out the project. Based on evaluations by both project employees and external judging committees, the five candidates were reduced to a shortlist of three who were invited to move forward to the Consultation stage. Finally, one candidate was chosen. The overall procedure took approximately 46 months.

Coen3.jpg

Figure 3: The tender approach of the competitive dialogue

Contract Structure

The Coen Tunnel is a DBFM-contract (Design, Build, Finance and Maintain) with a duration of 30 years and a total value of approximately € 500M. Coen Tunnel is responsible for design, building and maintaining the construction of the Second Coen Tunnel with access roads and facilities. The Dutch State (through Rijkswaterstaat) will continue to own and manage the asset. The banks financing the project are repaid through availability fees and a one-off transfer fee when the project is completed. Rijkswaterstaat is the guarantor for the banks.

The contract contains re-negotiation terms resulting from the economic crisis.

Risk Allocation

The public sector kept most of the risks in this contractual agreement (see figure 4). Serious problems in exploitation are expected to lead to renegotiation. Regulatory and force majeure risks were also discussed before being allocated.

Coen4.png

Figure 4: Risk allocation

Performance

A matrix has been developed based on the impact of different measures and the level of road users’ satisfaction with these measures. Most attention is devoted to high impact, low satisfaction measures. These include:

  • Lane availability in relation to the number of maintenance days;
  • Stability of the existing infrastructure (old tunnel tubes);
  • Air quality inside the tunnels.
  • Traffic forecasts are mostly in line with actual traffic. Penalties are foreseen with respect to availability.
  • Perceptions of road users on safety, quality of the pavement, the quality of traffic information and daily maintenance are regularly measured by the Dutch Highway Agency.

References

  • J., T. Voordijk, 2013, Coen Tunnel, In Roumboutsos, A., Farrell, S., Liyanage, C. L. and Macário, R, COST Action TU1001 Public Private Partnerships in Transport: Trends & Theory P3T3, 2013 Discussion Papers Part II Case Studies, ISBN 978-88-97781-61-5, COST Office, Brussels available at http://www.ppptransport.eu
  • Hoezen, M., Voordijk, H., Dewulf, G. (2012) Contracting dynamics in the Competitive Dialogue procedure. Built Environment Project and Asset Management 2 (1), 6-24.
  • Hoezen, M., Rutten van, J., Voordijk, H., Dewulf, G. (2010) Towards better customized service-led contracts through the competitive dialogue procedure. Construction Management and Economics 28(11), 1177-1186.
  • Hoezen, M., Voordijk, H., Dewulf, G.P.M.R., Procuring Complex Projects using the competitive dialogue, International Journal of Project Organization and Management (forthcoming).