Case Studies: The Blanka Tunnel Complex, Czech Republic

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Project Overview
Blanka.png
Figure 1: Blanka tunnel complex, Czech Republic
Blanka Tunnel Complex
Project Type: Greenfield
Contract duration: original date for completion of all works was set to 2011(5 years) but has been postponed to 2016.
Project Time Line
1993: Project conceived
1998: Project company SATRA awarded the contract to prepare studies and design for the tunnel complex
2003: Planning decisions and zoning permit issued
2006: Launch of tenders
Other important dates
November 2009: Announcement that opening of the tunnel postponed by 13 months to 2012
May 2012: City of Prague ceases payments to contractors
January 2014: Arbitration between the city of Prague and Metrostav begins
September 2014: Arbitration ends
Early 2015: Evidence of technical problems related to dampness and cabling system.
May 2007: Second tender for technology part signed with ČKD DIZ
June 2007: Beginning of construction
December 2013: Metrostav halts all construction works
May 2014: Metrostav resumes construction and ČKD DIZ begins to work on technology part.
September 2014: Construction is finished
October 2014: Trojský bridge opens


Introduction

The tunnel complex ‘Blanka’ forms a part of the city of Prague ring road system. It runs under a heavily urbanized environment right on the edge of the historic centre of Prague. It stretches from Brusnice - to the west of the Prague Castle area - to the municipal district of Troja in the northeast, thus, connecting the right and left banks of the Vltava river. The tunnel complex forms a part of the inner-city ring road and is directly connected to the system of tunnels to the south (Strahovský a Mrázovka) and Břevnovská radial road (connecting the city centre with the Prague Airport). On the right bank of the Vltava river, the tunnel connects to the Prosecká radial road (exit road to the north) and in the future should also connect to the final eastern stretch of the inner-city circular road. The intersections have been built as part of the project, so there is currently no obstacle to the full operation of the tunnel complex, even though the circle has not been completed.

With its total length of 6,4 kilometres, the Blanka is the longest road tunnel in the Czech Republic and the longest metropolitan tunnel in Europe. The tunnel complex itself consists of northbound and southbound tubes. It has three basic sections: Brusnický, Dejvický and Bubenečský tunnels and is directly connected to the system of another two inner-city tunnels (Strahovský and Mrázovka) that were all built as elements of the inner-city ring road. The inner-city circular road is being built in parallel to the so-called Prague ring road (R1) – a motorway that is to encircle the whole city of Prague. The Blanka tunnel complex is routed in driven and cut-and-cover tunnels, with connection ramps in key junctions. There are four major intersections along the structure (Malovanka, Prašný, U Vorlíků, Troja and Pelc-Tyrolka). The new 250 m long Troja tram/road bridge across the Vltava river was built as a part of the Pelc-Tyrolka intersection, modifying the provisional tram route arrangement in the area. Apart from the junctions, a large underground ventilation facility consisting of four engine rooms constitutes an important and distinctive feature of the project.

The tunnel complex was designed to relieve the historic centre of Prague from transit traffic and to reduce transit time across the city. The tunnel will offer faster and uninterrupted connection for vehicles travelling on the west - east axis of the city. Alternative connection via surface roads will remain possible, but the city hall will introduce certain restrictions at selected points in the city centre to support the use of the tunnel that should become the most convenient way of transit.

The Contracting Authority (Public Party)

The idea to build the Blanka tunnel complex has always been pursued primarily by the representatives of the city of Prague. The Prague City Hall is the main stakeholder in the process. The Blanka tunnel complex has been a part of the official policy since the late 1990s.

The City Hall manages road infrastructure throughout the city – including in the future – the Blanka tunnel complex - via its company Technická správa komunikací (TSK). The annual operation costs are expected to be 250 mil crowns (9,1 mil euros) and will be paid from the city of Prague budget. As a matter of fact, Prague 6 and Prague 7 metropolitan districts, directly affected by the tunnel complex, were also involved in the consultation concerning the planning and construction.

The project was support by all political parties, with the exception of the Green Party. However, from the outset, there has been a strong opposition from various environmental groups and activists claiming the promised improvements in the city’s traffic are largely illusionary (Auto*Mat, 2009). The AUTO*MAT association defending the urban and environmental principles and interests became the most notable opponent and critic of the project, trying to offer alternative solutions benefiting public transport, pedestrians and cyclists.

The central government involvement can be seen as very limited and mainly related to regulations. Changes in regulations have partly contributed to increases in total costs of the project. Among them, additional requirements for safety measures in tunnels by the State mining administration (SMA), played a particularly important role. The SMA also fined the contractor for landslides during the construction works.

The construction started in June 2007. The first setback came soon in 2008 with a series of landslides resulting in fines and new safety and structural requirements by the State mining administration. In November 2009, it was announced that the opening of the tunnel was postponed by 13 months to 2012. In 2011, it became clear that the original costs estimates would be exceeded by more than 10 bn crowns (356 mil Euros).

The audit by law firm White & Case was published exposing striking examples of ill-prepared project conditions, faulty contracts with insufficient motivation for contractors and mismanagement by the Prague City Hall (White & Case, 2011). In May 2012, the legal uncertainty surrounding extra works and imperfect contracts led the city of Prague to cease payments to contractors. In December of the following year (2013), Metrostav halted all construction works. An arbitration between the City of Prague and Metrostav began in January 2014. In May 2014, Metrostav resumed construction of the tunnel and ČKD DIZ began to work on the technology part. In September 2014, the arbitration ended and the construction of the tunnels was finished. The Trojský bridge opened in October 2014 with a final cost of more than three times (1,3 bn Czech crowns – 47,4 million euros) the originally expected one of 400 million Czech crowns (14,6 million euros). One, however, needs to take into account that the design of the bridge changed significantly. In early 2015, it became evident that the tunnel suffers from technical problems related to dampness and cabling system.

Sources of Financing

The entire project has been financed from the budget of the City of Prague. At the same time, no debt financing has been used. As a result, the project became the centre piece of city investment policy, substantially reducing its ability to engage in other large infrastructure projects, since it constituted about half of all Prague’s investment expenditure at times.

Users

The users of the tunnel complex Blanka are to be mostly the general public travelling from the west to the east of the capital or the other way round. As of now, public transport vehicles are not expected to use the tunnel.

Key Purpose for Public Financing Model Selection

The entire project has been financed from the Prague city budget, as it does not qualify for co-financing from any other sources (EU funds, state budget).

Project Timing

The political representation decided that, at that time, the Blanka tunnel complex was the best possible alternative to relieve the centre of Prague from increased congestion.

Project Locality and Market Geography

The entire project is developed in an urban environment within the boundaries of the city of Prague.

Procurement & Contractual Structure

Tendering

The original idea to build the northern section of the inner-city ring road was laid out in 1993. Of three different variants, it was the plan Blanka that got a go-ahead. The preparation phase began in 1997 with appropriate changes to the city development plan and the signing of an agency agreement between the City of Prague and the company IDS that was to become the project and construction supervisor on behalf of the City Hall. In 1998, the project company SATRA was awarded the contract to prepare appropriate studies and designs for the tunnel complex. Planning decisions and zoning permits were issued in 2003. A lengthy process was concluded with two bidders in 2006. Open call procedure was chosen for both construction and technology parts of the tunnel complex, as with most other important projects in the country, although the number of open calls had been decreasing over time (Oživení, 2012). The tender for construction part No. 50021964 lasted from the 25th of April to the 30th of October 2006. Despite the openness of tenders, just three contenders submitted their offers to both calls, of which one competitor in each tender was disqualified at the very beginning. Metrostav a.s. was announced the winner of the tender for the construction part on 26 September 2006 and the contract was signed a month later. The tender for the technology part No 50023489 was launched on 23 June 2006 and concluded on the 14th May, 2007. As a result, the company ČKD DIZ became the supplier of technology systems.

Contract Structure

The project is based on 4 separate contracts (design, construction, technology and construction supervision) and their amendments. The division of tasks has been criticised during the process of construction in respect to a series of misunderstandings and disputes among individual contractors and the Prague City Hall. The original amount of 21 bn Czech crowns (cca 766 million euros) mistakenly presented as the final total cost for the whole project and guaranteed not to be exceeded (as claimed by the City Hall representatives (Toman, 2007), has soared to the current cost of more than 43 bn Czech crowns (1,56 bn euros) (as of May 2015) and is expected to be even higher. There are several reasons behind the imprecision of the original calculations. First, some items were excluded from the calculations of the construction costs by the City Hall even though they constituted indivisible parts of the Blanka tunnel complex (i.e. junctions to the existing Strahovský tunnel). Also, as the consecutive audits of the project revealed, the figures advertised by the procuring authority at the beginning only included estimated construction costs (White & Case, 2011). Nevertheless, even those were significantly exceeded over the years as no strict cap had been incorporated into the original contract for the construction part of the project. Similarly, increases compared to the original cost expectations were registered in contracts for technology and equipment, project design and construction supervision.

Risk Allocation

Given the fact that the project is divided into several uncapped contracts under traditional procurement conditions, it is the public authority – the Prague City Hall - that bears most risks related to the construction of the project. There has not been a single instance where the construction supervisor or designer were held responsible for individual failures. As the developments have shown, contrary to the original expectations, the City of Prague was forced to accept responsibility for the majority of events that led to substantial cost overruns. The operation of the whole tunnel complex will also be an exclusive responsibility of the City holding company.

Performance

The Prague City Hall as the contracting authority has been criticised for being defenceless against the numerous price increases and bills for extra works that were uncontested. At several instances, it has agreed to arbitrations on disputed issues and lost most of them, despite being in the right according to the procurement law (Léko, 2015). Namely, arbitrators’ decisions are not primarily based on law, but on what they consider justified.

The project suffered from the lack of legal clarity that forced the city hall to halt the payments to contractors on several occasions. The crisis culminated in 2013 with the Mayor of Prague claiming that the contracts were not valid from the very start, as they had not been approved by the city assembly. Moreover, the project faced serious and unexpected challenges of geological nature (three landslides), changes in regulations, flooding, misconduct by both the procuring authority and contractors and prolonged legal battles among the individual parties.

Most recently, the tunnel signalling system has been described as excessive consisting of too many colourful lights that required more cabling than necessary. As a result of all the above mentioned factors, the costs have spiralled to the current level of 43 bn crowns (1,56 bn euro) up from originally expected 27 bn Czech crowns (985 mil Euros), while the date of completion and start of full operation had been postponed several times from the original year 2011 to currently, 2016. At the moment, a large part of the inappropriate cable network along the tunnel has to be replaced due to flood damage. Critics claim the damage has been minor in fact and the tunnel complex should have been opened to public regardless (Bělohlav in Reflex: 2015). The idle tunnel has been prone to illegal intrusions by youngsters, thus gaining the nickname “most expensive skate park in Europe”.

There are multiple reasons behind the failure. What most experts agree on is that the initial and crucial part of the blame lies with the contracting authority – Prague City Hall - and its representatives, who are responsible for setting up the project design, failing to formulate clear specifications for the project and enforce their implementation, signing of a largely imperfect contract and failing to manage and coordinate the construction in an informed and responsible way. Frequent political changes and staff reshuffles at the City Hall investment unit are also cited as reasons leading to failure.

Project Outcomes

The Blanka tunnel complex has been a grand and extremely challenging project featuring on the one hand examples of world-class engineering but, at the same time, suffering from major management issues, legal disputes and force majeure events that led to substantial cost overruns compared to the original estimates. It remains to be seen to what extent the multibillion scheme is going to meet planners’ expectations, especially in improving the traffic inside and outside the city centre.

The significant cost overruns together with an almost 5 year-delay have casted doubt over the ability of the City Hall to successfully manage large infrastructure projects and have led to several allegations, police investigation and legal battles. It has been argued by auditors that by signing an ill-conceived mandate contract with the project supervisor the city representatives lost control over the project, while failing to motivate the contractor by not including any sanctions or bonuses in the contract. Representatives of the main contractor have blamed the City Hall for insufficient project specifications, leadership and integration of tasks. According to them, it was the separation of the project into several contracts and lack of clarity over responsibility of the individual contractors that caused major problems.

In this respect, Blanka is often compared to the extension of metro line A. This project was realized almost in parallel to the road tunnel and can be considered equally challenging in terms of technical difficulty. Contrary to Blanka though, the project was finished on time and within the planned budget. Some stakeholders mention contractual integration and superior management capabilities at the Prague Public Transport company as decisive success factors.

One has to wait for a final evaluation of the Blanka tunnel complex that is now to be opened in late 2015 or early 2016 (if the cabling system is successfully replaced by that time). Nevertheless, it is clear that the developments so far have set an example and precedence of how not to implement major infrastructure projects.

Economic Impact

It is difficult to evaluate the overall economic impact of the project at the moment as the tunnel complex has not been operational. Nevertheless, it is obvious that the economic rationale had been rather overshadowed by the need to relieve the centre of Prague from congestion. The political representation of the time decided the Blanka tunnel complex was the best possible solution on offer. Notwithstanding, calculations of economic effect had been carried out especially for the city ring road as a whole. The expected annual savings from the infrastructure (reduced travel time + reduced fuel consumption without further optimising measures are said to reach 3,8 bn crowns (138 mil euros) (mestskyokruh.org, 2007). However, it is important to bear in mind that the tunnel complex forms just one part of the entire system. One of the project goals was to save on average 10 % of fuel consumption owing to more fluent traffic on the ring-road.

The construction of the tunnel complex has undeniably had an immense impact on the budget of the city of Prague and its investment strategy, as the whole project has been financed directly through the city budget. Over the years, Blanka has regularly consumed about a half of all budgeted investment expenditure. The share has started to decrease only recently with the project being almost completed (Prague City Hall, 2015). One can argue that committing so much money to the tunnel complex has significantly reduced the space for other investments in the city infrastructure. Blanka took precedence over projects such as the new metro line D or other public transport projects that, according to the project's critics, would have much more benefited Prague inhabitants.

Social Impact

There is no doubt that Blanka has already changed the face and profile of several places around the city even though the entries to the tunnel are still closed for traffic. The new Troja bridge, celebrated for its modern design, has been in service since October 2014, but its impact - until the completion of complementary infrastructure - is limited. More substantial systemic changes are expected when the tunnel complex opens to users. The project will clearly have an impact on desirability of certain parts of the city and can lead to a change in the social composition of these areas.

Environmental Impact

The tunnel complex faces criticism for insufficient analysis of its environmental impact. Critics claim that the tunnel will attract even more vehicles to the areas close to the city centre (Auto*Mat, 2011). At the same time, they say the new park areas surrounding the tunnel were designed unprofessionally by engineers and that the reduction of green areas due to the construction was evitable. The environmentalists were against the Blanka tunnel from the very start and offered alternative solutions. After the realization started, they have proposed dozens of measures to maximize the positive effect of the tunnel complex.

Acknowledgments

The work on this contribution was enabled through the specific research project SVV No 260 232 of the Faculty of Social Sciences, Charles University in Prague.

References

  • Léko, I. (2014). ‘Tunel Blanka, kauza Opencard a „elegantní“ řešení pro všechny‘. Česká pozice. 21 November 2014 (Accessed on 15 May 2015).