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Case Studies: Port of Agaete

2016-10-12T18:09:54Z

Nimda: Created page with "{{Infobox |header1 = Port of Agaete, Spain |header2 = |label2 = Project Type: |data2 = Brownfield |header3 = |label3 = Type of Project Financing: |data3 = Public (const..."

{{Infobox
|header1 = Port of Agaete, Spain
|header2 =
|label2 = Project Type:
|data2 = Brownfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public (construction); Concession (Operation)
|header4 =
|label4 = Contract duration:
|data4 = 8 years (construction)
|header5 =
|label5 = Budget:
|data5 = 5.7 M EUR 
Initial construction budget (in 1982): 3.1 M EUR (Ptas. 515 mill.) 
Updated additional budget (in 1987): 2.6 M EUR (Ptas. 427 mill.)
|title = Project Overview
|image = [[Image:Agaete.png|300px]]
|caption = ''Figure 1: Port of Agaete, Spain ''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1981:
| data1 = Initial planning project (''Project I'').
| label2= 19 May 1982:
| data2 = Public tendering.
| label3= 16 June 1982:
| data3 = Public works awarded to private construction firm (SATO).
| label4= 30 August 1982:
| data4 = Start of public works. Public opinion against the project due to concerns on visual impact.
| label5= 16 June 1983:
| data5 = Second planning (''Modified Project II'') is started. Public works are temporarily paused.
| label6= 1 July 1983:
| data6 = Public works are definitively halted.
| label7= 23 October 1985:
| data7 = Administration and management of local ports are transferred from the central government to the regional government (by Royal Decree 2250/1985).
| label8= January 1986:
| data8 = Regional government updates the existing project (''Modified Project III'') Public works are restarted by the same building company (now, SATOCAN).
| label9= 1987:
| data9 = Agreement between the regional government and the island government (Cabildo Insular) to update the budget and speed up the works. Modified Project IV, with technical updates.
| label10= 1993:
| data10 = Completion of main work; Commercial use of the port is negotiated between regional government and central government.
| label11= December 1994:
| data11 = Passenger and road traffic license is awarded to Fred Olsen, a ferry operator between Gran Canaria (Agaete) and Tenerife (Santa Cruz). Fred Olsen operates as a monopoly due to ‘lack of capacity’. Pays a fee to regional government.
| label12= 1999:
| data12 = Additional works required adapting the port to ‘fast-ferry’ operations. Fred Olsen performs works.
| label13= 2014:
| data13 = Large increase in passenger traffic since 2000.A second passenger license is currently being negotiated (sharing existing facilities). There is a project for further enlargement of the port of Agaete (Plan de Puertos de Canarias, 2013) to be carried out from 2015 onwards.
| label14= January 2015:
| data14 = Passenger services opened to competition. Two private ferry operators (Fred Olsen and Líneas Armas) will share port facilities.

}}
}}

==Introduction==

Agaete is a small village (pop. 5,600 in 2014) located in the northwest corner of the island of Gran Canaria, in the Canary Islands. Until the beginning of the 1980s, the local economy was relatively isolated and centered on agriculture, although it also had a small fishing harbour with minimal facilities for local fishermen. During the 1990s, the 30 km-road that connected Agaete with the rest of the island and the capital city, Las Palmas de Gran Canaria (pop. 650,000 in 2014, including its surrounding metropolitan area) was greatly improved, and the village became a crucial maritime link; within a transport network (promoted by the regional government) to connect Gran Canaria with Tenerife, the second main island in the archipelago.

Since the end of the 1970s, local authorities had already claimed for improvements in their small port. A first project was designed by the Spanish government in 1981 through the Ministry of Public Works in Madrid. The project was not well received by local residents because it was based on a large dock, whose huge sea-wall had a high visual impact. Despite opposing public opinion, the works were awarded in 1982 in a competitive tendering process to SATO (Sociedad Anónima de Trabajos y Obras), a Spanish construction company with solid national experience. It was the only company that participated in the tender.

However, both political and social pressure increased, and the works were finally stopped (just one year after their initiation) in search for an alternative design. Meanwhile, the construction company was re-founded as SATOCAN, with local capital. The modified project included a new dock with a special design to alleviate the impact of sea waves during bad weather conditions. This design was also heavily criticised by local authorities because it was not well connected to the village and had to be re-elaborated.

In 1985, a major administrative change occurred: the regional government (Gobierno de Canarias) assumed all the competencies for small and medium-sized ports in the Canary Islands. Additional changes were, thus, made to the project (saving the local beach, construction of a new road and reducing the visual impact), and the third design was finally accepted, with an updated budget, partially provided by the island’s government (Cabildo Insularde Gran Canaria). The works were concluded in 1993, although additional improvements to facilitate its usage as commercial port were also implemented in subsequent years.

As any other port, the Agaete project itself is a monopoly. There are small fishery harbours in nearby villages, but the only competitor for the Gran Canaria-Tenerife Ro-Ro traffic is the Port of Las Palmas, 32 km away. The commercial use of the Port of Agaete was awarded as a monopoly to a single operator (Fred Olsen) in 1994, apparently due to technical (safety) reasons. However, in 2015 (after no major changes in the infrastructure), a second license was awarded to a competitor (Líneas Armas).

Agaete has become the crucial maritime link between Gran Canaria and Tenerife. In the 1990-2000s, it was the center of an ambitious regional plan to create “a motorway” between the two main islands, with improvements in the connecting roads and access from Las Palmas de Gran Canaria through a motorway. There are regular bus services for ferry passengers from this city to Agaete, provided by Fred Olsen.

==The Contracting Authority (Public Party)==

The Spanish Ministry for Public Works, through the Administrative Ports Planning Group (Grupo Administrativo de Puertos) contracted the initial works. After 1986, the works and supervising competencies were transferred to the regional government (Gobierno de Canarias), firstly through the Dirección General de Puertos (an administrative body), and now (since 2012), through Puertos Canarios, a public agency.

The initial works were carried out under the Spanish legal framework for ports and public works (particularly, the Law for Public Contracts). In 1985, the RD2250/85 (government decree) transferred the management of the small and medium-sized ports to the Government of the Canary Islands (a Spanish Autonomous Community since 1982). The use of Agaete as a commercial port was negotiated in 1992 and the Regional Statute was suitably adapted in 1996 (Ley Orgánica 4/96). Today, the legislative framework is defined in the Law of Ports of the Canary Islands (Ley 14/2003).

As described above, national authorities initiated the project, but competencies were later transferred to the regional government. The local government (the island’s government also participated in the final financing) was involved at the beginning of the project and in 1996, to authorise the commercial usage. Since then, all the responsibility is assumed by the regional government.

==Private Sector Contribution==

===Construction===

The project’s main sponsor was the public sector (Spanish Government, Regional Government, Island’s Government). SATOCAN was the only construction company involved in the project. There were no major issues with respect to the procedure, apart from the fact that the project suffered from several changes in design after being awarded. However, the new project was not opened to new concurrence: it was directly awarded to SATOCAN, in accordance with legal provisions. The involvement of SATOCAN was limited. Its only responsibility was performing the public works.

===Operation===

The port following construction was concessioned to Fred Olsen (1994). In 2015, a second concession was granted to Líneas Armas.

==Sources of Financing==

The project was contracted in accordance with the Spanish Law for public contracts through an open procedure. It was divided in several stages, at the end of each, the builder receiving the corresponding payment (standard building contract). All the payments were made by the Spanish Government after the corresponding budget assignments.

Concessioners pay a fee to the local government.

==Users==

The main user of the Port of Agaete is Fred Olsen, a private-owned shipping company that provides regular ferry services between Gran Canaria and Tenerife. Fred Olsen also operates other routes in the islands and also offers additional services (cargo, tourism accommodation, etc.) Local fishermen and private recreational yachts also make occasional use of the safe dock. Today, the main usage of the port is the provision of regular passenger and Ro-Ro services.

==Key Purpose Project Delivery Model Selection==

Spanish legislation at the moment attributed exclusive ownership and port management rights to the State (central government). After construction, the port would remain under the control of the public sector. No private interest was evident at the initial stages of the project.

Afterwards, the private operator (Fred Olsen) contributed with minor works to improve port facilities.

==Project Timing==

At the beginning of the 1980s, the village of Agaete and, in general, the northwest of the island of Gran Canaria, seemed relatively isolated and relegated in terms of transport infrastructure, compared to the more touristic and sunnier southeast part of the island. Most people living in the north commuted to work to the island’s capital city or simply visited for shopping or entertainment. The port of Agaete was mainly used as a fishing harbour by local residents, while the main attractions for occasional visitors were local restaurants and the “Dedo de Dios” (God’s Finger, a peculiar rock which was destroyed by a tropical storm in 2005). The village’s economy was mainly based on agriculture and minor services, with small growth rates.

The Canary Islands’ economy was also relatively stagnated during the 1980s, after two decades of expansion based on tourism services and construction. Since 1957, the region’s GDP had multiplied by 12, reaching a share of 4% of the national figure, with a GDP per capita of approximately 10,000 euros in 1985.

At the beginning of the project, the ferry services did not seem necessary because there was a maritime connection between Gran Canaria and Tenerife from the Las Palmas de Gran Canaria Port. The main competitive advantage of the new service (from Agaete to Tenerife) was that the time on-board was reduced to one hour.

==Project Locality and Market Geography==

The Port of Agaete became a key link in the regional transport market. Agaete’s population and level of economic activity has benefited from the project. The number of permanent residents has increased by 27% between 1981 and 2014, but the number of seasonal residents (foreign retirees in winter and people from the rest of the island in summer) is also very important. The budget of the local council has doubled between 1980 and 2010.

In 1995, the population density was:

* In Agaete: 115 inhab. per sq.km
* In Gran Canaria: 487 inhab. per sq.km
* In the Canary Islands: 260 inhab. per sq.km

No major industrial activities were noted before and after the project. Fishing activities remained the same. Commercial activity increased after 2000, largely due to the increased number of transit passengers and tourism.

==Procurement & Contractual Structure==

===Tendering===
The port construction and refurbishment project was awarded to SATO (later re-founded as SATOCAN) after a competitive tendering that did not attract many participants. In fact, it was the only bidder.

The operation of ferry transport services was directly awarded to Fred Olsen that was the only company interested. Apparently, another company (Trasmediterranea) also expressed its initial interest, but was seemingly discouraged due to technical issues (not enough capacity at the dock to operate with safety). The duration of the project assignment procedure was three months.

===Contract structure===

Both the construction and operation contracts were fairly standard. They were designed by the Spanish Government and included clauses and provisions that were common in the Spanish legislation, including penalties for unjustified delays (in the construction stage).

===Risk Allocation===

The risk allocation is shown in Figure 2.

[[Image:Agaete1.png]] 
''Figure 2: Risk allocation''

===Performance===

In 2012, the regional government obtained €1.2 million from public funds for the usage of the dock facilities (by Fred Olsen). It also obtained 17,000 euros for renting warehouses and terminal facilities. Indicative figures of its performance:

* 2 private ferry companies (in 2015)
* 43 licensed fishermen
* Traffic in 2013: 773,509 passengers
* Estimated traffic in 2020: 900,000 passengers

==Project Outcomes==

The project has changed dramatically the lives and prospects of the inhabitants of the northwest corner of Gran Canaria and has created a relevant link for inter-island traffic. Beyond its economic results, the port of Agaete is now a vital entry for the island and a way to reduce the political differences among islands.

==References==

* De Rus, G. (1997): How Competition Delivers Positive Results in Transport-A Case Study, The World Bank Group Viewpoint Note No. 136. Washington DC.
* Puertos Canarios. http://puertoscanarios.es/EN/. Official website Canary Ports.

Case Studies: Modlin Regional Airport, Warsaw, Poland

2016-10-12T17:52:24Z

Nimda:

{{Infobox
|header1 = Modlin regional airport, Poland
|header2 =
|label2 = Project Type:
|data2 = Brownfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 5 years
|header5 =
|label5 = Budget:
|data5 = 331 807 669,05 PLN (approximately 82M EUR)
|title = Project Overview
|image = [[Image:Modlin.png|300px]]
|caption = ''Figure 1: Modlin Airport Terminal, Poland'' 
''Source: Kuryłowicz& Associates http://www.apaka.com.pl/en#/projekty/lotnisko-w-modlinie''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 2003:
| data1 = Members of Parliament, members of the local government and entrepreneurs signed a letter of intent concerning the location of the airport on the premises of former military airfield in Modlin.
| label2= May 2005:
| data2 = Draft business plan was developed for investment project entitled "Establishment of a new communication airport by means of modernization of the existing and building new infrastructure for handling aircraft, passengers and cargo on the premises of the former military airfield".
| label3= October 2006:
| data3 = Civil Aviation Office issued a letter of commitment to provide a license to establish a public airport in Modlin. Permit for the establishment of a civil airport.
| label4= 10 September 2009:
| data4 = Building permit is granted. The Voivode of Mazowieckie issued a building permit.
| label5= 8 February 2010:
| data5 = The facility is entered in the register of civil airports kept by Civil Aviation Office.
| label6= 12 March 2010:
| data6 = The investment project received an environmental decision.
| label7= 8 October 2010:
| data7 = Official start of construction.
| label8= 29 October 2010:
| data8 = Agreement with Mostostal for the construction of the terminal signed.
| label9= 1 February 2012:
| data9 = The management of WizzAir announces that as on 18 July 2012 they will move all their flights from Chopin Airport to Warsaw/Modlin Airport.
| label10= 8 February 2012:
| data10 = The Irish airline Ryanair announces it will launch flights from Warsaw Modlin Airport
| label11= 6 June 2012:
| data11 = Regional Building Inspector issued an operational permit for the airside of the airport, and the runway obtained a positive decision of the Air Force Institute of Technology.
| label12= 7 July 2012:
| data12 = An Open Day at the airport.
| label13= 13 July 2012:
| data13 = On 13 July, the President of Civil Aviation Office accepted airport taxes for Warsaw/Modlin Airport as requested by the company Mazowiecki Port Lotniczy Warszawa-Modlin Sp. z o.o.
| label14= 15 July 2012:
| data14 = First scheduled flights. WizzAir and Ryanair operating from Modlin. The new airport taxes tariff will become effective on 15 July.
| label15= 22 December 2012:
| data15 = Closing airport runaway indefinitely for safety reasons. The construction was built using improper materials. By a Decision of the Regional Building Inspector the concrete part of runway was closed, as a result of which the airport was able to handle only those aircrafts for the landing of which a runway length of 1500 m was sufficient.
| label16= 4 July 2013:
| data16 = Re-opening airport after construction works to fix the runway.
| label17= 17 July 2013:
| data17 = Wizz Air announced it would not return to Modlin despite its re-opening.
| label18= 30 September 2013:
| data18 = First scheduled flights after re-opening - Ryanair returned to Modlin.

}}
}}

==Introduction==

The project entails the building of a new airport for Warsaw (capital city of Poland) and Mazovia Region for low-cost airlines and charter flights. The project is based on an old military runway located 35 km from Warsaw.

First plans assumed:

* rebuilding and lengthening of the runway
* building new taxiways and airport terminal
* rebuilding existing railway siding and building railway station on the airport (both not realised)
* building fright terminal (not realised).

Realisation of the project was delayed by a few years. After a few months of operation, the airport was closed due to technical and safety reasons.

The re-opening of the Modlin Airport was in June 2013, however, only one airline decided to operate from it.

==The Contracting Authority (Public Party)==

Mazowiecki Port Lotniczy Warszawa Modlin Sp. z o.o. Contracting authority is a public entity with participation of regional self-government (30,37% shares), the Town of NowyDwór Mazowiecki (4,81%), State-owned enterprise "PortyLotnicze", 30.39% and Military Property Agency, 34,43%.

==Sources of Financing==

The total budget for the project amounted to 331 807 669,05 PLN (approximately 82M EUR), including:

* European Regional Development Fund subsidiary: 64 736 000 PLN (approximately 16M EUR)
* National budget subsidiary: 11 424 000 PLN (approximately 2,85M EUR)
* Owners sources: 255 647 669,05 PLN (approximately 64 M EUR)

==Users==

Warsaw Modlin is the first airport in Poland established specifically with the intention to be used by low-cost airlines and charter carriers. Starting from June 2012, it operates as a regional public airport complementary to the Warsaw Chopin Airport. The airport handles international short- and medium-distance flights. Air operations are carried out 24hrs a day.

The airport's specific orientation at low-cost airlines is reflected in certain components of the infrastructure, particularly the terminal with no designated business waiting area, no luxury commercial or food court areas and no jet ways.

Nowadays, Modlin Airport is used by one, big, regular passenger airline (Ryanair), and realises negligible charter flights and general aviation. A small cargo terminal is planned (2015/16). Table 1 lists the forecast and actual traffic volumes.

Table 1-Forecasted and actual traffic volumes 
{| class="wikitable"
|-
! '''Year'''
! '''Forecast'''
! '''Actual'''
! '''% Actual vs Forecast traffic'''
|-
| 2012
| 900 000
| 857 481
| 95%
|-
| 2013
| 2 300 000
| 344 566
| 15%
|-
| 2014
| 2 900 000
| 1 703 219
| 59%
|}

==Project Timing==

The concept of building the airport was formulated in 2003. The initial agenda for the investment project was announced in 2005, and after this date preparation works run. Construction works started in 2010 and ended in 2013. Substantial complementary infrastructure not realised included essential connections such as the foreseen railway connector and station, and other infrastructure such as the cargo terminal.

==Project Locality and Market Geography==

Modlin Airport is located only 35 km North-West from the center of Warsaw, but is not well connected - Modlin Airport has no convenient, direct connection to the capital city, (bus connection takes up to 2 hours (average 40-60 minutes), while the railway connection takes up to 1,5 h and needs one change to bus).

==Procurement & Contractual Structure==

The investment process was divided in 20 small contracts. Separate tendering process was inter alia for:

* demolition of existing buildings
* logging the trees
* dispose of the cut wood
* modernising runway and taxiway
* construction of the airport traffic control tower
* construction of the roads and parking areas
* construction of the water and waste infrastructure
* construction of the telecommunication networks
* construction of the fence
* modernisation of hangars
* construction of the ILS/DME system ( instrument landing system)
* construction of the passenger terminal
* procurement of furniture
* check-in counters for passenger terminal
* luggage control equipment for passenger terminal
* refuse bins with and without ashtray for passenger terminal and many more.

The Central Anti-Corruption Agency (CBA) found irregularities in the application of the Public Procurement Law, including, inter alia, an undervaluation of contracts and sharing contracts for parts. The material gathered was submitted to the Prosecutor's Office.

===Tendering===

The main elements of ongoing contracts were: upgrading of runway, construction of airport terminal and other structures and facilities (over 20 tenders). During the execution of works, the Contracting Authority (The company Mazowiecki Port Lotniczy Warszawa-Modlin) granted three basic contracts with 62 additional works.

===Contract Structure===

“The company Mazowiecki Port Lotniczy Warszawa-Modlin did not have formal procedures for conducting the investment process, taking into account the risks that may occur at each of its stages, and also did not have sufficient staff resources, allowing for self-management and monitoring of contracts.

Notably, the preparation of vague and inconsistent provisions of the agreement and terms of reference resulted in additional works with direct assignment of more than 5 million zl. The Supreme Audit Office considered the assigned works as unjustified.

The documentation developed for the runway construction did not state clearly the type of aggregate to be used for the concrete mix in the construction of the belt. As a result, the contractor did not have documentation that warrants the exclusion of particles with high water absorption, which may be damaged by frost and defrosting. The related close down of the airport caused financial losses in the range of PLN 34.4 M.

===Risk Allocation===

There is no detailed information about risk share between SPV (Mazowiecki Port Lotniczy Warszawa-Modlin Sp. z o.o.), designer, constructor and other entities.
As a result of the over 6 months close down of the airport operation and delay in ILS (Instrument Landing System) installation, several lawsuits are currently in court, e.g. SPV contra main contractor of construction runway (PLN 34,4M), Wizzair Airlines contra SPV (PLN 11 M), LS Airport Services contra SPV (over PLN 1 M).

[[Image:Modlin1.png]] 
''Figure 2: Risk allocation''

===Performance===

The primary business objectives for the airport in Modlin were too optimistic. Reasons of not meeting objectives are not only the result of potential traffic overestimation, but also the failure to build reliable transportation connections (no appropriate rail and road connections) to Warsaw.

In addition, the business results reflected in the airport shut down for a few months after its launch. This event shifted the chances of achieving break event point for investments by 4-7 years . The location of the airport was controversial to both aviation experts (position into delta of 2 rivers, withseveral misty days), as well as environmentalists (breeding place of many valuable bird species). The construction process became risky due to the fragmentation of works. The latter, not only led to accusations of breach of the Public Procurement Act, but also contributed to the lack of control over the quality of the work of the contracting authority.

Despite the lack of infrastructure and transport links to the airport causing considerable inconvenience to passengers, it is now the 6th airport in the country, with the highest growth rate in number of passengers.

==Project Outcomes==

The main problem of Modlin Airport is the lack of transport infrastructure to/from airport, as a result of partly external factors and partly the low effectiveness of bodies managing the airport and the Region.

The plan of transport infrastructure for Euro 2012 was unrealistic and additionally, several planned main roads in Poland were not realised because of the financial crisis of 2009.

The plans for the railway connection were realised partly. Coaches to service Warsaw-Modlin Airport line were bought, however, building the rail infrastructure (rail station at the airport and upgrading the track) outgrew the Regional self-government and after several years of preparation works, the issue was passed to PKP (national railways).

Inconvenient passenger transport connections, delays in ILS system operation and break in airport operation resulted in Wizzair discreditation to Modlin Airport.

Suburban airport last year handled over 1.7 million passengers. Thus, Modlin in terms of passenger traffic volume, was in the sixth place in Poland and ahead of, among others, Poznan airport. According to forecasts, in 2015, the number of passengers in Modlin is to increase to 2.5 million. Although it is only used by Ryanair, it is fast expanding its route network. With this development, the airport terminal in Modlin may become too small fairly quickly. Expectation was for it to handle nearly 3 million passengers a year. Therefore, there are plans to enlarge the airport .

==References==

* http://en.modlinairport.pl/modlin-en-new/web/airport/about-the-airport-2/calendar.html
* http://warszawa.gazeta.pl/warszawa/1,34889,17394180,Modlin_szybko_sie_zapcha__Lotnisko_szykuje_sie_do.html
* http://www.biznes.newseria.pl/news/lotnisko_w_modlinie_zyski,p43543087
* http://www.modlinairport.pl/uploads/old_www/Prognoza%20ruchu%20pasazerskiego_1.pdf

Case Studies: Metro de Malaga, Spain

2016-10-12T17:27:31Z

Nimda:

{{Infobox
|header1 = Metro de Malaga, Spain
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = PPP
|header4 =
|label4 = Contract duration:
|data4 = 35 years
|header5 =
|label5 = Budget:
|data5 = 762-795M EUR
|title = Project Overview
|image = [[Image:Malaga.png|400px]]
|caption = ''Figure 1: Current lines of Metro de Malaga, Spain ''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1995: Conception
| data1 =
| label2= 31 October 2003:
| data2 = Call for tender
| label3= 13 October 2004:
| data3 = Contract Award
| label4= 2 December 2004:
| data4 = Contract signed
| label5= 2006:
| data5 = Initial Works plan approval (modified)
| label6= 3 February 2006:
| data6 = Finance Close
| label7= 2008:
| data7 = Start of works
| label8= 2010:
| data8 = Concession agreement revision
| label9= 2012:
| data9 = Works plan revision
| label10= 27 September 2013:
| data10 = Institutional agreement to start operations
| label11= 18 July 2014:
| data11 = New concession and financing agreement
| label12= 30 July 2014:
| data12 = Start of Operations (1st phase)
| label13= 2017:
| data13 = Expected completion of works

}}
}}

==Introduction==

“Metro de Malaga” is a light rail network serving the city of Malaga, Andalusia, Spain. The project concerns the construction of the first two lines of a new underground railway system in Malaga, one of Spain’s largest cities, with a population of some 550,000 inhabitants, with the metropolitan area having a population of more than one million. The light rail network is operated by Metro de Malaga, a concessioner formed by the Public Works Agency of the Andalusia regional government, several builders and operators, as well as the financial institution Cajamar (a regional commercial bank).

The first two lines (Line 1 and Line 2) of the light metro system, covering the areas to the west and south-west of the city and spanning 11.3km in total length, entered commercial service at the end of July 2014. The Line 1 runs for 6.7km from Andalucía Tech to El Perchel, in the Central district of Malaga, located on the right bank of Guadalmedina. The 4.5km-long underground section of the line comprises of 11 stations, including the El Perchel station that is shared with Line 2. The section provides easy access to the University campus, the City of Justice and Carlos Haya Hospital. The Line 2 runs 4.6km along the coastal belt from Palacio de los Deportes to El Perchel and is completely underground. It has seven stations, including the one shared with the Line 1 and provides easy access to districts of Carretera de Cádiz and the Martin Carpena Arena. The two lines cross at the El Perchel station, which offers access to Renfe's AVE high-speed commuter rail service, as well as the intercity bus hub.

Construction for the project was agreed to start in 2006 and the first two lines of the metro were completed by June 2014. However, the two lines comprise only 81% of the planned network under the first development phase of the broader metro network. The remaining 19% of the network includes: 1) the under-construction El Perchel-Guadalmedina section, scheduled for completion in 2017; 2) a 295m-long underground section from the Guadalmedina station to the Atarazanas station in the city centre and 3) a 1.8km over-ground track extension of Line 2, from Guadalmedina station towards the Hospital Civil station situated north of the city centre.

This previous solution was adopted after long institutional negotiations and contract revision. In effect, there were project improvements concerning design, intermodal transfer and safety, as well as a political controversy mainly due to a new proposal about the central section from underground to surface. Consequently, there were significant delays and cost overruns of the original project. As a result of the new agreement, the Ministry of Public Works and Housing of the Government of Andalusia launched at its cost a tender for the infrastructure works required for the Guadalmedina-Atarazanas section in July 2014. The remaining sections of the planned network are scheduled for completion by the end of 2017 (see Figure 1).

The original budget was 403 M EUR (including 41 M EUR for rolling stock). However, due to significant changes in the final design and as a consequence, delays in works completion, investment at commencement of operations in 2014 exceeded 600 M EUR, of which 570 M EUR concerned construction costs. According to the last institutional agreement, at project completion due at the end of 2017, the total investment after covering remaining sections, is expected to be between of 765 and 795 M EUR.

The rolling stock is mainly composed of 14 CAF Urbos 3 tram units, each capable of accommodating 221 passengers. The vehicles with a maximum speed of 70km/h are equipped with triple braking system, which includes an electric brake on the engine, as well as mechanical and electromagnetic brake axles on the rail track.

The signalling system used in the first two lines of the metro is based on Alstom's Urbalis 400 communications-based train control (CBTC) solution. The system uses wireless communication technology and automatic train protection (ATP) system to enhance operational efficiency by increasing the number of trains per hour, while enabling a swift response to any incident.

The two lines are expected to have an annual ridership of 17.1 million passengers, which is set to exceed 20 million by 2018 after the network is completed.

The project was proposed as part of the Intermodal Transport Plan for Malaga, a six-line light metro network, in 1999. The Government of Andalusia started planning for the development of two lines of the proposed network in 2002 and signed a collaboration agreement with the Malaga City Council in the following year. The two lines awarded were the first phase of a total of 6 lines to be in operation in the entire metropolitan city. These six future metro lines will also be a central part of the Railway Corridor project on the Costa del Sol (intercity plan) that will be launched between Estepona (West) and Nerja (east). It will be a cross route linking the two ends of the Malaga coastline and will mitigate the severe circulatory problems experienced in the N-340, the A-7 and AP-7 (see Figure 2).

[[Image:Malaga1.png|400px]] 
''Figure 2: Future line development of Metro de Malaga, Spain''

There is some level of exclusivity in the project. The project may compete with other transportation modes, mainly buses and taxis. However, this new way of transportation would be more efficient in terms of time and cost. There is also an alternative sustainable transport mode based on a cycling route running along the sea front.

==The Contracting Authority (Public Party)==

The Malaga Metro is a light railway network promoted by the regional government of the autonomous community, Junta de Andalucia, as part of an Infrastructure Regional Plan to be developed under a Public Private Partnership strategy.

In Spain, the central government keeps main competencies in railways, ground transport, airports, ports and other main infrastructures of general interest or those across several Autonomous Communities and national territory. While the autonomous governments may get transferred into its Statute, all related competences only affect its own autonomous territory. The regional governments have been very active in providing public infrastructures. Likewise, the main autonomous communities have utilized diverse PPP models based on mixed payment mechanisms, to provide other public facilities and services in the transport sector. At regional level, although each autonomous community may have a different organization, it most usually follows a similar state pattern, with a Public Works and Housing Department (Consejeria), which often has an Infrastructure office and Public Agencies to implement the Regional Governments policies.

In the autonomous community of Andalucia, the regional government, through the Consejería de ObrasPúblicas y Transportes, has developed a master Infrastructure Regional Plan. To accomplish this plan, the Consejería created in 1996 the public institution Gestion de Infraestructuras de Andalucía. S.A. (GIASA), responsible for road, hydraulic and transport infrastructure. Later in 2011, this institution merged with another public institution the Ferrocarriles de la Junta de Andalucía, creating the sole Agencia de ObraPública de la Junta de Andalucía, which is currently the contracting agency responsible for most public infrastructure. This agency carries out the planning, tendering, contracting and financing/funding tasks, and often participates in the project company. This is the case of Metro de Malaga, in which the regional government acts as concession grantor and shareholder of the concession with a share of approximately 24%.

==The Concessioner (Private Party)==

The project sponsors and other interested parties are the following:

* Junta de Andalucia,
* European Investment Bank (EIB)
* Metro de Malaga, S.A
* Private partners
* Malaga Town council
* Central Government

Original shareholders of the SPV were, Junta de Andalucia (25.00%), FCC (26.73%), Azvi (12.62%), Sando (12.62%) Comsa (11.14%), Vera (11.14%), and Cajamar (0.75%) (regional commercial bank).

However, currently Metro de Malaga is owned by the regional government Junta de Andalucía (23.69%) and a number of private investors with the following shares: Globalvía (15.35%), FCC (10.01%), Cajamar (18.86%), Azvi, through Cointer (11.96%), Comsa-Emte (10.56%), Sando (8.57%) and Vera (1.03%). Currently, equity sums € 136.5 million.

The key subcontractors (builders) are the following:

* FCC (large national /international builder)
* Azvi (large regional/ medium national builder)
* Comsa (medium national builder)
* Sando (small national / biggest local builder)
* Vera (small national / second biggest local builder)

Recently, a process to change ownership started and some shareholding changes might take place.

Globalvia is the concessioner holding integrated by FCC and Bankia groups, who are currently (2015) in negotiations to sale Gobalvia to a Malaysian Fund.

Some shareholders, representing a total of 39.4% of shares (Sando -8.57%-, Azvi, through Cointer,-11.96%-, and Cajamar-18.86%-), have a selling position. This group recently failed to complete its stake sale to Blackstone Fund (USA), but is still looking for other alternatives.

Other main contractors involved are as follows:

* Agencia de Obra Publica, as grantor and partner, co-lead the project.
* Metro Bilbao provides technical assistance for the implementation of the project.
* CAF was awarded a 41 M EUR contract to deliver 14 Urbos 3 tram units for the Malaga Metro. CAF Transport Engineering is responsible for technical assistance coordination for the commissioning of the metro.
* A joint venture between Vimac and two other companies was awarded a contract for electrification and electromechanical installations that include the installation of six traction substations and corresponding distribution and interconnection centres (CDI's), 18,500 m.
* Alstom delivered this signalling system for the two lines of the metro under a contract awarded in 2006.

Figure 3 illustrates main parties and roles in the project.

[[Image:Malaga2.png]] 
''Figure 3: Participants in Metro de Malaga project''

==Sources of Financing==

The total investment for the light metro network planned in the first phase is estimated to be 765-795 M EUR. In addition to the shareholder’s equity contributions, the European Investment Bank granted in 2006 a 20-year loan of 325 M EUR for the project, while the remaining financing comes from the government of Andalusia and the Malaga city council.

EIB loan has two tranches, the first one signed on February 3, 1996 for 50 M EUR and the second one signed on March 26, 2010 for 275M EUR. The loan is covered with a guarantee line granted by the regional government of Junta de Andalucia, which also covers other projects such as the Metro de Sevilla.

In summary, the financing structure is the following:

* Shareholder capital: 136.5 M EUR.
* Public contributions: 212 M EUR (may be incremented at completion) (33% of total investment)
* EIB loans: 325 M EUR. (Max. 50% of total investment)

==Users==

The main users are individual passengers, with current lines mainly serving commuters from several neighbourhoods to downtown and industrial parks, as well as university students.

The main stakeholders include the Regional government, Town council, Local districts council, and the Metropolitan consortium.

==Key Purpose for PPP Model Selection==

The main reason for selecting the delivery method/financing scheme is the identification of this project as part of the Regional Infrastructure Plan to procure urban mobility that includes the public private partnership as selected strategy for its implementation.

In the selection of this project, the reasons considered in choosing Private (co)financing, have been:

* Large scale project
* Long term project approach
* Public funding restrictions and institutional financing availability
* Adopting technology innovation

The business model may be considered as a rather finance-based approach and consists of a mix of public funding with operating subventions and usage payments in accordance with performance indicators, as well as private funding from user charges.

==Project Timing==

Metro de Malaga required more than a decade of project discussions and nearly eight years of works, and has significantly changed mobility in the area of Cadiz road and the new Teatinos neighbourhoods. Since the last tram operated in Malaga streets in 1961, several project ideas have been raised from different public authorities. But it was in 1995, when the Junta de Andalucia included a light metro for the Malaga Intermodal Transport Plan for the first time.

When the project was approved in 2006, the regional and national economy was booming after more than a decade of economic growth. The economic downturn impacted the local economy and regional GDP, while also the per capita income was lower than expectations at operations commencement in 2014. The unemployment level was higher than forecasted and mobility levels decreased. However, after the summer of 2014, the economy is clearly growing again, mainly pushed by the tourist sector which is showing historical records of activity.

==Project Locality and Market Geography==

For the time, Metro de Malaga is exclusively an urban project, which covers the west part of the city along the coast and the new developments for residential and industrial areas. The north and east part of the city, as well as the centre area are still out of the scope of the project and most likely will require a long time to be considered.

Areas covered by lines 1 and 2 needed to improve mobility out of the existing traffic congestion. The area covered by line 1, along the Cadiz road, is, by far, the highest population density area of the region and new developments along the coast makes the density level even higher, therefore, basic traffic assumptions were meaningful and correct. Similarly, line 2 runs by a growing area, which hosts new university buildings, a dynamic technological and industrialized zone, new commercial and business parks and new residential developments, which, in spite of the economic downturn, show considerable economic activity, even higher than planned a decade earlier.

Nevertheless, there is clear need for extending existing lines and building new, in order for the project to become a global city transportation mode and achieve outstanding use. In fact, the two lines awarded were the first phase of a total of 6 lines to be in operation in the entire metropolitan city.

==Procurement & Contractual Structure==

===Tendering===

Open call is the usual procurement method in Spain, though it is also common to include a negotiation process in the final stage to deal with changes in the project and open issues not included in the tendering process. Considering all arising issues in the Metro de Malaga project, after the open call and selection process, long negotiations (not part of the tender) were required.

Four Bidders were considered in the 1st Stage. The winner consortium was Metromar, led by the main building company FCC, and jointed with Comsa, Azvi and local Sando and Vera building companies, as well as the local financial institution Cajamar. The other three competing consortiums were led by national builders, SACYR, Ferrovial-Necxo, and Dragados-CAF, respectively.

===Contract Structure===

The light metro project follows a Design, Build, Finance, Operate and Maintain (DBFOM) contract. The concession comprises of two lines, depot and maintenance facilities, a fleet of vehicles and intermodal facilities. However, since the project faced design and construction changes, public provision also consisted of Design, Built and Finance, mainly for the amended part of the project.

In addition, financial guarantees were provided by the grantor. Moreover, financial guarantees were granted to the European Investment bank from Junta de Andalucia.

The contract also includes public contributions in operations to cover the operating costs (technical tariff).

The contract does not include renegotiation clauses in line with the usual Spanish procurement standards. There are clauses and penalties for timely and quality completion of Works. Also, some penalties are included in the contract for contract breach or non-compliance of general duties set in the contract. Early contract termination is included.

Performance guarantees were required to the winner consortium both for project construction and operation.

''Repayment mechanism''

The type of expected remuneration during the operating phase included:

* User charges
* Usage payment
* Subventions

The concession grantor makes payments as operating subvention (fix) and user payments (variable) which are the main source of income/revenues. As a result, user charges become secondary revenues/income.
User charges (fares) are proposed by the concessioner, but need approval by the public authorities (grantor).

===Risk Allocation===

The risk allocation scheme is presented in Figure 4.

[[Image:Malaga3.png]] 
''Figure 4: Risk allocation''

In principle, design and construction risks are totally transferred to the private sector. However in practice, lack of proper detail and inadequate planning in project preparation by the grantor (which is the reference for the final project design), alter at a big extend, the risk transfer scheme originally included in the contract. Exploitation and commercial risks are at some extent mitigated by the operating public contribution scheme. Financing risk is also mainly mitigated by the financial guarantee provided by the grantor. In conclusion, overall, much of the risk level is kept by the public sector.

===Performance===

Operation started recently in 2014 and more time is required for an appropriate assessment.

There are some performance indicators which may incur penalties related to:

* Network availability: service and rolling material fleet
* Network reliability: rolling material fleet and fixed installations
* Timekeeping service: Delays
* Commercial reputation: cleaning, lighting, ticketing operations

The cost/budgeted of investments ratio is: 150%, and may be increased to 200% after the whole project finishes. The reasons behind this overrun were the modifications carried out during the main works, especially in terms of underground conversion and extensions, as well as improvements in stations. There are also significant innovations impacting investment and operation costs.

The concessioner and authorities claim that traffic and revenues are in line with forecast in the initial operation phase, and are expected to considerably increase once the project is completed (mainly when downtown stations from Gualdamedina to Atarazanas open), most likely to take place after 2017.

According to a press release issued by the concessioner at 2014 year closing, Metro de Malaga has achieved 2.05 million passengers in only five months of operation. This is much in the range of the forecast, just 1% above the 2.03 expected number of users. In 2014’s last quarter, the transport service achieved 436,000 users/month equivalent to over 17,000 passenger/day. For the first annual period of 2015, it is expected to reach 4.9 million users.

''Re-negotiations''

There have been several rounds of renegotiations after the project award (3 or more) sometime for a long period (more than a year). The main reason(s) of re-negotiation are:

* Contract design (misallocation of risks including revenue guarantees, Investment requirements / Exclusive private financing)
* Political and social environment (mainly institutional conflicts and disagreements)

The final outcome of the renegotiations was mainly an increase in the public contribution to offset the cost overrun and an extension of the concession period to similar time to the delays at works commencement.

The resulting delays were 2 years for the beginning of works and 4 years for the completion of works/opening of operation.

==Project Outcomes==

At present, the general level of the project's perceived success is low because of the cost of the works and delays in opening.

The Critical Success Factors (CSFs) that can be considered are the number of users and the additional lines and stations that provide transportation services throughout the city.

The Critical Failure Factors (CFFs) are the following:

* Poor or lack of ex-ante evaluation
* Inadequate works planning
* Additional works requirements.

With regard to acceptability, apart from the initial opposition to large and long works from the affected commercial business, users are in general satisfied.

The main objectives were to provide sustainable urban mobility and reduce congestion. In effect, the expected benefits of the project are time gains for users, cost savings for car users shifted to the metro, cost savings from reduced bus service operations that could be invested in complementary lines and decongestion effects in the city centre.

Economic impact

* Cost savings for daily commuters and private car users derived from less traffic congestion,
* Improved access to downtown to many commuters

Social impact

* Positive effect in reducing private car traffic running on the surface, in terms of pollution, noise and global warming.

Environmental impact

* Contribution to reducing pollution.

==References==

* AccountsChamber of Andalucia. (2013).Public Private activities analysis of Public Works Agency of Junta de Andalucia.
* Andalusian Advisory Council.(2014): Changes in Metro de Malaga Public Work contract.
* Concession de Ferrocarriles Metropolitanos. Los casos de Metro de Sevilla y Metro de Málaga
* General presentationof Public Works Agency of Junta de Andalucia(2012)
* http://www.latoga.es/detallearticulo.asp?id=1060683210&nro=156&nom=Noviembre/Diciembre%202005
* Metro de Malaga concession agreements and tendering conditions document (Pliego de CláusulasAdministrativasParticulares)
* Metro de Malaga web page: http://metromalaga.es/
* Nores, J.L. y Fernandez, F.J. (2005) Contrato de Concesion e Obra Publica – Andalucia. Nº 156 | Noviembre/Diciembre 2005
* Press articles (mainly local press, Diario Sur and Malaga Hoy)
* www.aopandalucia.es/.../05_Concesion_Metro_Sevilla_y_Malaga.pdf

Case Studies: M-25 London Orbital, U.K.

2016-10-12T15:51:11Z

Nimda:

{{Infobox
|header1 = M-25 London orbital, United Kingdom
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Private co-financing
|header4 =
|label4 = Contract duration:
|data4 = 30 years
|header5 =
|label5 = Budget:
|data5 = 900 Mil GBP (Construction cost)
|title = Project Overview
|image = [[Image:London.png|300px]]
|caption = ''Figure 1: M-25 London orbital, U.K. '' 
Source-. Briggs, A. and Drewett, D. (2007)
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 2006:
| data1 = Date Project conceived
| label2= 2008:
| data2 = Call for tender
| label3= Feb. 2009:
| data3 = Contract signed
| label4= 20 May2009:
| data4 = Financial Close
| label5= May 2012:
| data5 = Original project completion time
| label6= January 2013:
| data6 = Project extension
| label7= December 2014:
| data7 = Expected full completion

}}
}}

==Introduction==

The M25 motorway or London Orbital motorway forms a 125-mile orbital route some 20 miles from the centre of London that almost encircles Greater London, England, in the United Kingdom. The Dartford Crossing, two tunnels and a bridge crossing the river Thames at Dartford, complete the loop.

A narrower concept was first mooted early in the 20th century as part of the plan to build four ring roads around London. A few sections, based on the abandoned London Ring ways plan, were constructed in the early 1970s and completed in 1986.

The M25 is the major route around London, carrying international traffic between entry points and the rest of Great Britain. It also forms the hub of the English motorway system, and serves as a commuter route for local traffic. It is one of the busiest links of the British motorway network: 196,000 vehicles were recorded on a busy day near London Heathrow Airport in 2003 and the western half experienced an average daily flow of 147,000 vehicles in 2007.

In May 2009, the Agency signed a 30-year private finance contract with “Connect Plus”. The contract requires “Connect Plus” to widen two sections of the M25 (approximately 40 miles), and to refurbish the Hatfield Tunnel. “Connect Plus” must also operate and maintain the M25, including the Dartford Crossing, plus 125 miles of connecting roads at junctions. It is also required to design a solution for congestion for two further sections of the M25 (approximately 25 miles). The contract has a present value cost (2009) of £3.4 billion. Of this total, the widening of the initial sections has a present value construction cost of £900 million and delivers £2.3 billion present value benefits. However, the nominal contract value over the 30-year contract period is £6.2 billion.

==The Contracting Authority (Public Party)==

The Contracting Authority is the Regulatory authority Highways Agency. The project is included in the PFI Programme.

==The Concessioner (Private Party)==

Connect Plus, a consortium of Skanska, Balfour Beatty, Atkins and Egis Projects, was formed to deliver the contract services on behalf of the Highways Agency. Within the PFI contract, Balfour Beatty and Skanska share 50% each for the Construction Joint Venture; whereas for the O&M Joint Venture, Balfour Beatty holds 52.5% of the contract, whilst Atkins and Egis share 32.5% and 15%, respectively.

[[Image:London1.png]] 
''Figure 2: Organisations involved in the contract''

==Sources of Financing==

The financing structure of the project consisted of commercial bank debt provided by a 16-bank club deal for £700 million, EIB credits for £400 million and shareholder equity for £200 million. Part of the EIB participation was backed by an additional commercial bank facility for £215 million provided as EIB guarantees, whilst the remaining £185 million consisted of EIB structured finance facility.

In total, there were £1.1 billion senior debt loan facilities, which represented about 85% of the total financing.

==Users==

The project users are private and commercial user/vehicles. The primary aims of the project, in the view of users, were to (Highways Agency, 2012):

* Allow traffic to flow more smoothly, resulting in fewer accidents.
* See a noticeable reduction in road noise in most places immediately after completion and noticeable change in traffic noise levels over the long term due to the new lower-noise road surface.
* Provide improved drainage, resulting in better water quality and safer roads.
* Provide new modern "cut-off" lighting, which meets the level needed for a four-lane motorway while minimising the effect on adjacent properties.

==Key Purpose for PPP Model Selection==

From the Contacting Authority’s point of view, the main purposes for the use of PFI contract were to:

* Relieve congestion and improve reliability through securing a private sector partner to widen the M25.
* Get value for money from private participation and best outcomes in terms of use of public funds.
* Obtain financing at market rates during the difficult financing conditions in early 2009.

The Agency considered that a single private finance contract would be advantageous for the construction and the operation of the M25, because, during:

* Construction – contractors could achieve efficiency by using the same arrangements, such as appointing subcontractors for all sections and learn lessons for later sections. A single private finance contract could also reduce the risk of delays on earlier contracts causing delays on later contracts (reduction of interface risk).
* Operation – a single company responsible for the M25 would have easier interactions with third parties such as the emergency services, and the opportunity to make operating efficiencies.

==Project Timing==

According to the House of Commons (2011), the UK Government commissioned consultants to produce a long-term sustainable strategy for tackling congestion on the M25 in 2000. The Government announced its intention to proceed with widening in July 2003 and the Highway Agency’s initial 2004 timetable anticipated construction starting in May 2007. This was subsequently revised to May 2008, following consultation with industry and a decision to widen the motorway using private finance. In May 2009, nine years after the start of the project, the Highways Agency signed a 30-year private finance contract with “Connect Plus” for widening two sections of the M25 motorway, and maintaining the entire 125 mile length of the motorway, including the Dartford Crossing, and 125 miles of connecting roads and motorways. The timescales of construction of the project are listed in Table 1:

''Table 1: Construction timescales'' 
{| class="wikitable"
|-
! '''Activity'''
! '''Date'''
|-
| Publish Environmental Statement
| Autumn 2010
|-
| Site clearance
| From September 2012
|-
| Installation of new concrete barrier in central reservation
| Late 2012
|-
| Start of Works
| May 2013
|-
| Completion of work to upgrade the Central Reservation Barrier
| Mid-July 2013
|-
| Completion of Traffic Management Switch
| Early August 2013
|-
| Installation of first new Gantry
| Mid-September 2013
|-
| Completion
| 30 April 2014
|}
''Source: Highways England (2010)''

==Project Locality and Market Geography==

The M25 project forms a boundary with the Greater London Authority. The M25 is a vital route for freight, commuter and tourist traffic. Linking with the M2 and M20, it provides a gateway to and from the continent via Eurotunnel and Dover.

The London Orbital Multi Model Study (ORBIT), published in 2002, was tasked with addressing the problems of the M25 motorway and the orbital transport corridor around London. The study concluded that if current trends were to continue, traffic levels would increase and all users, including those essential to the economy, would suffer increasing congestion and unreliable journey times. The ORBIT report recommended that most of the dual 3 lane sections of the M25 should generally be widened to dual 4 lanes (Highways England, 2010).

==Procurement & Contractual Structure==

===Tendering===

The Agency ran a generally effective and competitive procurement for the widening tender advertised in 2005. There was, however, some slippage in the time schedule (National Audit Office 2010). The tendering was carried out in a two stage procedure, with 5 bidders submitting tenders in the first stage, shortlisted to 3 bidders during the negotiation phase.

The Agency prequalified five potential bidders, and then reduced these to the following three consortia in October 2006:

* ALF – Amey, Laing O’Rourke and FerrovialAgroman;
* Connect Plus – Balfour Beatty, Skanska, Atkins, and Egis; and
* FLOW – Vinci, Laing Roads, Carillion, and Costain.

The Agency selected Connect Plus as Provisional Preferred Bidder (announced in May 2008). The duration of the project assignment procedure was 42 months (from contract advertisement in November 2005 to award in May 2009).

===Contract Structure===

The contract structure was based on the availability model, with active management. The Private Provision of the contract consisted of:

* Design
* Build/ construct
* Operate/ Manage
* Maintain

The Public Authority Provision (activities not transferred) of the contract consisted of, Design and Finance. The contract included renegotiation clauses but no guarantees. There is a contract review clause, as an alternative to termination, allowing the Agency to renegotiate the contract if it radically changes its requirements.

===Risk Allocation===

The risk allocation scheme is depicted in Figure 3.

[[Image:London2.png]] 
''Figure 3: Risk allocation''

===Performance===

Performance indicators were explicitly mentioned in the contract and are related to (Highways Agency 2012; Nick Harding 2007):

* Lane Availability
* Route Performance
* Condition Criteria
* Safety Performance
* Proactive Management

With regard to achieving project goals:

* Reliability was improved fully in line with expectations or even more.
* Availability was fully in line with expectations or even more.
* Maintenance costs are fully in line with expectations.
* Safety was improved fully in line with expectations or even more.
* Security incidents are within expected range.
* User Satisfaction: More than 50% of end users are satisfied.

The project was completed on time and within budget. However, there are some criticisms about the initial delays from project inception (in 2000) to contract signing (in 2009). According to the House of Commons (2011), the initial project delays exposed the project to the 2008 credit crisis, resulting in further delays and higher financing costs. These costs were attributed to changes of design standards generating impact on investment costs. Finally, actual traffic and revenues are in line with forecast, while network usage has increased after the project implementation.

==Project Outcomes==

The general level of the project's perceived success is high, particularly with regard to reduction in congestion and improvements in safety standards. In addition, travel cost and reliability improvements are fully in line with or have exceeded expectations. Finally, the project has also resulted in less pollution and other environmental impacts (e.g. reduction in noise levels).

==References==

* Briggs, A. and Drewett, D. (2007). Contribution of PPP to enhance transport infrastructure – the UK experience. Highways Agency
* Highways Agency (2012). DBFO Background contract information
* Highways England, (2011), M-25, Available via: http://www.highways.gov.uk/our-road-network/our-network/key-roads/m25/
* House of Commons (2011). M25 Private Finance Contract. Committee of Public Accounts, Nineteenth Report of Session 2010–11. The Stationary Office Limited, London. Available via: http://www.publications.parliament.uk/pa/cm201011/cmselect/cmpubacc/651/651.pdf
* National Audit Office (2010). Procurement of the M25private finance contract. Highways Agency
* Nick Harding (2007): Performance Measures in PPP Contracts. Presentation at TRB Third International Conference on Performance Measurement
* Press articles.
* www.connectplusm25.co.uk/

Case Studies: Sá Carneiro Airport Expansion, Portugal

2016-10-11T12:03:51Z

Nimda: Created page with "{{Infobox |header1 = Sá Carneiro Airport Expansion, Portugal |header2 = |label2 = Project Type: |data2 = Brownfield |header3 = |label3 = Type of Project Financing: |data3..."

{{Infobox
|header1 = Sá Carneiro Airport Expansion, Portugal
|header2 =
|label2 = Project Type:
|data2 = Brownfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = Originally foreseen 3 years for the respective bundle of contracts
|header5 =
|label5 = Budget:
|data5 = EUR 308M
|title = Project Overview
|image =
|caption =
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1999:
| data1 = project conceived
| label2= 2000:
| data2 = contract for detailed design and technical assistance to construction
| label3= 1999:
| data3 = construction begins
| label4= 2002:
| data4 = baggage terminal completed
| label5= 2002:
| data5 = access roadworks completed
| label6= 2002:
| data6 = fire station completed
| label7= 2004:
| data7 = capacity expansion for the 2004 UEFA European Championship
| label8= 2006:
| data8 = platform renewal completed

}}
}}

==Introduction==

The SáCarneiro airport is located in Porto, the second metropolitan area of Portugal. It was built in 1945, became international in the mid-1950s, and underwent several expansions. In 1999, a three-stage masterplan was put forward as a strategic development roadmap. The 1999 expansion corresponds to the first stage of that masterplan. The stage aims to support an increase in capacity up to 6 MPA (million passengers per year), double the operational area capacity, and thoroughly renew the terminal.

With respect to the airside, the 1999 project included a new layout for the platform, the renewal of the runway and the taxiways, the introduction of 35 new aircraft parking positions, and a new fuel supply network. On the landside, the project included separate curbsides for departures and arrivals; new connections to the sewage network; the remodeling of the existing parking area; the construction of a new underground parking; improvement of road access, and a connection to the metro network. The terminal renewal included new departures and arrivals halls, new check-in desks, a major remodelling of the boarding and disembarking flows into two levels, as well as the installation of a pier along the front of the terminal, serving nine parking slots and served by nine jet bridges.

This project was conceived and procured by ANA, the (then) public company that holds the responsibility for all Portuguese airports, as a series of 65 public works and goods and services purchase contracts awarded directly and through competitions. The project suffered long delays and cost overruns, having been awarded in 2000, and delivered in 2007, 4 years later than planned. The airport was operational throughout construction.

The new terminal building won the 2007 European Steel Design Award for Portugal, and the airport has been voted by passengers as the best European airport in 2007 for the ACI International Award, while it has been between the top three between 2006 and 2011.

==The Contracting Authority (Public Party)==

ANA is the airport infrastructure manager in Portugal, operating the national airports. It was a public company when the Sá Carneiro airport expansion project was procured and built, but recently, in 2013, it was concessioned to Vinci for a 50 year period.

As manager of the Portuguese airports, ANA was responsible for the establishment, management and development of airport infrastructure in Portugal. Implementing the strategic development plan of the Sá Carneiro Airport was their responsibility.

Because it was a public company with exclusively public capital, ANA was subject to public procurement laws.

The new design was subject to national and international standards and regulations. Supervision and enforcement of national regulations is the responsibility of INAC, the civil aviation regulator.

The design was mostly carried out by the contracting authority ANA. Some detailed design was contracted out (structural, water/drainage, gas, electrical, mechanical, and security) to the following companies: AF – Armando Fialho, TalProjecto, ENGIDRO, EACE, Eng. Rodrigues Gomes e Associados.

Construction, services and equipment were contracted to the following companies: A. Cavaco, ABB, ACF, Adrianos, Alves Ribeiro, Bento Pedroso, Abrantina, CDL, Comelmada, Edifer, EDP, Efacec, Engil, Fernando Gaspar, Geopesquisa, Letratec, Mota-Engil, Movex,OFM, Siemens, SIMI, Sinal Impar, Sistavac, Soares da Costa, Soletop, Somague, Sotécnica, Teixeira Duarte, ThyssenElevatec, ThyssenKrupp, Zagope.

Other companies and institutions were involved as consultants (Schipol and NACO), managers and supervisors (GAPOBRA, GPA, PLANEGE, SOGECINCO, AFAPLAN), inspectors (CONUGAL/FASE), auditors (IOAT, European Court of Auditors, General Finance Auditor and Ernest&Young), and evaluators (National Laboratory of Civil Engineering, CONSULPAV, Bureau Veritas – RINAVE).

==Sources of Financing==

The financing was based on ANA’s own funds (42,8%), EU ERDF funds (6,1%), EIB loan (41,3%) and other loans (9,8%). The airport expansion was part of TEN-T’s Priority Project 8 - Multimodal axis Portugal/Spain-rest of Europe. The III Community Support Framework report for Portugal included the Sá Carneiro Airport expansion as a funded project (24,9 million euros from the European Regional Development Fund).

==Users==

Airlines and business developers looking to establish themselves at the airport (including commerce and cargo operators) are the users of the airport. Air transport passengers are also users, although they are not charged directly for the use of the airport. The main stakeholders identified for this project are ANA, the airport operator, the airlines flying to the airport, the businesses established at the airport, local public transport companies, local taxi associations, the local government / municipality, population residing near the airport (subject to noise), the local environmental associations, and airport handling companies.

==Key Purpose for Public Financing Model Selection==

For this project, ANA did not choose private co-finance. As airport operators, they contracted out construction, as that is not their vocation. They were able to finance the project partially with own funds, partially with loans, and with some ERDF contribution. More recently, ANA was the object of a PPP awarded to Vinci for 50 years, for the operation of all Portuguese airports.

==Project Timing==

The airport was built in 1945, under a different name – Pedras Rubras. In the mid-1950s, it became international following a runway extension to 2400m. During the 1970s, the runway was extended again to 3480m. In 1990, there were major remodelling works, with a new terminal building, new access roads, new parking in the platform, a freight terminal and additional technical buildings for air traffic control. With 1990 renewals, the airport was renamed Sá Carneiro. However, by the end of the decade, at 3 MPA, there were already severe capacity constraints affecting airport performance and its ability to grow. There were too few check-in desks and boarding gates, the baggage handling system did not have enough capacity, there was a shortage of parking, the platform layout was not optimized, the terminal layout was too limited and could not accommodate commercial area demands, and the single curbside access was congested. Facing these challenges, the airport operator brought in a consultant – Schiphol Project Consult – to devise a strategic development plan. In 1999, that plan, which covered marketing, business, land-use and infrastructure, and environment, was put forward as a three-stage masterplan for the airport. The 1999 expansion of the Sá Carneiro airport is the first stage of that masterplan for the airport. Further stages of the masterplan support future traffic growth for the airport.

==Project Locality and Market Geography==

As mentioned before, Porto is the second metropolitan area of Portugal, with a population of 3,7 million inhabitants, and an increasing population density of about 1580 inhabitants per square km. It has recently become a popular tourist destination listed in many top rankings for city break destinations in Europe. Tourism is one of the forces driving air traffic growth.

Although it is the only airport in the city of Porto, the Sá Carneiro airport is in direct competition with other airports in the region. There is competition for air routes with the Lisbon airport, and the Galician airports in Spain (Vigo, Santiago de Compostela, Coruña).

==Procurement & Contractual Structure==

65 contracts were involved, most related to construction, design, and construction coordination. There were also several contracts for systems and equipment.

===Tendering===

More than half of the contracts were directly awarded (54%), however these only represent 11% of the total value contracted. 87% of the total value of the construction was awarded using a public tender. Very few contracts were awarded using limited or negotiated procedures (a total of 7 representing 11% of construction value).

The main reason for using direct award procedures was the urgency due to the traffic peak generated by the UEFA championship EURO 2004. Additionally, 5 public tenders were cancelled with the exclusion of all bidders due to irregular and incomplete proposals, or because all bids were considerably higher than requested. Most of the direct awards were carried out after approaching only one company.

The most important award criteria for public tenders were price and deadline, which contrasts with what actually happened in terms of delays and cost overruns.

Open calls used as award criteria price (from 30 to 60%), deadline (from 13 to 35%), quality and quality control (5 to 40%), and technical support to equipment (30 to 40%).

Restricted calls used lowest price by NPV calculation as the sole award criterion.

Negotiated procedures used price (55%), quality (5%) and equipment (40%) as award criteria.

Direct award procedures used lowest price by NPV calculation as the award criterion, and, in three cases, a 15% to 20% weight on quality.

===Contract Structure===

The contracts followed three main pricing models – lump sum, fixed price and rental – but no official standards were used. The Court of Auditors concluded that lump sum contracts were not adequate for the project, and that unit cost should have been adopted. The Court mentions a particular contract that was tendered without detailed measurements and still used a lump sum model.

===Risk Allocation===

As designer and operator, financer and borrower of bank money, and contracting authority of the construction, equipment and rental contracts, ANA took the bulk of the risks associated with the expansion project, as depicted in Figure 1.

[[Image:Carneiro.png]] 
''Figure 1: Risk allocation''

===Performance===

Works inspection for the contracting authority was very satisfactory: 53% of contracts were considered to have performed at an excellent quality level, 29% were considered reasonable, and for 12% there were some issues.

With respect to cost, the project did not perform well: initial budget was EUR 308,2M; final cost was EUR406,9M; the cost overrun was of EUR98,8M, representing 32% of the original budget. This can be attributed to several reasons. Award value was 5% higher than budgeted. The contracting authority had to compensate several contractors for construction suspensions, construction delay, situations that hindered the works and constraints due to the terminal building construction. Claims for additional works were made, and after independent inspection, the contracting authority paid for them. Project changes, namely to deal with the Euro 2004 traffic peak, generated additional costs and required additional contracts. Pricing reviews also caused substantial cost overruns.

The UEFA Euro 2004 championship was awarded to Portugal after the project was underway. To be able to process the peak in demand, some changes were made to the project. These changes were to be in effect temporarily, throughout 2004, and then the project would return to the original design. The Euro 2004 capacity expansion required stopping some of the construction works for the duration of the championship. The latter also generated claims from other contractors involved in the project.

With respect to deadlines, the project did not perform well. There was a 10 month delay in the beginning of works because the environmental impact study was found non-compliant. Contracts were already being awarded at that time, and awards had to be stopped until a new study was submitted and an environmental impact declaration was issued. The final delivery of construction was 4 years later than planned. Even though the project was operating throughout construction, this delay had significant impacts. This delay can be attributed to several reasons. The imposition of level 3 alert after 9/11 made the areas around the pipeline off-limits to construction crews. Construction in those areas was thus delayed. The large number of bids for the terminal building contract, the tender suspension due to delays in obtaining the environmental impact declaration, and bidders’ claims to European courts, caused a delay of about 18 months. The temporary changes and constraints to the project due to the UEFA Euro 2004 championship required stopping some of the construction works for the duration of the championship. Finally, there were operational difficulties in providing construction site space for the contractors in the operating airport, especially since other entities were operating using airport space (customs, handling companies, restaurants and others).

Project coordination problems were also considered a critical factor in this project. There were difficulties in project management and supervision, which could have been accounted for in such a complex project. These were eventually solved after the project governance was changed from a task force model to a central management and coordination body within the contracting authority. Nevertheless, this solution came only 3 years after construction began.

With respect to traffic and revenues, the project has been performing well. In 2007, the traffic goal was 5MPA by 2010. Actual traffic in 2010 was 5,3MPA (6% higher than expected). Traffic is still growing since then – in 2014 it was 6,4 MPA.

==Project Outcomes==

The main purpose for the contracting authority was to increase capacity to be able to attract further demand – this goal seems to have been successfully achieved.

The Court of Auditors considers the project had a positive impact: the project made the Sá Carneiro airport a reference airport in the northwest of the Iberian Peninsula, allowed for a higher passenger satisfaction, generated international recognition for service quality, improved the region’s economy, positioned the metropolitan area of Porto as a European/World city, and promoted direct and indirect activities, such as the creation of jobs.

Despite the positive impact, the project’s delays and cost overruns make it less successful from a project management perspective.

==References==

* INAC (2010). Evolução do Transporte Aéreo no Aeroporto Francisco Sá Carneiro 1990-2009. Civil aviationinstitutereport, August 2010. ISBN 978.989.95680-9-9
* Tribunal de Contas (2009). Ampliação do Aeroporto Francisco Sá Carneiro. Auditoria temática às derrapagens em obras públicas. Quarto Relatório Vertical. Court of Auditor’s report nr. 06/2009 AUDIT. http://www.tcontas.pt/pt/actos/rel_auditoria/2009/audit-dgtc-rel006-2009-2s.pdf

Case Studies: “Slavyanka” Roads, Russian Federation

2016-10-11T11:07:00Z

Nimda:

{{Infobox
|header1 = Roads in the residential area “Slavyanka” (Pushkin District of St. Petersburg), Russian Federation
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public-Private Partnership (PPP)
|header4 =
|label4 = Contract duration:
|data4 = 12 years (including construction period – 2years)
|header5 =
|label5 = Budget:
|data5 = 1.6 billion rubles
|title = Project Overview
|image = [[Image:Slav.png|300px]]
|caption = ''Figure 1: Slavyanka Roads ''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= June 9, 2012:
| data1 = Publication of tender notice
| label2= August 17, 2012:
| data2 = Prequalification bids
| label3= August 20, 2012:
| data3 = Prequalification results
| label4= October 10, 2012:
| data4 = Award of the PPP agreement on construction and maintenance of roads in the residential area “Slavyanka”.
| label5= January 24, 2014:
| data5 = Start of operation.

}}
}}

==Introduction==

The project comprises the construction and operation of roads with a total length of 7.7 km in the residential area “Slavyanka”, in the Pushkin District of St. Petersburg.

The aim of the PPP project is to ensure the transport accessibility of the new residential district “Slavyanka” of the Pushkin District of St. Petersburg by the construction of free public roads and organization of their maintenance in accordance with a Public-Private Partnership agreement in accordance with the Law № 627-100 “On Participation of St. Petersburg in Public-Private Partnerships”.

Under the PPP agreement, the private partner is obliged to design and build the roads using equity and debt and to maintain the roads during a 10 year period, transferring the object of the agreement to the public partner under the contract of sale, including instalment payments for St. Petersburg.

The road consists of 12 road sections each of which is a standard public road with a different length as depicted in Table 1.

Table 1: Key characteristics of roads under contract 
{| class="wikitable"
|-
! Road facility
! Name
! Length
! Number of traffic lanes
|-
| Road facility 1
| Severskaya St.
| 817 m
| Minimum 4
|-
| Road facility 2
| Turovskaya St.
| 297 m
| Minimum 4
|-
| Road facility 3
| Izborskaya St.
| 297 m
| Minimum 4
|-
| Road facility 4
| Polotskaya St.(from Kolpinsky Highway to Ring)
| 404 m
| Minimum 4
|-
| Road facility 5
| Polotskaya St.(from Ring to Passage 2)
| 601 m
| Minimum 4
|-
| Road facility 6
| Rostovskaya St.(from Severskaya St. to Ring)
| 471 m
| Minimum 4
|-
| Road facility 7
| Rostovskaya St.(from Small Ring to Big Ring)
| 422 m
| Minimum 4
|-
| Road facility 8
| Rostovskaya St.(from Ring to Galitskaya St.)
| 498 m
| Minimum 2
|-
| Road facility 9
| Galitskaya St.
| 682 m
| Minimum 2
|-
| Road facility 10
| Big Ring
| 1190 m
| Minimum 3
|-
| Road facility 11
| Small Ring
| 507 m
| Minimum 3
|-
| Road facility 12
| Passage 2
| 1553 m
| Minimum 2
|}

Other related road infrastructure should also be provided, such as public transport stations, regulated and not regulated pedestrian crossings and junctions, sidewalks and lawns, and a system of modern and energy-efficient street lighting.

The project feature is that it is not a unique or complicated project, but it can serve as an example of the creation of regional and municipal free public roads. Currently, the roads in the residential area “Slavyanka” have been built and are in operation.

==The Contracting Authority (Public Party)==

The authority authorised to sign and fulfil the conditions of the PPP agreement on behalf of the city of St. Petersburg is the Government of St. Petersburg.

The organizer of the tender for the conclusion of the PPP agreement is also the Government of St. Petersburg. Interactions between the competition organizer and the participants of the tender and other stakeholders, including exchange of documents, are carried out through the Investment Committee of Saint-Petersburg acting on behalf of the Government of St. Petersburg. Control for fulfilment of the conditions of the agreement before commissioning of the roads is the responsibility of the Construction Committee, and after commissioning, that of the Administration of the Pushkin District. The Committee on City Property Management signs a lease agreement with the private partner.

==The Concessioner (Private Party)==

The private partner is the company “SlavDorService” Ltd. – a subsidiary company of the “Baltros” company group, which is one of the biggest developers and construction companies of the Northwest region of the Russian Federation and also the developer of the residential area “Slavyanka”. The main activity of the company is integrated development for housing construction.

“SlavDorService” Ltd. is 99% owned by “DSK Slavyansky” Ltd. and 1% - by “Zanevsky” Ltd. “SlavDorService” Ltd., as well as “DSK Slavyansky” Ltd. are included in the company group “Baltros”.

The company “SlavDorService” Ltd. was created especially for the purpose of roads construction in “Slavyanka” of the Pushkin District of St. Petersburg.

==Users==

The users –are the general public, legal entities and individuals having the right to use public roads in accordance with the legislation of the Russian Federation on the roads and roads activities.

The main aim of the use of roads is ensuring the accessibility of the residential area “Slavyanka”.

==Key Purpose for PPP Model Selection==

Value for money was the main driver for adoption of the PPP solution.

==Project Locality and Market Geography==

The roads with the total length of 7.7 km are located in the territory of the residential area “Slavyanka” of the Pushkin District of St. Petersburg.

The residential area “Slavyanka” situated in the south of St. Petersburg in the municipal district Shushary is one of the biggest projects of the integrated development of territory in the Russian Federation. It includes 135 apartment buildings constructed in a land of 220 ha, while the planned population of the area is 40-50 thousand inhabitants. Thereby, the roads built are very important primarily at the local level, since they provide convenient and high-quality access for the inhabitants of the municipal district Shushary.

==Procurement & Contractual Structure==

===Tendering===

The bids of participants during the tender procedure for the PPP agreement on construction and maintenance of the roads in the residential area “Slavyanka” were evaluated based on the following criteria:

* The size of principal payment for the entire object of the agreement (maximum – 1,76 billion rubles). Weight– 0,80.
* Construction period of the object of the agreement (maximum – 730 days). Weight – 0,10.
* The size of compensation of the maintenance costs by a participant as a percentage of regulatory costs for maintenance (maximum – 100%). Weight – 0,10.
* The size of rental fee for the land (minimum – 156000 rubles per quarter).
* The extent of implementation by a participant of conditions on the use of land.

Three companies, “SlavDorServise” Ltd., “NSK-Monolit” Ltd. and “General Construction Corporation” JST applied for participation in the competition. But only two companies, “SlavDorServise” Ltd., and “NSK-Monolit” Ltd. continued to participate in the tender, since the third company “General Construction Corporation” JST did not pass the pre-selection having not met the requirements of the tender documentation.

The contract was awarded to "SlavDorServis" Ltd., which presented the best bid with the highest rent amount (160 thousand rubles per quarter).

===Contract Structure===

The terms of the agreement of the 12-years PPP contract included:

* Construction period – 14 months;
* Operation period – 10 years;
* Term of signing of sale contract – not later than 3 months after the start of operation of the roads or after the date of state registration of the ownership of the private partner;

Legal framework of the agreement:

* St. Petersburg Law No. 627-100 “On St. Petersburg’s Participation in Public-Private Partnerships”, 25.12.2006
* St. Petersburg City Government Decision No. 346 “On Measures for the Development of Public-Private Partnerships in St. Petersburg”, 31.03.2009
* St. Petersburg City Government Decision No. 347 “On Measures to Realize Law No. 627-100”, 31.03.2009
* Decree of the Government of St. Petersburg No. 673 “On the Conclusion of PPP Agreement on the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin District of St. Petersburg and the Lease Contract of Land for Construction”, 02.07.2013
* Decree of the Government of St. Petersburg No. 672 “On the Form of Participation of St. Petersburg in Public-Private Partnerships", 02.07.2013

The contract is a Design Build Finance Maintain (DBFM) type. St. Petersburg provides the private partner the land for construction and operation of roads, the property right of which belongs to the private partner during the period determined in the agreement, after which the partner transfers the roads to the ownership of St. Petersburg and maintains them during the entire period of the agreement.

The city will pay the private partner the principal payment in equal instalments during the period of maintenance, including interest rate on instalments, and also compensate the maintenance costs of the private partner (availability fee).

The private partner bears all the costs and expenses related to the fulfilment of obligations regarding the construction and maintenance of the roads. The public partner has the obligation to pay the principal payment and compensate the maintenance costs of the private partner, which are provided in the agreement. In the case of non-fulfilment or improper implementation of the obligation by the private partner, the sum of compensation of the maintenance costs is reduced.

The total amount of financing from the part of the private partner in the project is 1.1 billion rubles, in addition:

* The interest rate for instalment payment is 12%;
* The Redemption price of roads is 1,18 billion rubles:
* Road facility 1 – 174,9 million rubles
* Road facility 2 – 58,6 million rubles
* Road facility 3 – 65,5 million rubles
* Road facility 4 – 83 million rubles
* Road facility 5 – 90,5 million rubles
* Road facility 6 – 107,6 million rubles
* Road facility 7 – 95 million rubles
* Road facility 8 – 63,3 million rubles
* Road facility 9 – 76,9million rubles
* Road facility 10 – 194,4million rubles
* Road facility 11 – 84,5million rubles
* Road facility 12 – 95,2million rubles

The size of government expenditure on the maintenance of the roads is 98% of the regulatory costs for maintenance.

===Risk Allocation===

Risks taken by the Government:

* underfunding of the government obligations;
* changes of the project on the initiative of the Government,
* town-planning constraints,
* failure to provide land plots,
* archaeological finds.

Shared risks:

* inflation,
* problems with permits,
* detection of communications, impeding the implementation of the project,
* delay of operation due to the illegal actions of the authorities of St. Petersburg,
* environmental risks,
* changes in legislation,
* invalidity of contracts for the project,
* force majeure

The risk allocation is depicted in Figure 2.

[[Image:Slav1.png]] 
''Figure 2: Risk allocation''

===Performance===

The project reached its goals and ensured the accessibility of the new residential district “Slavyanka” of the Pushkin District of St. Petersburg.

The PPP agreement did not contain specific operational performance requirements. These requirements were included in a bidding documentation. Penalties against the compensation of maintenance costs were included for insufficient performance.

With respect to Construction Management performance, the project was delivered on time, to budget and with minimum disturbance to the local environment.

==References==

* Decree of the Government of St. Petersburg No. 361 “On Granting of Subsidies in 2015 for Maintenance and Repair of Road Facilities in Accordance with the PPP Agreement on the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin District of St. Petersburg”, 22.04.2015.
* Decree of the Government of St. Petersburg No. 672 “On the Form of Participation of St. Petersburg in Public-Private Partnerships", 02.07.2013Decree of the Government of St. Petersburg No. 673 “On the Conclusion of PPP Agreement on the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin District of St. Petersburg and the Lease Contract of Land for Construction”, 02.07.2013
* Decree of the Government of St. Petersburg No. 908 “On Approval of the Additional Agreement No. 2 to the PPP Agreement of the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin district of St. Petersburg”, 25.09.2014
* PPP: the experience of St. Petersburg. Monthly informational and analytical magazine "Highways".http://archive.izdatelstvo-dorogi.ru/2012-11-01/platdorogi/gchp.html
* Roads and schools in the "Slavyanka" on the base of PPP will be built by "SlavDorServis" http://www.dormost.spb.ru/enews/view/2028

Case Studies: Western High-Speed Diameter (WHSD), Russian Federation

2016-10-11T10:54:32Z

Nimda:

{{Infobox
|header1 = Western High-Speed Diameter (WHSD), Russian Federation
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public-Private Partnership (PPP) BOOT
|header4 =
|label4 = Contract duration:
|data4 = 30 years
|header5 =
|label5 = Budget:
|data5 = 120 bln. Rubles
|title = Project Overview
|image = [[Image:Western.png|300px]]
|caption = ''Figure 1: Figure 1: Western High-Speed Diameter toll road ''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 7 February 2011:
| data1 = Call for tender
| label2= 9 August 2011:
| data2 = Procurement process concluded
| label3= 23 December 2011:
| data3 = LLC “Northern Capital Highway”, OJSC “Western High-Speed Diameter” and the Government of St. Petersburg sighed the PPP agreement
| label4= 20 December 2012:
| data4 = Financial close and renewed PPP agreement were signed in Mosco
| label5= March 2013:
| data5 = Start of construction
| label6= 2016:
| data6 = Expected start of operation

}}
}}

==Introduction==

The Western High-Speed Diameter (WHSD), the first urban high-speed toll road in the Russian Federation, is a modern high-speed urban highway being built in St. Petersburg. The investment project of international significance is aimed at:

* providing the transport connection between the north-western, the central and southern parts of the city;
* solving the problem of transport isolation of the Vasilievsky Island from other parts of St. Petersburg, including the period when the existing road bridges are open;
* relieving the transport road network of St. Petersburg, including the central part of the city being under UNESCO protection;
* improving the environmental conditions in St. Petersburg by relieving the city roads;
* partially solving seasonable road congestion problems at the exit from the city to recreational areas;
* transferring the transit traffic flows to the new highway, that will significantly increase the capacity of the road network of the city, relieve transport congestion in the historic centre of St. Petersburg and improve the environmental conditions;
* increase of turnover of the Seaport of St. Petersburg.

The project realization determines:

* the dynamics of socio-economic development of the city;
* competitiveness;
* the investment attractiveness of Saint-Petersburg;

The Contract was signed between the City of St. Petersburg, OJSC “Western High-Speed Diameter” and “Northern Capital Highway” on the 23th of December, 2011, in accordance with St. Petersburg Regional Law № 627-100 “On Participation of St. Petersburg in Public-Private Partnerships”.

The object of the PPP project is the toll road “Western High-Speed Diameter” (hereinafter – Toll Road), which includes three parts:

* North part;
* Central part;
* South part.

The Toll Road Technical Parameters are:

* Length : 46,6 km
* On land : 19,3 km
* In an open cut : 2,7 km
* On engineering structures :24,6 km
* Number of transport interchanges :15
* Number of lanes : 4-8
* Maximum permissible speed :110 km/hour

==The Contracting Authority (Public Party)==

St. Petersburg and OJSC “Western High-Speed Diameter” appear as a public partner in the project. The former is the initiator of the project and the owner of the object after the completion of the PPP agreement.

Under the PPP Agreement, the city Government is obliged to provide the land to the private partner, fulfil preconstruction works, such as rerouting or removal of the existing engineering networks, territory cleaning and carrying out measures for protection of the environment, provide capital grant for private partner, lease out the object of agreement for a long-term and provide minimal guaranteed income and compensation in case of cancellation of the agreement.

OJSC “Western High-Speed Diameter” is responsible for organization of the tender and acts on behalf of the city.

==The Concessioner (Private Party)==

The Limited liability company “Northern Capital Highway” (NCH) is a SPV company created on March, 14th 2011 on the purpose of realization of the PPP project initiated by the city government. The consortium consists of VTB Capital, Gazprom Bank, Astaldi (Italy), IçtaşInşaat (Turkey) (construction contractors) and Mega YapiInşsaatve Ticaret (Turkey) as a technical consultant.

NCH is obliged to finance, build the Central part of the highway and operate the highway for 30 years.

Debt funding equals 49% of the total funding and is provided by the group of different financial organizations such as commercial (investment) banks (VTB Capital, Gazprombank – 28%), international financial organizations (EBRR, Eurasian Development Bank – 30%) and development institutions (Vnesheconombank – 42%). Equity financing is 7%.

==Users==

WHSD is a toll road aimed at relieving the city road network by increasing its traffic capacity by up to 120 000 vehicles per day and provide the transport connection between the north-western, the central and southern regions of the city.

The major users of the highway are citizens and visitors of the city who drive motor cars, bus drivers and truck transport. The vehicles are divided into four categories according to their size. Toll charges differ between categories and depend on traffic and time of day. Also, there is a discount system for frequent users (10%, 15% or 20%).

There are three payment options:

1. Transponder

The most convenient way to pay a fee as drivers are charged automatically with the help of the electronic gadget placed on the wind screen. The use of transponder allows the user to get the discount of 25% or 15% depending on the chosen tariff.

2. Contactless smart card

The smart-card can be either personalized or not, topped up online.

3. Cash or credit card

==Key Purpose for PPP Model Selection==

The contract was signed between the Government of St. Petersburg, ZSD and the SPV NCH in accordance with St. Petersburg Regional Law on PPP. ZSD Company takes part as it was already responsible for constructing the North and South parts of the highway. It represents the city interests in the scheme. The purpose of the Agreement is, firstly, to raise money that are not public, secondly, to construct the object and, thirdly, operate it. These functions that were addressed to private partner defined the model of BOOT.

==Project Timing==

The key city`s reasons for project initiation are the lack of transport provision of the city and the need of relieving the transport road network. From the city government’s perspective, this will boost socio-economic development of the city, increase competitiveness and investment attractiveness.

==Project Locality and Market Geography==

The total length of the highway is 46.6 km. The Central part, which is being constructed under the PPP Agreement, is of 11 km length. The road goes from the river Ekateringofka bank to the right bank of the river Big Nevka.

From the city economic prospective, the highway allows the increase of cargo turn-over by improving the access to the port, improves transport accessibility to seaport passengers, boosts traffic capacity up to 120 000 vehicles per day, ultimately enhancing the city development as a touristic centre, providing workplaces and improving economic activity of the population.

On the federal level, the highway becomes a part of the transport corridor “North-South” by increasing traffic capacity, improving the level of federal indicator of physical distribution system effectiveness and providing conditions for increasing population mobility.

==Procurement & Contractual Structure==

===Tendering===

The tender organizer:

* OJSC “Western High-Speed Diameter”

The participants of the tender:

a) Ltd. “Baltic Concession Company “Magistral”

The Parties of the Consortium are:

⇒ CJSC “Terra Nova” (Russia) 
⇒ CJSC “Baltic Dredging” (Russia) 
⇒ AllgemeineBaugesellschaft A. PORR AG (Austria) 
⇒ Renaissance Construction Ltd. (Russia) 
⇒ Vinci Concessions SAS (France) 
⇒ JSC “Bridge Construction N19” (Russia) 
⇒ Jan de NulNV (Belgium) 
⇒ LTD “Sberbank Investments”(Russia) 

b) Limited Liability Company “Northern Capital Highway” (NCH)

The Parties of the Consortium are:

⇒ VTB Capital (Russia) 
⇒ Gazprombank (Russia) 
⇒ Astaldi (Italy) 
⇒ IçtaşInşaat (Turkey) 
⇒ Mega Yapi Inşsaat ve Ticaret (Turkey) 

c) Samsung C&T Corporation(South Korea)

Planned schedule of PPP tender:

07.02.2011 – publication of the notice about the tender
29.03.2011 - filing of applications for prequalification
12.04.2011 – prequalification stage
28.06.2011 – submission of tender proposals
29.07.2011 – assessment of tender proposals and determination of the winner of the tender
30.09.2011 - conduct of negotiations
20.12.2011 – signing of the PPP agreement

The requirements of prequalification:

I. Experience in construction of a toll road, the operation of which is started not earlier than 2000;

II. Experience in construction of a toll road in the framework of a project, which meets the following requirements:

* The project cost – not less than 10 billion rubles
* The length of the span of the bridge - not less than 160 m., the length of the vertical clearance - not less than 25 m.

III. Experience in attraction of funding not secured by state guarantees in the last 10 years for the project, the cost of which is not less than 10 billion rubles. The amount of attracted funding – not less than 7 billion rubles.

IV. Experience in participation in PPP projects, the total cost of which is not less than 10 billion rubles.

The proposals of the participants during the tender procedure were evaluated on the following criteria:

* Financial criteria. weight – 80%
* Legal criteria – weight 20%

===Contract Structure===

The three-party contract was signed between the city of Saint Petersburg, ZSD and CHN. The property rights on the road belong to ZSD. CHN possesses all the profits it gains from the operation of the road.

The St. Petersburg responsibilities are:

* To lease the land necessary for the construction to ZSD;
* To ensure the compliance of preconstruction works done in accordance with project documentation such as rerouting of utilities and facilities and of territory preparation including vacation of the land, compensatory payments and natural environment protection;
* Provide budget money according to the legislation in the manner and on the terms defined in the Agreement and in compliance with the project indicators including the amount of profits obtained from user charging;
* To pay an indemnity in amounts, manner and terms defined in the Agreement;
* To support the Agreement parties within its powers and according to the Agreement.

The ZSD responsibilities are:

* To build the North and South part of the highway;
* To operate the object of the Agreement on terms defined in the Agreement;
* To provide the NCH with an opportunity to operate in accordance with the Agreement on the land for building the Central part of the highway;
* To provide the right of use of project documentation to NCH;
* To finance a part of NCH spending on building of the object in amounts, manner and on terms defined in the Agreement;
* To make payments to NCH on operation stage in amounts and manner defined in the Agreement according to the tender proposal in order to provide service of money raised by the NCH
* To control the performance of NCH and make decisions on current project issues where necessary;
* To support the Agreement parties within its powers and according to the Agreement.

The NCH responsibilities are:

* To build the Central part of the highway;
* To raise money in amounts enough to meet commitment;
* To operate the road together with ZSD according to the terms of the Agreement.

The Private Partner is responsible for operating the highway and tolling. The fee is defined by the Private Partner within the limits set by the Public Partner. The agreement used by two parties is the scheme of minimal guaranteed income so that the city government represented as OAO “ZSD” is obliged to make fixed payments to the Private Partner as a guarantee of minimal income. In case of short delivery due to decrease in traffic level compared to forecasted, the city compensates the losses. In case of excess profits, the sum is divided between the Public and Private Partners in proportion of 90%/10%, correspondingly, according to the Agreement.

===Risk Allocation===

Saint Petersburg assumes:

* Risk of not obtaining the licenses in case of illegal delay of releasing licenses and illegal cancellation of the authorization;
* Risk of negative changes of legislation on cases defined in the Agreement.

ZSD assumes:

* Risk of drawbacks of the project documentation;
* Risk of delay of commissioning the Central part of the highway

NCH assumes:

* Financing risks;
* Common risk of getting licenses;
* Common construction risks including risks of construction organization, price and delays of construction;
* Operation risk including the risk of partial and total inaccessibility of the object of Agreement for users is distributed between ZSD and NCH.

Risk allocation is depicted in Figure 2.

[[Image:Western1.png]] 
''Figure 2: Risk allocation''

===Performance===

The project is still under the construction stage and will be delivered by 2016. There are no delays so far.

==References==

* Decree of the Government of St. Petersburg No. 106 “On the conclusion of PPP agreement on the construction and operation of the road “Western High Speed Diameter”, 11.02.2011
* http://fs.moex.com/f/1322/vtb-kapital.pdf
* http://www.nch-spb.com/
* http://www.pppinrussia.ru/userfiles/upload/files/ZSD_moya_pdf.pdf
* http://www.whsd.ru/pdf/info_mem_03-05.pdf

Case Studies: Orlovski Tunnel, Russian Federation

2016-10-11T10:00:07Z

Nimda:

{{Infobox
|header1 = ORLOVSKI TUNNEL (under the River Neva in St, Petersburg), Russian Federation
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = PPP
|header4 =
|label4 = Contract duration:
|data4 = 30 years (including 4 years of design and construction)
|header5 =
|label5 = Budget:
|data5 = 54 600 million rubles
|title = Project Overview
|image = [[Image:Orlovski.png|300px]]
|caption = ''Figure 1: Orlovski Tunnel ''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= September 14, 2007:
| data1 = Call for Tender
| label2= September 8-10, 2007:
| data2 = Road-show of the project in Frankfurt, at the office of the European Bank of Reconstruction and Development
| label3= December 6, 2007:
| data3 = Prequalification
| label4= February 18, 2010:
| data4 = Award
| label5= June, 2010:
| data5 = The concession agreement is signed between the Government of St. Petersburg and “Nevskaya Concession Company”
| label6= August, 2011:
| data6 = Start of construction
| label7= October 4, 2011:
| data7 = The authorities of St. Petersburg refused to participate in the project because of the significant increase of project costs (the cause is difficult terrain in the proposed site of construction)
| label8= November, 2012:
| data8 = Resolution of the Government of St. Petersburg on the cancellation of the agreement with the "Nevskaya Concession Company". The contract is cancelled.
| label9= December 11, 2012:
| data9 = The Government of St. Petersburg officially notified the "Nevskaya Concession Company" about the termination of the concession agreement for the design, construction and operation of the Orlovski Tunnel under the Neva River. The grounds for termination of the agreement is that the concessioner has not provided evidence to achieve financial closure, has not fulfilled the conditions of the start of construction and the cost of the project exceeded 55 billion rubles.
| label10= June, 2015:
| data10= Paris Arbitration ordered the Government of St. Petersburg to pay “Nevskaya Concession Company” compensation amounting to EUR 15 million for breach of the concession agreement.

}}
}}

==Introduction==

The Orlovski Tunnel was designed as a road tunnel of about one kilometre length under the Neva River, linking Piskarevsky Avenue and Smolnaya Embankment in St. Petersburg (Figure 2). The tunnel was to be tolled. Its key features included the following:

* 2 carriageways
* 3 lanes per carriageway
* Overall length 2350 m
* Portal to portal length: 1100 m
* River bank to bank length: 550 m
* Depth of river: 15 m
* Bored tunnel depth: 40 m

[[Image:Orlovski1.png]] 
''Figure 2: Project Location, St Petersburg''

The overall two-way capacity of the Orlovski Tunnel was to be 60 000 vehicles per day.
The construction of the Orlovski Tunnel was considered as the solution to the traffic problems of St. Petersburg. Its implementation would have contributed to the development of the city as a major international transport hub.

The decision to develop the Orlovski Tunnel project was driven by the following factors:

* congestion of the transport network in the city centre and the gravity zone of the Orlovski Tunnel,
* absence of a permanent transport connection between the right- and left-bank districts of St. Petersburg in the city centre,
* exhausted capacity of the existing Neva bridges,
* expected traffic increase throughout the city.

Moreover, the construction of the Orlovski Tunnel would have helped to address an issue of federal significance – to increase the capacity of the Volgo-Baltic Waterway (VBW). The tunnel would allow the draw bridges over the Neva River to be open for one hour longer, thus increasing the total ship traffic.

In accordance with the Decree of the Russian Government, the Orlovski Tunnel project had to be implemented using a Private-Public Partnership model .The construction and operation of the Orlovski Tunnel could become one of the first Russian transport infrastructure concessions, implemented in accordance with the Federal Law of the Russian Federation “On Concession Agreements” d.d. July 21st, 2005 No. 115-FZ (hereinafter – Concession Law). The duration of the agreement was foreseen for 30 years from its signing.

The bidding procedure for the concession agreement for the design, construction, financing and operation of the Orlovski Tunnel in St. Petersburg (hereinafter – Tender procedure) was conducted in accordance with the Concession Law.

In November 2006, the Decree of the Government of the RF No. 1709-r was adopted which put the project on the list of schemes supported by the Investment Fund and approved the project.

On April 10th, 2007, the Government of St. Petersburg adopted the Decree No. 384 “On Implementation and Operation of a Toll Tunnel under the Neva River in Alignment of Piskarevski Pr. – Orlovskaya Ul.”

On May 31st, 2007, the Government of the Russian Federation passed the Decree No. 695-r “On Signing of Concession Agreement in relation to Orlovski Tunnel under the Neva River in St. Petersburg”.

The Tender Documentation was approved by Order of the Federal Highways Agency (No. 61 of September 4th, 2007) and Decree of the Government of St. Petersburg (No. 1090 of April 3rd, 2007).

The duration of the agreement was 30 years from the signing, including 4 years of design and construction (2008-2012). The Tunnel construction was scheduled to begin in 2011 and its inauguration in early 2016.

==The Contracting Authority (Public Party)==

The Public Partners under the Orlovski Tunnel project was the Russian Federation and the city of St. Petersburg via their respective dedicated authorities:

* on behalf of the Russian Federation , the Federal Road Agency (Rosavtodor)
* on behalf of the federal city of St. Petersburg , the Government of St. Petersburg

The Government was the project developer – Managing Company of the Orlovski Tunnel project.

Later, the Russian Federation withdrew from the structure of Grantors.

Advisory support was provided by:

* The World Bank – financial and strategic advisor
* Freshfields Bruckhaus Deringer – legal advisor
* Mott Macdonald – technical advisor
* Research and Design Institute of Regional Development and Transportation – technical and transport advisor

==The Concessioner (Private Party)==

The concessioner in this project was the consortium Ltd "Nevskaya concession company”, which represents the French group Vinci.

==Users==

The Orlovski Tunnel was constructed to be the major link between the right and left bank districts of St. Petersburg in the city centre and open to passenger traffic, public transport, emergency services and freight transport with a permissible maximum weight of up to 3.5 tons.

==Key Purpose for PPP Model Selection==

The PPP model was selected due to the following:

* Project inscribed in master plans of the city since 1986
* Feasibility studies and site evaluation were concluded
* Government believes there is significant value in innovative design solutions and long term maintenance risk being transferred to the private sector: strong rationale for PPP
* Project designed on the basis of a 30-year concession, design build finance operate & maintain scheme

==Project Timing==

The construction of the Orlovski Tunnel was considered as the solution for the traffic problems of St. Petersburg.

7. Project Locality and Market Geography
St. Petersburg plays a major role in the transport system of the Russian Federation. The largest Baltic Port of Russia, located in St. Petersburg leading all Russian ports, and the Volgo-Baltic Waterway, make St. Petersburg a major transport hub in the Russian Federation. Owing to its unique geographic location – on the coast of the Baltic Sea and in immediate proximity to the EU and major European ports- St. Petersburg has become the gateway to the Russian Federation for a considerable share of the export/import freight volumes of the country. Sections of two Euro-Asian transport corridors – the North-South and the Transsiberian, as well as the Pan-European Transport Corridor IX pass through St. Petersburg.

The principal transport artery through St. Petersburg is the Neva River, whose 23 km length is included in the Single Deep-Water System of European Russia. The Neva River is one of the major links of the Volgo-Baltic Waterway (VBW) connecting the Volga River to the Baltic Sea, via the White Sea - Baltic Canal, to the White Sea. The Volgo-Baltic Waterway plays a major role in the Pan-European Transport Corridor IX and the North-West transport Corridor. The significance of the VBW increased substantially due to the construction of new ports in the Gulf of Finland and the extension of the Pan-European Transport Corridor IX to the Black and Caspian seas.

[[Image:Orlovski2.png]] 
''Figure 3: Volgo-Baltic Basin''

At present, the traffic via the Volgo-Baltic route is constrained due to limited periods when bridges are raised. Ship owners incur considerable losses because of delays of ships waiting to pass through the Neva.

The implementation of the Orlovski Tunnel would enable the Neva bridges to open for one hour longer every day. Based on estimates, this would increase the capacity of the St. Petersburg section of the Volgo-Baltic Waterway by 1.3 times its current capacity, and provide an essential impetus to the increase in international transportation.

Moreover, the accommodation of the growing traffic flows would be impossible without new crossings between the left- and right bank sections of the city. At present, north-eastern districts of the city are linked to the centre and south-western districts mostly over four bridges: the Troitski Bridge, Liteiny Bridge, Petra Velikogo (Bolsheokhtinski) and Alexander Nevski Bridge. The central street and road network rely on bridges already operated at capacity. For instance, during peak hours, the above bridges are at more than 100% capacity.

The implementation of the Orlovski Tunnel would enable the realignment of traffic on the approaches to the centre, and therefore, a significant relief of congestion on existing bridges linking the right- and left bank districts of St. Petersburg.

The Orlovski Tunnel forms an integral part of the construction and reconstruction transport works currently undertaken by St. Petersburg as part of its Master Plan.

==Procurement & Contractual Structure==

===Tendering===

The Bids received were evaluated on two criteria:

1) Technical criteria: weight – 0,2
2) Financial criteria: weigh– 0,8:
a) The total discounted amount of public financing of the construction (capital grant). Maximum 22,15 billion rubles.
b) The total discounted amount of compensation paid by the Grantor to the Concessioner during the stage of exploitation of the Tunnel (availability payment).

At the prequalification stage, applications for participation in the Tender procedure were received from four companies:

* Ltd “Nevskaya concession company” (the French group Vinci)
* Ltd "Neva Tunnel" (Austrian Strabag AG, the Cyprus Suri Holdings Limited, a German Zueblin AG and the French Egis Projects SA)
* JSC "Buigproekt Operating" (the French group Bouygues)
* Neva Traverse GmbH (German Hochtief Construction AG and Hochtief PPP Solution and the Dutch Royal Boskalis Westminster NV)

Only one of the four consortia, which had previously been screened for participation in the Tender procedure, continued to participate in the tender – "Nevskaya concession company" Ltd-, because no other company submitted proposals to this stage of the competition. In June 2010, the Government of St Petersburg and “Nevskaya Concession Company” Ltd signed the concession agreement.

===Contract Structure===

The obligations of the Concessioner included the following:

* to design the Orlovski Tunnel and obtain all the relevant permits and approvals;
* to build the Orlovski Tunnel using equity and debt funds, and finance provided by the Grantor;
* to start the operation of the Orlovski Tunnel before the deadline specified in the bid;
* to use (operate) the Orlovski Tunnel as a public road tunnel, in particular – to levy tolls from users of the Orlovski Tunnel once its construction is completed and the tunnel is put in operation, and not to terminate (not to interrupt) this activity without the Grantor’s consent, and collect tolls from the tunnel users. Toll rates will be set by the Grantor;
* to provide public utility services with access to the land plots used in construction and operation of the Tunnel;
* to provide maintenance and major repairs of the Orlovski Tunnel at its own expense;
* to meet requirements for insurance against risks specified in the Concession Agreement; in particular, at its own expense, insure the risk of loss (destruction) or damage of the Tunnel, and the risk of third party liability for the damage caused during the construction and operation of the Tunnel;
* on termination of the Concession Agreement (including expiry), to transfer the Tunnel to the Grantor;
* the Concessioner may not build any property (other than the Orlovski Tunnel) on the land plots provided to it.

The obligations of the Grantor were as follows:

* after the signature of the Concession Agreement within the time set by law, sign with the Concessioner a Land Lease Agreement in respect of land plots, where the Tunnel will be located and which are necessary for construction and operation of the Orlovski Tunnel by the Concessioner;
* to provide necessary support to the Concessioner in obtaining subsoil and water use licenses;
* hand over the design and construction input data available to the Concessioner;
* provide a contribution toward the Orlovski Tunnel construction costs from the budget of the Russian Federation and the budget of St. Petersburg in the amount determined based on Bids;
* make availability payments for the Tunnel;
* to provide the Concessioner with reasonable support in its interaction with public authorities and other organizations controlled by the Grantor, and in getting access to the necessary communications and resources of the existing urban infrastructure;
* on termination of the Concession Agreement (including expiry), accept the Tunnel from the Concessioner under the procedure specified in the Concession Agreement;
* fulfil other obligations, arising from the Concession Agreement, other contracts between the parties, and provisions of Russian laws.

The estimated project cost was 54 600 million rubles.

The project was financed by equal shares – (33.3%) of the investor, the city budget and the investment fund of the Russian Federation.

The Concessioner was expected to mobilize finance in an amount sufficient to cover project design, construction, and operation costs.

The disbursement of government funding included government support to be provided both by the Russian Federation and government of St. Petersburg and a grant from the RF.

The Russian Federation had to contribute a part of capital costs of the project. The Orlovski Tunnel was one of the first toll road projects approved for the financing from the Investment Fund of the Russian Federation (grant + availability payment from St. Petersburg government).

St. Petersburg had to support the project with city budget funds. Pursuant to the investment project profile (approved by Decree of the Government of the RF No. 1708-r of 30.11.2006), the maximum amount of public support at the construction stage had to be 17,572 million rubles. In order to keep the public financing to a minimum, Bidders were requested to indicate the amount of the Grantor financing they need. This was one of the key bid evaluation criteria. Moreover, the concession agreement provided for availability payments (based on Lane availability and System performance) by the city of St. Petersburg, i.e. the concessioner did not bear traffic risk. Bidders indicated the amount of availability payment required, which was also an important part of the bid evaluation criteria.

Finally, there was direct contractual obligation of each government to mobilize funding and funding mechanisms to be transparent and reliable (funding mechanism to be based on clearly identified and measurable milestones).

[[Image:Orlovski3.png]] 
''Figure 4: Orlovski Tunnel PPP Structure''

===Risk Allocation===

Risks related to land preparation, utility relocation, development of the urban road network, and traffic risks are to be borne by the Grantor.

Risks related to design, construction, operation of the Tunnel were to be borne by the Concessioner.

The Grantor assumed the traffic risk and had more freedom related to the policy of toll collection.

The risk of certain changes in the law and the risks of public sector are borne by the Grantor, but the risks related to necessary approvals/permits belonged to the Concessioner.

Risks related to changes in macro-economic situation, construction financing, as well as subsurface and force majeure risk will be shared by both parties.

The above risk allocation is presented in Figure 5.

[[Image:Orlovski4.png]] 
''Figure 5: Risk allocation''

===Performance===

The tunnel was to provide for:

* two-way traffic of up to 60,000 vehicles per day;
* two-way traffic on ramps: Piskarevski Pr. ramp – up to 35,000 vehicles per day, Sverdlovskaya Embankment ramp – up to 15,000 vehicles per day;
* a link to Shosse Revolutsii, Polustrovski Pr., and Sredneokhtinski Pr. with overall two-way traffic of up to 20,000 vehicles per day;

Traffic estimates for the tolled tunnel are presented in Table 1:

''Table 1: Tunnel Traffic forecast'' 
{| class="wikitable"
|-
! Parameter
! 2011
! 2015
! 20251
! 2035
|-
| '''Daily traffic for cars (‘000 vehicles)'''
| 52.5
| 63.2
| 60.3
| 66.3
|-
| '''Daily traffic of trucks (trucks up to 3.5 tons, in ‘000vehicles)'''
| 5.5
| 4.2
| 5.8
| 6.4
|-
| '''Total traffic'''
| 58.0
| 67.4
| 66.1
| 72.1
|}

1: the traffic reduction in 2025 will be caused by the development of the urban road network within the gravity zone of the tunnel

The tunnel was to be equipped with a physical toll collection facility. The key requirement for toll stations is toll collection without queues in front of toll plazas exceeding a 2 minutes wait time or 12 vehicles.

==Outcomes==

The construction of the Orlovski Tunnel did not begin since the Government of St. Petersburg terminated the concession agreement with the "Nevskaya Concession Company" on the grounds that the concessionaire has not provided evidence to achieve financial closure, had not fulfilled the conditions of the start of construction and the cost of the project exceeded 55 billion rubles.

==References==

* Decree of the Government of St. Petersburg No. 1215 of November 23, 2012 “On the Cancellation of the Concession Agreement for the Design, Construction and Operation of the Orlovski Tunnel under Neva River in St. Petersburg”
* Decree of the Government of St. Petersburg No. 309 of March 24, 2010 “On Results of Open Competition for the Concession Agreement for the Design, Construction and Operation of the Orlovski Tunnel under the Neva River in Saint Petersburg”
* Decree of the Government of St. Petersburg No. 310 of March 24, 2010 “On Measures for the Conclusion of the Concession Agreement with the Participant of Open Competition for the Concession Agreement for the Design, Construction and Operation of the Orlovski Tunnel under the Neva River in Saint Petersburg”
* Decree of the Government of St. Petersburg No. 1090 of September 3, 2007 “On conclusion of the Concession Agreement in Relation to Orlovski Tunnel under the Neva River in Saint Petersburg”
* Decree of the Government of the Russian federation No. 695-r of 31.05.2007 “On Signing of Concession Agreement in relation to Orlovski Tunnel under the Neva River in St. Petersburg”
* JSC "WHSD".(2015) Orlovski Tunnel. URL:http://www.orlovtunnel.ru/index.php?lng=en&page=1
* Project Brief. Construction of the Orlovski Tunnel under the Neva River in St. Petersburg./ “ORLOVSKI TUNNEL” JSC. – September, 2007.

Case Studies: OW-plan Oostende-Integrated Coastal and Maritime Plan for Oostende, Belgium

2016-10-11T09:44:07Z

Nimda:

{{Infobox
|header1 = OW-plan Oostende-Integrated Coastal and Maritime Plan for Oostende, Belgium
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = approximately 9 years (breakwaters’ contract duration)
|header5 =
|label5 = Budget:
|data5 = 69.931.156,66 Million EUR (This budget includes only Construction Costs of the breakwaters.)
|title = Project Overview
|image = [[Image:Oostende.png|300px]]
|caption = ''Figure 1: OW-plan Oostende-Integrated Coastal and Maritime Plan for Oostende, Belgium ''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= May 2007 – 2015:
| data1 = Contract duration of the breakwaters
| label2= 22 June 2007:
| data2 = Approval of environmental plan
| label3= June 2007:
| data3 = Environmental Impact Report drafted
| label4= 14 December 2007:
| data4 = Act-taking Flemish Government
| label5= 27 January 2010:
| data5 = Granting phase of West dam finished
| label6= 26 April 2010:
| data6 = Start of construction of western port dam and deepening of the sailing track
| label7= June 2010:
| data7 = Ships can sail via the new access route
| label8= 2012:
| data8 = Two breakwaters-dams completed (by DEME)
| label9= End 2013:
| data9 = Planned beach nourishments completed
| label10= September 2013- November 2014:
| data10 = Construction of the walking parts of the breakwaters

}}
}}

==Introduction==

The works for an improved port approach are part of the Public Works Plan which is threefold: (1) Coastal defence: protecting the centre of Ostend against floods; (2) Enable all types of vessels to enter Ostend port- improve access to the harbour; (3) Tackle port infrastructural works in a unified way (Mobiliteit en Openbare Werken and Maritieme Dienstverlening en Kust , 2014).

The need for an improved harbour access resulted in the design of two new breakwaters in Ostend (Verhaeghe, 2010). Ostend is situated in the middle of the Belgian coastline. Although for many centuries, Ostend was one of the most important ports at the Southern North Sea, today, it has a relatively small port. In order to make the port accessible for ships with a length up to 200m, important modification works on the port access were necessary. Studies have led to a new design of the port access, in which the old (curved) access defined by two wooden piers, is replaced by a new access channel perpendicular to the coast line together with the construction of two breakwaters (Gysens et al., 2010).

For tackling the sea protection, the city of Ostend will build a growth beach. In front of the seaboard, a big beach is being made. During storms, the waves are broken at this beach instead of hitting the seaboard at full force. With this, the protection level of Ostend is increased up to a 100-year storm (until level +7m at the foot of the seaboard). The ultimate goal is to protect the city against a heavy storm with a return period of 1000 years. When protecting against this event, a maximum between 0 and 1 litres of sea water per second and per m of seaboard can flow into the city (Deme, 2014).

Although the project is threefold, this analysis focuses mostly on the construction of the two breakwaters.

==The Contracting Authority (Public Party)==

The Agency for Maritime and Coastal Services of the Flemish Government and the City of Oostende compose the contracting authority.

==Sources of Financing==

This is a purely public infrastructure project, which means that 100% of financing comes from the Public. The Flemish government invested 69.931.156,66 mlns euro for the construction of the two breakwaters without expecting any direct revenues to recover the investment (Goemaere, 2015).

==Users==

The direct users of this infrastructure are the companies that will be able to port larger transport ships. In addition, considering that the protection of the centre of Ostend against floods is also taken into account, then direct users are also the inhabitants and retailers of the Ostend city centre, who will be protected against the floods.

Other stakeholders/indirect users are: 1) the Flemish Government, 2) companies trading with Ostend, 3) employees of the port of Ostend and 4) companies in Ostend centre (mix type of users: companies and freight).

During the elaboration of the Master Plan, particular attention was given to communication and stakeholder participation (including questionnaire, presentations, brochures, newsletter, etc.). Stakeholders’ consultation was in particular carried out by means of a steering committee and an advisory board. The steering committee consisted of representatives of different governments and administrations at provincial, Flemish and Belgian level. The advisory board consisted of direct and local stakeholders, such as representatives of: the coastal communities and towns, nature organisations, yacht clubs, beach clubs and the local economy including horeca (hotel, restaurant and catering). The same consultation bodies were also involved during the implementation phase of the Master Plan measures (Pauwels, 2014).

==Project Timing==

The contract for the construction of the breakwaters was signed and awarded in May 2007. One month later, the environmental plan was approved. In 2012, the two breakwaters/dams were completed by DEME and from September 2013 until November 2014, the walking parts of the breakwaters were constructed.

The GDP per capita, income per capita and the unemployment rate of the region during the time of data collection (2011, 2013& 2014) was in line with the expectations at project award (2007)(Eurostat, 2015b).

==Project Locality and Market Geography==

The locality of the project is interurban (Goemaere, 2015). The infrastructure investments concern the city of Ostend, the beach and the port that are within the city itself.

In the region (West-Flanders) where the breakwaters are located, the population density at the time of data collection (2013) was higher than the density at project award time (2007) (Eurostat, 2015a). The level of industrialization and of economic activities during the time of data collection was higher than the level of industrialization at the time of project award. Specific production activities, such as energy-windmills, which were not foreseen when the project was planned, started in the region (Goemaere, 2015).

==Procurement & Contractual Structure==

===Tendering===

A “traditional” procurement contract known as “bid build” was used. On the one hand, the contract for building/constructing the breakwaters was awarded to DEME. On the other hand, the Public Authority was in charge of the maintenance and operation of the breakwaters. The project is 100% financed by the Public authority (Flemish Government). It is not only the construction of the breakwaters that is financed by public funds, but also the maintenance and operation. Contractors were invited to submit tenders/bids for the construction of the project. An open call took place. A pre-selection took place based on an ‘Open Call” and at the 1st stage there were three candidates/bidders and five bidders in the negotiations (Goemaere, 2015).

===Contract Structure===

The type of contract used for the construction of the breakwaters, or at least the type of the “biggest” contract was a “unit cost contract”. The duration of this contract was 36 months and the value was 80 million euro (Goemaere, 2015).

===Risk Allocation===

Risks linked to the construction, maintenance and exploitation of the breakwaters and also revenue, financial, regulatory and force majeure risks are allocated as depicted in Figure 2. Based on the latter, all risks (design, maintenance, exploitation, financial, regulatory & force majeure) apart from the construction one are totally public. Only the construction risk was born by the private sector/contractor (Goemaere, 2015).

[[Image:Oostende1.png]] 
''Figure 2: Risk allocation''

===Performance===

No performance indicators were explicitly stated in the contract. In order to measure the performance of the project, the following indicators are examined: reliability, availability, maintainability, safety, security and user satisfaction. Reliability and availability were improved fully in line with expectations or even more, maintenance costs are below expectations and safety was improved fully in line with expectations or even more. Regarding end users’ satisfaction, more than 50% of end users are very satisfied (Goemaere, 2015).

Regarding the performance respect to project costs, there were 20% cost overruns. The reasons for these cost overruns are the following: (1) the ground investigation could not be done; (2) the port soil was very poor and also the port entrance was of poor standards. (3)There was an increase of the investment costs due to changes of design standards, made due to the poor soil condition.

Last but not least, there was no delay in completion of works or opening of operation (Goemaere, 2015).

==Project Outcomes==

The general level of the project’s perceived success is high. The “Critical Success Factors” that contribute in making the whole Master Plan project (construction of breakwaters and beach nourishment) a successful case, are described in the following.

The project is judged successful when all project goals materialize within an acceptable term. The main success factors are: protecting the city of Ostend against a 1000-year storm and opening up the port to ships of up to 200m length (Verhaeghe et al, 2010).

On the contrary, it could be said that a limiting factor of the project could be the fact that “the coastal protection Master Plan” project is rather ambitious and therefore requires continuous engagement and technical-financial support. This is required in the future so as not to limit the full implementation of identified measures. Particular attention is also intended to be given to the monitoring and assessment of potential ecological effects of planned interventions, including beach nourishment in particular (Pauwels, 2014).

The project’s outcomes and success are going to be also measured through the main project purpose for the Contracting Authority. This means that if the main project purpose is reducing the travel time and this goal is achieved, then positive project outcomes could be considered. The main reason for implementing the project is to improve the reliability of transportation, even if the purpose of the general Master Plan project is to improve the safety of the city of Oostende. Regarding the achievement of other goals, after constructing the breakwaters, travel time and travel costs were not improved or only marginally improved, whereas reliability was improved fully in line with expectations or even more and safety was improved only partially in line with expectations (Goemaere, 2015).

Economic Impact

1. Besides the port entrance protection, two other objectives were aimed at the same time: the new breakwaters were designed to improve the Ostend Centre coastal defences and to increase port capacity. The new breakwaters made the port more accessible to vessels with a length of up to 200 m, instead of the 150 to 160 m previously (economic development). In the past, vessels had to navigate an elongated S-shaped approach route to enter Ostend port. Only vessels up to 160 metres were able to do so, bigger vessels did not have sufficient manoeuvring space (DEME, Dredging, Environmental & Marine Engineering, 2014).

2. It is expected that the new harbour dam will reduce the requirement for maintenance of beach nourishment to once every five to ten years (Pauwels, 2014).

3. Wider beaches and the design of sea walls that optimise their integration in the existing coastal space will likely generate benefits in terms of tourism (Pauwels, 2014).

4. By means of the Masterplan Coastal Safety 206919, the Coastal Division wants to protect the coast from at least a 1,000-year storm surge, and wants to reduce the residual risk of serious economic damage and casualties, based on a cost/benefit approach. The plan has been gradually executed since 2011 (Verwaest et al. 2013).

5. The implementation of the Master Plan was socially and economically necessary. The damage and suffering caused by flooding are incalculable. An indicative example is the catastrophic flood in 1953 in Ostende. Economic damage can amount to a few billion euros in the case of superstorms and there may be thousands of victims. This impact is considered as a social impact as well.

6. Economic viability of the port of Ostend: The OW plan Ostend guarantees the future economic viability of the port of Ostend by realizing port access to vessels with a length of 200 meters, by protecting Ostend against flooding and by realizing an integrated management of the coastal zone of Ostend.

Social Impact

7. One of the objectives of the project was the following: the new breakwaters were designed to improve the Ostend Centre coastal defences (improving the well-being of the inhabitants).

8. The main Master Plan goal is, i.e. to protect coastal communities against storm events with an annual probability of 0.1%, under current condition and the case of sea level rise (up to 30 cm by 2050). Coastal protection implies the maintenance of coastal human actives, including in particular: residential use of the coastal space, tourism, harbour and industrial activities (Pauwels John, 2014).

9. The coastal protection measures and the design of the western breakwater had to be integrated in the historical city context during the Environmental Impact Assessment Studies (EIA-process) (Gysens et al.2010).

10. Wide stakeholder participation, during both the design and implementation phases of the Master Plan (Pauwels, 2014).

Environmental Impact

Regarding the environmental impact, an environmental impact assessment (EIA) for the whole project was prepared and approved in June 2007. The environmental impact assessment showed that environmental compensation for the project in Ostend was necessary. Measures needed to be taken to mitigate the environmental impact of the overall project.

The EIA plan considered that there were no alternatives to the OW plan that helped avoid degradation of the natural environment. The most significant adverse effects of the OW plan were those expected by the disappearance of 26 hectares of intertidal area on the western shore of Ostend.

==References==

* DEME, Dredging, Environmental & Marine Engineering (2014) Port of Ostend, new breakwaters | Dredging International | DEME Group |, Retrieved June 26, 2015, from http://www.deme-group.com/dredging/projects/port-ostend-new-breakwaters
* Eurostat. (2015a) Home - Eurostat. Retrieved June 25, 2015, from http://ec.europa.eu/eurostat
* Eurostat. (2015b) Home - Eurostat_1. Retrieved June 25, 2015, from http://ec.europa.eu/eurostat
* Goemaere J. (2015) Department Mobility and Public Works: interview.
* Gysens S., De Rouck J., Trouw K., BollE A. and Willems M. (2010) Integrated Coastal And Maritime Plan For Oostende Design Of Soft And Hard Coastal Protection Measures During The Eia Procedures
* Mobiliteit en Openbare Werken and Maritieme Dienstverlening en Kust (2014) New fairway for Ostend Port, from http://www.portofoostende.be/logon/Uploads/nieuwe-haven-lichtenlijn.pdf
* Pauwels J. (2014) Implementation of the integrated Master Plan for Coastal Safety in Flanders (2014), Retrieved June 26, 2015, from http://climate-adapt.eea.europa.eu/viewmeasure?ace_measure_id=3327
* Verhaeghe H. Van Damme L., Goemaere J., De Rouck J. and Van Alboom W. (2010) “Construction Of Two New Breakwaters At Ostend Leading To An Improved Harbour Access”
* Verwaest, T., DeWolf, P., Mertens, T., Mostaert, F. and Pirlet, H., (2013)Safety against flooding, In: Lescrauwaet, A.K., Pirlet, H., Verleye, T., Mees, J., Herman, R. (Eds.), Compendium for Coast and Sea 2013: integrating knowledge on the socio-economic, environmental and institutional aspects of the Coast and Sea in Flanders and Belgium. Oostende, Belgium, p. 219-230.

Case Studies: Metro do Porto S.A., Portugal

2016-10-11T09:21:59Z

Nimda: Created page with "{{Infobox |header1 = Metro do Porto S.A., Portugal |header2 = |label2 = Project Type: |data2 = Greenfield |header3 = |label3 = Type of Project Financing: |data3 = Privat..."

{{Infobox
|header1 = Metro do Porto S.A., Portugal
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Private (Co) Financed Transport Infrastructure
|header4 =
|label4 = Contract duration:
|data4 = 50 years
|header5 =
|label5 = Budget:
|data5 = Investments 1st Phase (1993-2005): Expected: €1.070.852.000 
Investments 1st + 2nd Phases (1993-2005): Budget: €2.969.440.541
|title = Project Overview
|image =
|caption =
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1993:
| data1 = Creation of the Oporto Metropolitan Metro Company (Grande Área Metropolitana do Porto, Anonymous Society) (S.A.) - Public Company responsible for planning, promoting and managing the bidding process for the concession of the infrastructure and service provision- € 997.595,79
| label2= 1998:
| data2 = Concession phase: 50 years concession awarded to Metro do Porto, S.A.
| label3= 1998:
| data3 = 1st Construction Phase: The provision of the infrastructure, rolling stock and other systems is subcontracted by the Metro do Porto, S.A. to NORMETRO Group of Complementary Companies.
| label4= 2003:
| data4 = Operating Phase: The metro service is inaugurated serving the section between Trindade and Senhor de Matosinhos.
| label5= 2008:
| data5 = End of the 1st Construction Phase: Metro do Porto service is composed by 5 lines with 59.6 km of extension.
| label5= 2010:
| data5 = The operation of the metro service is awarded to the consortium of private companies ViaPorto.

}}
}}

==Introduction==

Metro do Porto is the metro network of the city of Porto in Portugal. The metro is operational since 2002, with lines added in 2004, 2005, 2006, and 2011. The Metro do Porto network is composed by 5 lines serving the Oporto Metropolitan Area. Apart from the metro service, Metro do Porto S.A is also responsible for the operation and maintenance of the Guindais funicular system.

The Metro do Porto project started in the 90’s with great support from the municipalities of the Oporto metropolitan area. In 1993, the Portuguese national government created the Oporto Metropolitan Metro Company (Grande Área Metropolitana do Porto, Anonymous Society S.A.), a public Company responsible for planning, promoting and managing the bidding process for the concession of the infrastructure and service provision. In the 90’s , Oporto Metropolitan Metro Company discussed and organized the concession process, which resulted in awarding the concession of the operation and construction of the service to the Metro do Porto, S.A. for 50 years.

Also in 1998, Metro do Porto S.A. subcontracted the concession services to the Normetro group of complementary companies. This consortium has been responsible for designing, building, operating and maintaining the metro services in the first phase (2010). In 2010, Normetro’s concession was replaced with a 5-year concession for the operation and maintenance of the metro network to the private consortium Via Porto.

Up to 2008, 24% of the project’s budget was paid for by public money (public budget transfers, European funds, additional payments from shareholders, and compensations paid by the State for financial rebalancing), 67.5% was paid for by loans (80% of which had government guarantees), and the rest was financed through leasing. User charges have been collected since 2003 through an intermodal ticketing company which shares revenues between the participating operators in the region. The system is integrated with the other transport modes in the Oporto Metropolitan Area. TIP, g.c.c. (Intermodal Transport of Porto) is a group of complementary companies responsible for managing the integration within all public transport services inside the Oporto Metropolitan Area.

==The Contracting Authority (Public Party)==

Since the first years of the Metro do Porto project, the development has been driven by the municipalities of the Oporto Metropolitan Area. Considering the role of this political will in the construction, the conceptual role of the contractual authority may be extended to a contracting authority organized in a two level structure.

On the national level, the Portuguese Ministry of Public Works, Transportation and Communications (Ministério das Obras Públicas, Transportes e Comunicações) is considered the official project grantor. However, different to traditional public private concessions, Metro do Porto has been granted to a consortium of public entities (Municipalities, Portuguese National Government and two public transportation companies).

After this process, Metro do Porto S.A. have contracted a consortium of private companies named Normetro. On this second level, Normetro was responsible for the design, construction, finance and initial operation of the metro system.

==The Concessioner (Private Party)==

Regarding the complex contracting structure described in the previous section, this section presents the SPVs with their respective capital shares.

* Metro do Porto, LP

1 – Foundation: 1993 (€ 5.000 Share capital)
a) Municipalities of Porto Metropolitan Area = 60%;
b) Sociedade de Transportes Colectivos do Porto, SA (STCP) – Public Transport Society of Porto = 25%;
c) Portuguese Government = 10%;
d) Comboios de Portugal (CP) – Portuguese National Railway Company = 5%.

2 – 2008 (€ 7.500 Share capital)
a) Portuguese Government = 40%;
b) Municipalities of Porto Metropolitan Area = 40%;
c)Sociedade de Transportes Colectivos do Porto, SA (STCP) – Public Transport Society of Porto = 16,67%;
d) Comboios de Portugal (CP) – Portuguese National Railway Company = 3,33%.

* Normetro, Group of Complementary Companies (€ 27.477.746,32 Share capital): Responsible for the Infrastructure Construction and Rolling stock Acquisition

a) BSN – Santander Bank for Portuguese Business, SA (18,82%)
b) Santander Totta Bank (81,17%)
c ) Metro do Porto Consultoria, LP (0,001%)

* Transdev Transports, LP (Initially was part of the Normetro group): Responsible for the operation of the system and human resources management

* Transpublicidade, S.A. (€ 99.759,58 Social Capital): Responsible for manage the advertising facilities inside the infrastructure

a) Metro Consultoria, LP (100%)

* TIP, ACE (€ 30.000): Responsible for operate the intermodal integration inside the Porto Metropolitan Area

a) Sociedade de Transportes Colectivos do Porto, SA (STCP) – Public Transport Society of Porto (33,33%)
b) Comboios de Portugal – Portuguese National Railway Company
c) Metro do Porto Consultoria, LP (33,33%)

''Source:(Tribunal de Contas, 2006, 2010)''

==Sources of Financing==

Until 2004, Metro do Porto has been financed by:
* Portuguese Government (National Investment and Expenditure Program): €99.898.296 (7,78%)
* European Investment Bank: €663.689.707 (51,47%)
* European Cohesion Funds: €265.989.296 (20,41%)
* Leasing: €249.999.999 (19,46%)
* Others: €5.000.000 (0,30%)

==Users==

Since 2013, Metro do Porto has a 66.6 kilometers network of 5 lines and 81 stations. In 2013, 55,931 passengers travelled in the Metro do Porto system.

==Key Purpose for PPP Model Selection==

In the first stage, the metro system has been granted to the consortium of public institutions due to the strength of the regional drivers of the project. The concession allowed the municipalities to assume the responsibility of pushing the development of the project plan and the concession process. The share structure in the SPV depicts this responsibility of the Municipalities of Porto Metropolitan Area and the support of the Portuguese Government.

After that, Metro do Porto only started to consider rendering the project a PPP one in 2003/04. For the second construction phase, the expansion plan expected to finance € 1.026 million by PPP contracts. At this moment, the PPP model has been selected oriented to relief the finance burden of the project.

==Project Timing==

In the 90’s, Portugal experienced a great investment momentum for infrastructure projects.

[[Image: Porto.png]] 
''Figure 1 - Triennial Gross Fixed Capital Formation growth rate (Portugal and EU)'' 
''Source: Composed by the authors based on the Eurostat database''

During those years, the Portuguese economy experienced gross fixed capital formation rates almost 3 times higher than the European average (Figure 1). In addition, several infrastructure projects were contracted in Portugal and other European countries. Supported by the EU finance policy, those projects have been partially financed by the European finance vehicles in order to reduce the economic gap between those countries and central Europe (Larre & Torres, 1991).

The initial investments in the Metro do Porto network have been supported by this macroeconomic environment. The participation of the European Investment Bank (51.47%) and European Cohesion Funds (20.41%) in the project finance structure depicts this supranational support. Most of the investments supported by those funds have been co-financed and awarded in public private partnership contracts.

==Project Locality and Market Geography==

The Metro do Porto represents the most important transport axis in the Oporto Metropolitan Area. Composed by 17 municipalities, AMP is the second metropolitan area of Portugal, with a population of 3.7 million inhabitants, and an increasing population density of about 1580 inhabitants per square km. Historically, the political and economic strength of the Oporto Metropolitan Area may be considered one of the most important drivers of the project.

==Procurement& Contractual Structure==

===Tendering===

In 1998, “Metro da Grande Área Metropolitana do Porto”, a Public company founded in 1993 to plan and manage construction of the Metro do Porto, became an anonymous society company (Metro do Porto, S.A.) and was granted with the concession rights to construct, operate and maintain the Metro system. In the same year, Metro do Porto, S.A., exclusively owned by public stakeholders (Municipalities, Public Companies and National Government), subcontracted the construction of the infrastructure, systems and acquisition of the rolling stock to a Group of Complementary Companies named Normetro.

===Contract Structure===

Apart from the metro service, Metro do Porto S.A is also responsible for the operation and maintenance of the Guindais funicular system. Outside the transportation supply chain, Metro do Porto is also responsible for the advertising and intermodal integration management of the metro system. TIP, g.c.c. (Intermodal Transport of Porto) is a group of complementary companies responsible for managing the integration within all public transport services inside the Oporto Metropolitan Area.

Initially, the project was designed to be mainly funded by user fares. The pricing system is calculated in accordance with the travelled distances within the displacement zones. The fare system also includes a social pass, a daily pass and discounts for elderly users and children. In the cases of operational debts, the project also considered the payment of public subventions from the national government. Since 2004, the Portuguese government has been paying financial compensations to cover part of the operational deficits of the Metro do Porto Service (64.700.000 EUR between 2003 and 2008).

===Risk Allocation===

In the Metro do Porto concession, it is a hard task to define the risk allocation between public and private parties, since the concession has been awarded to a public company. Since 1998, all shareholders of the Metro do Porto, S.A. are public authorities and other public companies. Historically, this position in the middle between a public or a private entity has defined quite an ambiguous risk allocation structure.

All Design, Construction, Maintenance and Revenue risks are the responsibility of the Metro do Porto, S.A. In 1998, the SPV subcontracted Normetro, G.C.C. to provide those services and operate the system. The sub-concession contract does not transfer any of those risks to the Normetro consortium. However, according to certain contractual guarantees, the public party is the ultimate responsible for rescuing, ending or recovering the concession in cases of poor financial performance in two consecutive years. The risk allocation is depicted in Figure 2.

[[Image:Porto1.png]] 
''Figure 2: Risk allocation''

===Performance===

In the Metro do Porto concession contract, performance has been defined in a two dimensional evaluation process based on financial and operational perspectives. Not much is discussed about operational elements for performance control, but the contract focuses on safety elements that must be provided jointly with the local police and insurance companies.

On the financial perspective, the concessioner is expected to invest and operate the system with financial strength. The concession contract stipulates that the concessioner will be forced to subcontract the metro service exploitation if the concession presents negative annual results for two consecutive years.

In numbers, the Metro do Porto system has been improving the accessibility in the Porto Metropolitan area. For instance, the system ridership grew from 5.96 million users in 2003 to 51.5 million in 2008. Nevertheless, in the same period, the operational revenues only grew from 37 million to 53 million. Table 1 presents the operational performance of the Metro do Porto concession. The negative results have been supported by financial compensation from the public authorities.

''Table 1- Operational results 2010-13'' 
[[Image:Porto2.png]] 
''(Porto, 2013)''

==Project Outcomes==

Although the Metro do Porto project has been observed as a success case of PPP agreements for the provision of transportation service, recently, this investment has been suffering from financial problems. Since 2003, the Metro do Porto system has been losing profitability and financial and organisational autonomy due to the debt structure (cost of the debt services and lack of repayment capacity).

==References==

* Larre, B., & Torres, R. (1991). Is convergence a spontaneous process? the experience of Spai, Portugal and Greece. OECD Economic Studies, Spring(No. 16), 169–198.
* Metro do Porto (2013). Metro do Porto - Relatório e contas de 2013.
* Tribunal de Contas. (2006). RELATÓRIO de AUDITORIA No. 33/06 - Metro do Porto, SA, 97–98. Retrieved from http://www.tcontas.pt/pt/actos/rel_auditoria/2006/audit-dgtc-rel033-2006-2s.pdf
* Tribunal de Contas (2010). Auditoria ao Metro do Porto , SA Transportes Públicos Urbanos na Cidade do Porto.

Case Studies: Gardermobanen, Norway

2016-10-11T08:57:38Z

Nimda: Created page with "{{Infobox |header1 = Gardermoen Line – Airport Express train, Norway |header2 = |label2 = Project Type: |data2 = Both |header3 = |label3 = Type of Project Financing: ..."

{{Infobox
|header1 = Gardermoen Line – Airport Express train, Norway
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 6 years (Construction finished in 1999)
|header5 =
|label5 = Budget:
|data5 = The original construction budget 575 million EUR (4,9 billion NOK).
|title = Project Overview
|image = [[Image:Garder.png|300px]]
|caption = ''Figure 1:Gardemoen Line, Norway''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1992:
| data1 = The government established Gardermobanen AS as part of the decision of the new airport. The estimated return on investment was to be 7,5% return. Main planning and design started.
| label2= 1994:
| data2 = Construction start, to be finished until 1999.
| label3= 1997:
| data3 = Severe leakages in new tunnel. Extra costs of 150 million EUR.
| label4= 1998:
| data4 = Postponed end date for tunnel, trains used the old track for local trains as a start.
| label5= 1999:
| data5 = Tunnel opens at end of year. Big success from the 1stday.
| label6= 2000:
| data6 = Debt situation, organization and ownership decided by government. Flytoget (Airport Express train) as an owner of all above rail lines, pays charge to Jernbaneverket for operation and maintenance that owns the track and rolling stock.

}}
}}

==Introduction==

Gardermobanen is a high-speed railway line, connecting the city of Oslo to the Gardermoen Oslo Airport. The line is 64 km long and replaced the older Hoved line as the main line northeast of Oslo. The older line now handles commuter and freight traffic, while the Gardermbanen handles high-speed passenger trains and freight trains laden with jet fuel for the airport.

Gardermobanen AS is a state owned share holding company, which was established in 1992 to develop high-speed (speed limit 210 km/hour) transportation between the Oslo Central Station and the new Gardermoen airport. The high -speed connection was decided by the Parliament of Norway in 1992. The project followed the decision to move the airport from Fornebu to Gardermoen, which is located 50 km from the Oslo centre, as the old airport could not be further extended due to lack of space. The high-speed line contributed to the decision of changing the airport location providing quick access within 20 min.

Gardermobanen is integrated in the tracks of the Intercity triangle around Oslo (Skien, Moss-Halden, Lillehammer). Gardermobanen is the shortest line from the airport to the Oslo Central Station.

The line is of 64 km total length, including a tunnel of 14,5 km and an extension further north to Eidsvoll. The Airport Express train reaches Oslo Central Station from the airport in 19 minutes. The strongest commitment to support the project by the parliament was that the costs of construction should be borne by operators and not taxpayers. In 1992, Norwegian State Railways established Gardermobanen AS to construct the line and later on in 1996 to operate the train. The name was then changed to Flytoget AS.

Construction started in 1994 and was completed in 1999. The longest railway Romeriksporten tunnel (14,580m) was a part of the project. During the spring of 1997, leakages came into the tunnel and a huge amount of extra works to stop them was carried out. This led to a delay of one year, but in the meantime, trains operated on the old track.

In 1996, Parliament decided that the development company, Gardermobanen AS, should also be the operator. Pricing became an issue in 1996 with discussions between NSB Gardermobanen and counties politicians. The expectations from the operator were too high (the price was almost doubled), in comparison with the other prices for the same route. The stakeholders for this project are users, companies involved in the project, municipalities and the government (Ministry of Transport).

[[Image:Garder.png]] 
''Figure 2: Gardermoen Line''

The total budget was 575 million Euro due to the problems and other unexpected expenses. Other transport mode infrastructure was included in the project, as well as rolling stock. The tunnel formed part of the new rail track. The construction included also the new station at the new airport. Upgrading of other works were included in areas at Central Station in Oslo and at a station in-between.

==The Contracting Authority (Public Party)==

The contracting authority is Gardermobanen AS, a state owned sharing company, which was established by the government to manage and develop this project and later to operate it.

==Sources of Financing==

The project was financed through the public budget of the Republic of Norway (public projects) with a credit guaranteed by the state. Investment comes directly from Government after approval in Parliament. The project was financed 100% by funds from the annual state budget. All the main plans were approved by Parliament. Operation and Maintenance is covered by user charges and tax sources.

The original budget was 575 million EUR (4,6billion NOK). The total costs of 674 million EUR included:

* Extension to Eidsvoll: 175 million EUR (1,4 billion NOK)
* Rolling Stock and preparation for operation: 175 million EUR (1,4 billion NOK)
* Financing costs: 112 million EUR (0,9billion NOK)

The added costs due to heavy leakage in tunnel and others are as follows:

* Tunnel: 162 million EUR (1,3 billion NOK)
* Other unforeseen costs: 50 million EUR (0,4 billion NOK):

==Users==

The high-speed connection serves the airport. Fares are higher than for the local train, so passengers for other destinations may use the local train or the intercity train, which also stop at the airport.

==Key Purpose for Public Financing Model Selection==

All airports and rail in Norway are owned by the state. It is usual that state covers the investments for the infrastructure projects. Extensions of existing airports are financed by AVINOR, a state owned company with the role to operate and develop a national network of airports for the civilian sector and joint air navigation services for the civilian and military sectors.

==Project Timing==

The project was constructed at that time, due to a decision of the government to move the airport from Fornebu to Gardermoen, which is located 50 km out of Oslo. An express rail link to the capital was, therefore, considered necessary.

==Project Locality and Market Geography==

Gardermobanen is a node for the express train, and a number of regional trains running north of Oslo (Trondheim, Lillehammer-Vestfold, Eidsvoll-Kongsberg). It connects several cities north of the airport, through Lillestrøm, Oslo and further west to the city of Drammen.

The level of economic activities in the region has grown since project inauguration, including tourism and exhibition activities. Mostly favoured is Lillestrøm (a station between airport and Oslo), with an increased number of international conferences and exhibitions due to ease of access, new hotels and exhibition areas.

==Procurement & Contractual Structure==

There were open public tenders for all phases of investments (design, build), as well as several design and construction calls and contracts. Some of them were combined (design and build). The following companies were involved:

* Design companies: Aas-Jakobsen (3 contracts), Multiconsult-Grøner, OHAS (Oslo Hovedflyplass AS), FjellangerWiderøe.Design
* Building companies: Reinertsen (2 contracts), Bruer AS, AF Spesialprosjekt-Hochtief.
* Construction companies: SRG (Scandinavian Rock Group) as a joint venture with AF (Maalselvanlegg - NOR Entreprenoer - Fagbygg - PEAB Entreprenad Vest); Veidekke; AF NCC / Eeg-Henriksen.

The main planning phase includes 10 contracts, the construction phase 4 contracts and MOM (management, operation and maintenance) 2 contracts. The “Airport express train” is responsible for MOM for trains, while Jernbaneverket (Norwegian government’s agency for railway services) is responsible for tracks, stations, and the tunnel.

===Risk Allocation===

Risks were shared. Design and construction risks were mostly on the contractor side and risk assessment was acceptable. Maintenance and exploitation risks are totally public and risks assessment is moderate. Commercial and financial risks are totally public, but user charges cover the costs of construction and operation. Regulatory risks and force majeure are totally public. These are depicted in Figure 3.

[[Image:Garder2.png]] 
''Figure 3: Risk allocation''

===Performance===

The indicators which were used for the evaluation of different stages of the projects were time schedule, project finance, quality checking and users’ satisfaction. Reliability was measured by ex-ante and ex-post share of delayed traffic. Availability was in accordance with the project expectation already in 1998. The project was inaugurated on time with a limitation that the part of the old track was used during the first year, due to the construction problems in the tunnel. The tunnel was opened one year later in 1999. Maintainability was measured by ex-ante and ex-post maintenance costs. Safety was measured continuously and no accidents have occurred to date. Cost of investment was almost 25% higher than expected, due to the leakages in the tunnel, and the project time line was extended for a year. Ridership has increased over the years and is greater than the forecasted number of passengers to the airport.

==Project Outcomes==

The project is a success due to it finishing in time (except from the tunnel), achieving the goal of transportation time between the airport to Oslo in less than 20 min. It needs only 19 minutes to access the Oslo Central Station, with a service every 10 minutes. It provides an express link compared to other modes (by car: 35 min, by bus: 50 min). The line is open 20 hours per day and a one-way ticket costs 19 Eur (180 NOK). The cost for taxi is 93 Eur (105 NOK) and bus 16 Eur (150 NOK). The rate of user's satisfaction is 96%. There was also a high economic impact with the increase of business activities in the area.

==References==

* http://no.wikipedia.org/wiki/Gardermobanen
* http://www.flytoget.no/eng/About-Flytoget/History
* http://dev.flytoget.nxc.no/eng/About-Flytoget/Annual-reports
* https://www.regjeringen.no/nb/aktuelt/utbygging_av_gardermobanen-kostnader/id238067

Case Studies: Tram-Train “Kombilösung”, Karlsruhe, Germany

2016-10-06T16:23:18Z

Nimda: Created page with "{{Infobox |header1 = Tram-Train “Kombilösung” Karlsruhe, Germany |header2 = |label2 = Project Type: |data2 = Both |header3 = |label3 = Type of Project Financing: |dat..."

{{Infobox
|header1 = Tram-Train “Kombilösung” Karlsruhe, Germany
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 10 years
|header5 =
|label5 = Budget:
|data5 = €897,324,000 (2014)
|title = Project Overview
|image = [[Image:Kombi.png|Kombi.png]]
|caption = ''Figure 1: “Kombilösung” Karlsruhe, Germany''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1970s:
| data1 = Initial thoughts about tunnel.
| label2= 1990:
| data2 = Resolution in the municipal council for a tram-train tunnel in “Kaiserstrasse”
| label3= 1996:
| data3 = First (failed) referendum
| label4= 2002:
| data4 = Second referendum to decide over construction of the “Kombilösung” with a positive result of 55.55 % pro-“Kombilösung” votes
| label5= 2003:
| data5 = Formation of KASIG mbH as principal of the “Kombilösung”
| label6= 2004:
| data6 = Appropriation request through the Municipal Transport Financing Law of the state of Baden-Württemberg
| label7= 2005:
| data7 = “Planfeststellungsverfahren” (Planning Approval Procedure) for the partial project “Kaiserstrasse”, as well as the development of a development plan for “Kriegsstrasse”
| label8= 2008:
| data8 = Approval under building law for the plans of the “Kombilösung” and approval for financing through the GVFG program. Decision to first build the tram-train tunnel in “Kaiserstrasse” and financial agreement between the state of Baden-Württemberg and the city of Karlsruhe to implement the “Kombilösung”
| label9= 2009:
| data9 = Invitation to tender
| label10= 2010:
| data10 = Beginning of construction works in “Kaiserstrasse”
| label11= 2015:
| data11 = Beginning of construction works in “Kriegsstrasse”
| label12= 2018:
| data12 = Planned opening of the tram-train tunnel
| label13= 2019:
| data13 = Completion of construction works in “Kriegsstrasse”

}}
}}

==Introduction==

The “Kombilösung” Karlsruhe is an innovative public transport infrastructure project with the aim of creating space for increased mobility and quality of life in the city centre of Karlsruhe. The city of Karlsruhe is located in the south-west of Germany. It is the second largest city in the German Federal State of Baden-Württemberg with a population of around 300,000 people. The infrastructure project mainly concerns the inner-city region.

The project consists of two parts which are linked by a joint connection, as shown in Figure 2. Both parts are deemed necessary in order to fulfil the project’s goals.

One part of the project is a tram-train tunnel in the street ”Kaiserstrasse” including a branch line in the southern direction from the tram-train stop “Marktplatz” (market place) to the stop “Augartenstrasse”. The stop “Marktplatz” is the main junction between the east-west tram-train tracks and the north-south tracks, which connect the inner city with Karlsruhe’s main station. “Kaiserstrasse” is a pedestrian area and the main shopping area with several shops, restaurants and cafes, located in the city centre. However, the pedestrian area is shared between the tram-trains and pedestrians. Therefore, both, the flow of the tram traffic and the pedestrians are disturbed.

The tram-train tunnel in “Kaiserstrasse” (east-west direction) is 2.4 kilometres long and includes four underground stops. The branch in the north-south direction is one kilometre long and includes another three underground stops. Several ramps are built to connect the underground tracks with the tracks above ground. All of the underground stops are approximately 13 meters deep, except for one which is only 7 meters deep. The tunnel itself is built as one tube with an outer diameter of 9 meters (inner diameter: 8.2 meters) with one track going in each direction.

The second part of the “Kombilösung” includes an additional tram-train track in the “Kriegsstrasse” street with extensive green areas, as well as cycle paths. The vehicle traffic currently managed on “Kriegsstrasse” is lead through a second tunnel that underpasses the newly built tram-train tracks on “Kriegsstrasse”.

[[Image:Kombi1.png|Kombi1.png]] 

''Figure 2: Mapofthetunnels in “Kaiserstrasse” (red) and Kriegsstrasse (green); an interactive map can be found on the official project homepage''

The car tunnel in “Kriegsstrasse” is designed at 1.6 kilometres long and will replace the current busy road, which at the moment includes several underpasses for “fast-track” traffic. The tunnel starts at the stop “Karlstor” at the western end and ends at the node “Ostendstrasse” in the street “Ludwig-Erhard-Allee”. The tracks in “Kriegsstrasse” are an additional load relief for the tram-trains going through “Kaiserstrasse”. There will be three further stops for this line. Between “Karlstor” and the “Mendelssohnplatz” stop, a pedestrian boulevard framed by trees and green areas with wide cycle paths and walkways is also incorporated, besides the new tram-train tracks. With this boulevard, the city centre is stretched out from “Kaiserstrasse” to “Kriegsstrasse”. This constitutes the beginning of a long needed southwards stretch of the centre.

The project is currently still under construction and planned to be finished in 2019. Although the project has only been realized in the last few years, the idea for a tunnel in “Kaiserstrasse” exists since the 1970s. The idea has constantly been developed and has been made public in 1990 with a resolution in the municipal council for the tunnel. A first referendum in 1996, however, has been negative. In 2002, a second referendum voted for the joint project as it is executed now.

==The Contracting Authority (Public Party)==

The Karlsruher Schieneninfrastruktur-Gesellschaft mbH (KASIG) is the principal for the project. The company was founded in 2003, solely for the construction of the “Kombilösung”. It is owned 100% by the “Karlsruher Versorgungs-, Verkehrs- und Hafen GmbH“(KVVH), which is again owned 100% by the city of Karlsruhe. KVVH incorporates all of the city’s transportation and public utilities companies, as well as the inland port of Karlsruhe.

Since the KASIG mbH is indirectly owned by the city of Karlsruhe, it can be assumed the project is driven locally with the purpose of reorganizing the traffic in the city of Karlsruhe in order to free the centre from congestion and to provide fast, reliable and better connected public transport in Karlsruhe.

==Sources of Financing==

As of the Municipal Transport Financing Law (GVFG), the project is funded through public subsidies by 80%. The remaining 20% are borne by the KASIG mbH. This, however, does not accurately match the latest numbers that have been made public in December, 2014 (see Table 1).

The financing structure is as follows:

The 80% of public financing is divided between the Federal Government of Germany that provides 60 % of the funding through the Municipal Transport Financing Law (GVFG), and the State of Baden-Württemberg that provides 20% of the funding, also through the GVFG.

As of 2014, the subsidies by the Federal Government came to €426.7 million and the subsidies of the State to €142.2 million. In order to complete the project, €897.3 million are needed. The remaining €328.4 million are provided by the KASIG mbH.

''Table 1: Summary of the financing structure for the “Kombilösung”'' 

{| class="wikitable"
|-
| '''Overall budget'''
| '''Subsidies of the Federal Government (Germany)'''
| '''Subsidies of the State Government (Baden-Württemberg)'''
| '''KASIG mbH'''
|-
| 897.3 Mio €
| 426.7 Mio € (48%)
| 142.2 Mio € (16%)
| 324.4 Mio € (36%)
|}

==Users==

Users directly benefiting from the project are the public transport users living in Karlsruhe or the surrounding areas, as well as residents along the main construction areas ("Kriegsstraße" and "Kaiserstrasse"). Residents of and visitors to Karlsruhe will benefit from a car and tram-freed pedestrian area in the city centre and a less dissected district around the "Kriegsstrasse". Thus, the infrastructure project is basically a city development project.

Other parties that yield benefits are shopping, food and other service businesses along the pedestrian area "Kaiserstraße", as well as businesses located along the newly emerging southward stretch of the city centre in the “Karl-Friedrich-Strasse” street .These businesses will profit by the upgraded and then traffic-freed pedestrian area, whereby an improved shopping experience for customers could be provided.

Public transport operators will benefit from the modern infrastructure that enables a high-quality service and fast connections.

Overall, the city of Karlsruhe will provide a more attractive environment for residents and visitors alike.

==Key Purpose for Public Financing Model Selection==

It is assumed that a PPP model was rejected because public interest rates are extraordinarily low in Germany, compared to private interest rates.

==Project Locality and Market Geography==

The tram-train tunnel in “Kaiserstrasse” and the car tunnel in “Kriegsstrasse” are both located in the city centre and are built with the purpose of ensuring traffic flow in the inner city. Therefore, the project is classified as urban.

==Procurement & Contractual Structure==

===Tendering===

The company commissioned for the construction works has been selected through a tender process, which is a standard procedure for projects similar to the “Kombilösung”. Since the project consists of two separate parts, there is a separate tender process for each.

The tender process for the tram-train tunnel in “Kaiserstrasse” has started in 2009. The tender documents have been sent to five chosen consortia on June 19, 2009. The proposals had to be handed in by October 6, 2009. In the first quarter of 2010, the results had been published. On February 23, 2010, KASIG has announced the company with the winning bid and the cost for the carcass works. The company responsible for the works is Alpine Bau Deutschland AG.

The construction tender in “Kriegsstrasse” was handled similarly, but started only in 2014. After prequalification, six associations have been approved for the tender process, to which the documents had been sent on November 28, 2014. The deadline for the application was March 26, 2015. There is no further information available at this time (2015), since the tender process is not yet completed.

===Risk Allocation===

There is no information available on the risk management of the project. It can only be assumed based on the structure of the project (see Figure 3). All risks are totally public, since it is a public project. Commercial, financial and regulatory risks are all moderate to acceptable (since they do not apply to the project), therefore no risk mitigation strategies are needed.

[[Image:Kombi2.png|Kombi2.png]] 

''Figure 3: Risk allocation''

==Performance==

Since the project is not yet completed, no conclusions on the eventual performance can be drawn at the moment. However, the project is well underway, with no substantial delays and it can be expected that the project will achieve its goals.

Nevertheless, there have been delays that have been caught up with, in the course of the project.

The construction of the underground stops of the tunnel in "Kaiserstrasse" has been delayed up to 12 months. This was caused by a fault in resource and space planning. There have not been enough construction workers working at the respective sites. Additionally, the construction sites were designed as too small in the planning phase in 2004. Obstacles in the building ground were regularly found that needed to be removed and in some building excavations several pumpings were needed to ensure tightness, which all caused unplanned work stops.

The insolvency of the main construction company, Alpine Bau Deutschland AG in 2013 was also highly discussed. However, the city claims that this has caused a delay of only two days.

Despite the above, with the closure of the street “Kaiserstrasse” between the stops “Kronenplatz” and “Marktplatz” in 2013, 15 months of building time have been regained. Therefore, the project is now said to be more or less within schedule.

There has been a substantial cost increase of around 50% due to the increase in costs for the construction works and administration. The increase in construction costs resulted from additional or modified services, as well as additional amounts in the range of civil engineering works and increased demands on quality assurance. Moreover, the construction of interim arrangements for tram, road and pedestrian traffic were required and new sewage pipes had to be installed. The site clearing, in particular the investigation and disposal of ammunition and dud bombs left over in the building ground after the Second World War, added more unforeseen costs. The additional budget for administrative matters can be broken down into project controlling, construction supervision and site management, as well as costs for experts and testing engineers for geotechnics and tunnel construction and legal matters.

==Project Outcomes==

The project is still under construction; therefore, no statements regarding project outcomes can be made.

==References==

* Casazza, W. "Kombi-Loesung Karlsruhe-Tunnelbau im Herzen der Stadt." Betonwerke im Untergrund-Infrastruktur fuer die Zukunft: 5. Symposium Baustoffe und Bauwerkserhaltung, Universität Karlsruhe (TH), 13/03/2008. 2008
* Konrath, U. „Kombiloesung Karlsruhe – Tunnelbau im Herzen einer Stadt“ Perspektiven des Gleisbaus: Überwachungsgemeinschaft Gleisbau e.V. 12/09/2013 http://uegg.eu/fileadmin/user_upload/dokumente/G5136509_ Konrath. pdf
* http://www.diekombiloesung.de/startseite.html, last accessed: 22/06/2015
* www.ka-news.de, last accessed: 24/06/2015
* http://www.diekombiloesung.de/aktuelles/webcams/marktplatz-nord.html

Case Studies: Berlin-Brandenburg Airport, Germany

2016-10-06T15:21:05Z

Nimda: Created page with "{{Infobox |header1 = Berlin-Brandenburg Airport, Germany |header2 = |label2 = Project Type: |data2 = Both |header3 = |label3 = Type of Project Financing: |data3 = Public..."

{{Infobox
|header1 = Berlin-Brandenburg Airport, Germany
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 5 years (initial)
|header5 =
|label5 = Budget:
|data5 = €6.11 billion (2014)
|title = Project Overview
|image = [[Image:Berlin1.png|300px]]
|caption = ''Figure 1: Berlin-Brandenburg Airport, Germany'' 
''Source: www.wikimedia.com''

| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1991:
| data1 = Formation of Berlin Brandenburg Flughafen Holding GmbH (FBB), comprising all airports of Berlin (TXL, SXF, THF). Shareholders are the state of Berlin, state of Brandenburg and the Federal Republic of Germany.
| label2= 1992:
| data2 = Project conceived, planning commences for a new single airport in Berlin, named Berlin-Brandenburg International (BER).
| label3= 1993-1994:
| data3 = Regional planning procedure (“Raumordnungsverfahren“), evaluating different location alternatives (Jüterborg, Sperrenberg, Schönefeld etc.).
| label4= 1996:
| data4 = Shareholders agreement, the so-called “Konsensbeschluss”, for a single airport in Schönefeld. All other operating airports are to be shut down after new single airport starts operation.
| label5= 1997-2003:
| data5 = Various tendering processes
| label6= 1999-2004:
| data6 = Project award, official approval of plans (Planfeststellung): Single airport and almost all other infrastructure projects connecting the airport with the local infrastructure are approved by August 2004.
| label7= 2006:
| data7 = Court challenge of planning approval notice is finally dismissed by federal administrative court. However, stricter noise protection measures are imposed.
| label8= 2006:
| data8 = Construction of airport commences in September.
| label9= 2008:
| data9 = Construction of terminal starts.
| label10= 2010:
| data10 = Bankruptcy of construction planning company and changes in terminal construction works due to new European security regulations at airports delay the opening of BER to June, 2012.
| label11= 2011:
| data11 = Initial scheduled opening of BER (November 2011).
| label12= 2012:
| data12 = Non-compliance with fire prevention standards forces opening of BER to be postponed for a second time.
| label13= 2012:
| data13 = Last court challenges for planning approval notice are turned down.
| label14= 2013:
| data14 = Updated beginning of operation scheduled for 2013. Opening of the airport postponed again.
In late 2014, CEO of the airport company Hartmut Mehdorn announces airport opening by 2017.

}}
}}

==Introduction==

Berlin-Brandenburg-Airport (IATA-Code: BER / ICAO-Code: EDDB, geo coordinates: 52° 21′ 44″ N, 13° 30′ 2″ O) is an airport under construction to replace existing civil aviation infrastructure in the Berlin-Brandenburg region, Germany. The project has received massive public attention for heavy cost increases, construction failures, environmental claims (e.g. noise), extensive delays and mismanagement.

The project was conceived in 1992. Berlin’s civil aviation infrastructure evolved historically at different loca-tions in Berlin-Tempelh of (THF/EDDI), Berlin-Tegel (TXL/EDDT) and Schönefeld (SXF/EDDB) in conse-quence of its division between 1945 and 1989. Following the fall of the Berlin Wall in 1989, Berlin’s access to air transport was scrutinised as the existing infrastructure - far separated in distance - did not hold for environmental and economic principles. In 1996, local and national politicians reached a consensus to con-struct a single airport at Schönefeld, after evaluating different location alternatives. It was further decided to subsequently close down operations in Tegel (active by time of project assessment) and Tempelhof (seized operation in 2008).

In 1997, a tendering process was initiated to privatise construction and airport operations. Two consortia, namely HochTief and IVG, expressed interest. In 1999, a deal with HochTief was overturned by a regional administrative court. Further endeavours for privatisation failed in 2003. Public commitment for a single airport, however, remained active. Flughafen Berlin Brandenburg GmbH (FBB), a public enterprise, resumed the planning of BER.

In 2004, FBB obtained clearance (approval of plans, project award) for its construction plans of Berlin’s new single airport. Adjacent to existing civil aviation infrastructure of the Berlin-Schönefeld-Airport, the following construction activities were approved:

* A new terminal building is constructed to host an annual flow of 30 million passengers per year. Its modular setup allows for an expansion to a maximum capacity of 45 million passengers per year. BER has 132 check-in counters, 25 passenger boarding bridges and additional walk-boarding capaci-ty at its northern pier.

* Refurbishment and construction work is conducted for the BER runway system to host aircrafts of ICAO-Code-Letter F. The new airport has two runways (07/25), both allowing for 83 start and landing operations per hour. SXF’s old south runway is refurbished and extended to a length of 3,600 meters to become BER’s northern runway. BER’s southern runway with a length of 4,000 meters will be newly constructed. 82 parking positions for airplanes will be available.

* For passenger accommodation, four car parks with a capacity of 2,200 slots are built. In total, park-ing capacity will reach 10,000.

* Adjacent to the airport, an area of 16 hectares is developed to become the airport’s commercial dis-trict.

* An underground train station at the airport links BER to Berlin’s local public transportation system, as well as to long distance trains. It comprises of six tracks at three platforms – two for long distance and local commuter trains, and one for rapid train systems (S-Bahn).

* There have been some modifications in the road system. For instance, a motorway access to Auto-bahn A113 has been built.

Overcoming court challenges for approval of plans, construction started in 2006. At that time, the beginning of operation at BER was planned for the end of 2011. Bankruptcy of the construction planning company, construction failures (e.g. smoke extraction system), changes in EU security regulations and mismanage-ment prompted a delay. By the time of assessment, the beginning of operation at BER was expected for mid 2017.

==The Contracting Authority (Public Party)==

The Berlin-Brandenburg-Airport project is conducted by a public enterprise named Flughafen Berlin Bran-denburg GmbH (FBB). In 1996, FBB’s public owners decided to develop a new single airport in the Berlin metropolitan area. This task – operation and development - remained with FBB (or its legal predecessors) as intended privatization failed. Hence, FBB is responsible for all conducted business processes, e.g. con-tracting construction companies or obtaining an operating permit. However, its decision making is largely influenced and supervised by its public owners. Ownership of FBB lies with the State of Berlin (amount of shares: 37%), State of Brandenburg (37%) and the Federal Republic of Germany (26%). By its set up, the project has a regional character.

Furthermore, FBB operates Berlin’s existing main civil aviation infrastructure at Berlin-Tegel (TXL) and Berlin-Schönefeld (SXF). Before the closure of Berlin-Tempelh of (THF) in 2008, FBB also operated this airport.

==Sources of Financing==

The Berlin-Brandenburg-Airport project receives financing through multiple channels: subsidies, credit and equity capital. Types of sponsorships, however, differ between the different infrastructure projects. Financ-ing airport investments (€5.4 billion) contain all three sources. Initially, the BER financial concept was based on FBB public owners spending €0.43 billion. FBB covenanted to provide €0.45 billion of equity capital and debt financed €2.4 billion in the form of long-term credit from private financial institutions to cover estimat-ed project costs of €3.3 billion. To facilitate FBB’s credit raising, public sponsors offered a 100% guaran-tee. For the terminal construction included in a TEN-T project, FBB received about €30 million of subsidies from the European Union.

Unexpected cost increases required additional project funding. In 2012, participating public authorities au-thorised €1.2 billion in accordance with their amount of shareholding at FBB. In 2014, FBB owners increased subsidies by €1.1 billion to cover for a budget shortfall. By the time of assessment (2015), while BER still being under construction, there have been public discussions about the question of how to finance potential additional funding requirements. Latest media reports indicate project costs of €8 billion.

The European Commission investigated the public involvement of the airport financing for a possible in-fringement of European common market laws in 2009 and 2012, but did not raise any complaint.

Rail (€0.636 billion) and road (€0.073 billion) works have different sponsorships, which have not been as-sessed so far.

==Users==

The main purpose of the Berlin-Brandenburg-Airport is to facilitate air passenger and air cargo transport. The airport serves as a gateway to Europe and other worldwide destinations mainly for residents of the regions Berlin and Brandenburg and transfer passengers, but will also attract airfreight forwarding companies.

==Project Locality and Market Geography==

The Berlin-Brandenburg-Airport project locality has a regional character. The node connects Berlin, Branden-burg and adjacent regions to Europe. The hinterland counts about 10 million inhabitants, out of which 6 mil-lion live in Berlin and Brandenburg. The next airports offering comparable regular domestic or intra-European flights are Szczecin (distance: 163 km, measured in great circle distance), Dresden (140 km), Leipzig (137 km), Hannover (261 km) and Hamburg (275 km). Whether the Berlin-Brandenburg-Airport will attract more long-haul traffic to outer-European destinations, such as Asia, the Middle East or North Ameri-ca or function as a hub, like Frankfurt, Paris or London to change its market geography is unknown by the time of project assessment. Currently, TXL and SXF serve as a final destination airport. Only 8% of TXL’s and SXF’s passengers combined are transfer passengers (2013).

==Procurement & Contractual Structure==

===Procurement===

Public tendering process for construction and operation of the airport starts in 1997. Politicians agree to offer at least 74.9% of FBB for sale to a private contractor, who shall obtain an operating concession with a minimum duration of 50 years. Public financial obligation shall be reduced to a minimum. Two consortia lead by HochTief and IVG indicate interest. In 1999, HochTief is awarded the concession. In the same year, an agreement between public authorities and HochTief is successfully challenged in court by IVG. The agreement contained the selling bid for FBB of DM650 million (€332.4 million) and an operation concession until 2057. Private investments for the airport’s first development stage are estimated at DM4,693 million (€2,400 million), while public obligations are estimated at DM1,598 million (€817 million). In 2003, public offi-cials cancel a second tendering process started in 2000, because an agreement with a merged consortium of HochTief and IVG could not be reached.

===Risk Allocation===

All risks can be classified as rather public, as shown in Figure 2. Design risks would have catastrophic magnitude. Other risks are acceptable to moderate. Risk mitigation strategies have not been made public.

[[Image:Berlin2.png]] 

''Figure 2: Risk allocation''

==Project Outcomes==

The project is still under construction and will be opened in 2017 at the earliest. Therefore, no statements regarding project outcomes can be made. However, the project is already heavily over budget and seriously delayed.

==References==

* Berlin-Brandenburg Flughafen Holding GmbH (1993). “Ergebnisse der Standortsuche: Phase 1 der Vorbereitung des Raumordnungsverfahren – Zusammenfassung der Gutachten“
URL: http://www.bvbb-ev.de/index.php/dokumente-und-unterlagen/category/23-rov?download=266:ergebnisse-der-standortsuche-1-phase-des-rov-1993, last accessed 24/06/2015.

* Berlin-Brandenburg Flughafen Holding GmbH (1997). „Konzept zur Privatisierung der BBF und Privatfinanzierung des BBI“ Dokument des Aufsichtsrat.
URL: https://ber.piratenfraktion-berlin.de/media/documents/Aufsichtsrat_BBF_
Privatisierungskonzept_September_1997.pdf.

* Europäische Kommission (2009). „Staatliche Beihilfe Nr. NN 25/2009 (ex N 167/2009) – Deutschland Finanzierung des Flughafens Berlin Brandenburg International“.
URL:http://ec.europa.eu/competition/state_aid/cases/231148/231148_978961_8_2.pdf, last accessed 24/06/2015.

* Europäische Kommission (2012). „Staatliche Beihilfe SA.35378 (2012/N) – Deutschland Finanzierung des Flughafens Berlin Brandenburg“. URL: http://ec.europa.eu/competition/state_aid/cases/246863/246863_ 1395913_177_1.pdf, last accessed 24/06/2015.

* Flughafen Berlin Brandenburg GmbH (2011). “Gesellschaftsvertrag”. URL: http://www.mueller-gueldemeister.de/wp-content/uploads/2013/01/Flughafen.pdf, last accessed 24/06/2015.

* Flughafen Berlin Brandenburg GmbH (2014).“Geschäftsbericht 2013“.

* Flughafen Berlin Brandenburg GmbH (o.D.). „Entwicklung des Fluggasterminals“.

* Ministerium für Stadtentwicklung, Wohnen und Verkehr des Landes Brandenburg (2004). „Planfeststellungsbeschluss Ausbau Verkehrsflughafen Berlin-Schönefeld“ Band 1. 13. August 2004.
URL: http://www.lbv.brandenburg.de/dateien/luftfahrt/Planfeststellungsbeschluss.pdf, last accessed 24/06/2015.

* Planfeststellungsbeschluss “Ausbau Verkehrsflughafen Berlin-Schönefeld” (2004),

* Planfeststellungsbeschluss “Schienenanbindung Ost Flughafen BBI” (2010)

* Masterplan Gateway BBI.

* State aid cases NN 25/2009 and SA.35378.

Case Studies: Helsinki-Lahti Main Road 4 / E75, Finland

2016-10-06T09:11:43Z

Nimda: Created page with "{{Infobox |header1 = Helsinki-Lahti Main Road 4 / E75, Finland |header2 = |label2 = Project Type: |data2 = Both |header3 = |label3 = Type of Project Financing: |data3 = ..."

{{Infobox
|header1 = Helsinki-Lahti Main Road 4 / E75, Finland
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public-Private Partnership (PPP)
|header4 =
|label4 = Contract duration:
|data4 = 15 years
|header5 =
|label5 = Budget:
|data5 = 240 M€
|title = Project Overview
|image = [[Image:Lahti.png|300px]]
|caption = ''Figure 1: Helsinki-Lahti motorway in operation, Finland''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 1996-1997:
| data1 = Political and administrative decisions
| label2= 1997-1999:
| data2 = Construction period
| label3= 1998:
| data3 = First section opened to traffic
| label4= 1999 :
| data4 = Second section completion and opened to traffic
| label5= 2012:
| data5 = Concession period completed and handover back to the state

}}
}}

==Introduction==

A working group set up by the Ministry of Transport and Communications recommended in its final report, 26th of March 1996, that private finance would be implemented to road construction and maintenance by the shadow toll option. The concession contract was to cover the upgrading of the Järvenpää-Joutjärvi stretch of semi-motorway into motorway as well as the maintenance of this stretch (both the old and the new carriageway) for 15 years. The cost estimates excluding VAT were between 550-590 MFIM (ca. 100 M€) for the construction and 10 MFIM annually for the maintenance. The same parliamentary decisions for this were made.

==The Contracting Authority (Public Party)==

The task of organizing the call for tenders was allocated to the national road authority, Finnish Road Administration (later Finnish Transport Agency). The Administration was the state infrastructure manager responsible for the entire public (state) network in the country.

==The Concessioner (Private Party)==

The concessioner was a consortium of private investors and construction business actors. Figure 2 below shows the synthesis of actors and their contribution.

[[Image:Lahti1.png|400px]] 

''Figure 2: Concession actors and roles (Source: KPMG 2013)''

==Sources of Financing==

The first set of equity invested by the project company shareholders was in fact minimal, to fulfil the letter of corporate laws. Other arrangements were made to ensure equity financing. The largest debt investor was the Nordic Investment Bank.

==Users==

The road is a public state road. A large share is heavy transport and commuting.

==Key Purpose for PPP Model Selection==
Helsinki-Lahti was the first PPP project in Finland. Therefore, its nature was partly experimental. However, the actual link improvement was necessary, so the only novelty for the project was the financing. An awareness of state budget limits with regard to infrastructure investments that were deemed needed was clearly one motivational factor. The other one was the general trend in PPPs and liberalizationin Europe.

==Project Timing==

In November 1998, the first sections of the road were opened to traffic, while the remaining sections in September 1999. The handover to the state and termination of the concession was in August 2012.

==Project Locality and Market Geography==

The road links the city of Lahti to the capital Helsinki. There are old roads that can be used in case of disruptions, but immediately after the opening to traffic, the road was fully utilized by road users. A railway line, also one of the busiest in the country, runs alongside the road, and there is a natural competition between modes. The new road seems to have strengthened the road transports’ competitiveness.

==Procurement& Contractual Structure==

The project company Nelostie Ltd. representing the consortium and assuming the concession was the signing party. The other side was the Finnish Road Administration.

===Tendering===

After the political decisions were made, the public announcement for call for tenders was made in May 1996. The first actual call for tenders was issued in July 1996. Bids were received in November 1996. The contract was signed in March 1997.

===Contract Structure===

The contract covered the construction and operation of the road.

The state owner paid a shadow toll to the concessioner according to traffic performance (vehicle kilometres of travel) on the road. The traffic was measured at two sites. The first site represented an assumed homogenous traffic volume on a 30,2km stretch and the second site, 39,0 km. In case of exceptional situations, when traffic volumes were not recorded or traffic was blocked, the traffic counts of the previous year for the same period applied. Certain clauses had been included for traffic days in exceptional circumstances.

The cash flow from shadow tolls was received in four payments: end of March, end of July, end of September and end of December. The first three payments were based on the total payment of the previous year. At the end of December, the payments were balanced according to real traffic volumes. Different types of vehicles are not distinguished, but each vehicle, or rather vehicle kilometre, was equally worth.

The owner had a right to withdraw the liabilities of the concessioner to a third party, as long as these liabilities were due to operations connected to the concession contract.

The construction costs were not indexed except for the paving works, where the market price of bitumen could have an impact on contract payments.

The operating costs were indexed totally throughout the concession period using civil engineering works cost index.

The re-paving works were also included in the operating costs.

Any possible changes to these contracts were not publicized.

===Risk Allocation===

The risk allocation is depicted in Figure 3.

[[Image:Lahti2.png]] 

''Figure 3: Risk allocation (author’s own estimate)''

===Performance===

With regard to construction quality, the owner was eligible to claim compensation when bad quality, workmanship or engineering was detected. Special emphasis was laid on the quality assurance procedures and quality control documents. The evaluation of quality was done mainly on the basis of contractor’s/concessioner’s quality control documentation supplemented with inspections and sampling. If inspections or sampling showed deviations from the accepted quality level and the contractor’s own reports did not conform to the sampling or inspection results, the contractor paid a 50.000 FIM sanction for each event of non-conformance.

As with construction, the operating quality was based on the concessioner’s own reports supplemented with inspections by sampling. The sanctions were the same as above. There are sanctions concerning blocked lanes due to repair works or similar issues.

==Project Outcomes==

According to an interview study carried out by KPMG for the Finnish Road Administration, Helsinki-Lahti is by and large considered to be a success story. The active role the PPP company has played in collaborating with the local authorities to revitalise the local economy was highlighted by the interviewees (KPMG 2013).

One academic study on the project concluded that from the taxpayer point of view, the benefits of the road were not fiscal, but mainly related to local economy boosting and externalities, such as improved traffic safety (Leviäkangas 2007).

==References==

* KPMG (2013).Elinkaarimallinjälkiarviointi [Ex post evaluation of life-cycle PPPs]. Report for the Finnish Transport Agency, available at: http://www2.liikennevirasto.fi/julkaisut/pdf3/lr_2013_elinkaarimallin_jalkiarviointi_web.pdf
* Leviäkangas, P (2007). Private finance of transport infrastructure projects - Value and risk analysis ofa Finnish shadow toll road project. VTTPublications 624. 238 p. + app. 22 p. Available at: http://www.vtt.fi/inf/pdf/publications/2007/P624.pdf

Case Studies: E18 Muurla-Lohja, Finland

2016-10-06T08:51:38Z

Nimda:

{{Infobox
|header1 = E18 Muurla-Lohja, Finland
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public-Private Partnership (PPP)
|header4 =
|label4 = Contract duration:
|data4 = 24 years
|header5 =
|label5 = Budget:
|data5 = ca. 700 M€
|title = Project Overview
|image = [[Image:E18.png|300px]]
|caption = ''Figure 1: E18 Muurla-Lohja in operation, Finland''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 2004:
| data1 = Official announcement to call for tenders, expressions of interest, and first call for tenders
| label2= 2005:
| data2 = First and second round of tenders, procurement decisions, contract negotiations and signing of the service contract
| label3= 2005-2009:
| data3 = Construction
| label4= 2008 & 2009:
| data4 = Openings to traffic

}}
}}

==Introduction==

E18 Muurla-Lohja motorway is part of the international East-West connection from Turku to Helsinki. The project included 51 km of motorway, 12.5 km other roads, 27 km private roads, 7 tunnels (total length 5.2 km) and 8 interchanges.

The project is part of a larger investment strategy program of the Finnish Ministries and government, where the east-west connections to St. Petersburg played a vital role. The road also improves connections between the largest (Helsinki) and second largest (Turku) cities of the country.

==The Contracting Authority (Public Party)==

The task of organizing the call for tenders was allocated to the national transport infrastructure authority, Finnish Road Administration (later Finnish Transport Agency). The Administration was the state infrastructure manager responsible for the entire public (state) network in the country.

==The Concessioner (Private Party)==

The concessionaire was a consortium of private investors and construction business actors. Figure 2 below shows the synthesis of actors involved in the project.

[[Image:E18_1.png|400px]] 

''Figure 2: Concession actors and roles (Source: KPMG 2013)''

==Sources of Financing==

Experienced infrastructure equity investors such as Skanska and Laing Roads Ltd. were in the core of the project company, providing major equity stakes. EIB, NIB and Nordic large commercial banks were issuing debt for project company Nelostie Ltd.

==Users==

The road is a public state road. A large share is heavy transport and commuting.

==Key Purpose for PPP Model Selection==

E18 Muurla-Lohja was the second PPP project in Finland. Encouraged by the positive experience of the first (Main Road 4 /E75 Helsinki-Lahti) PPP project, the second PPP was launched. The E18 Muurla-Lohja, however, has a different revenue mechanism.

The actual link improvement was necessary and part of national investment program.

==Project Timing==

Following, the political decision to deliver the project through the PPP model, the public procurement processes was completed within approximately one year (2004-2005). The construction phase was in its entirety four years (2005-2009), and the road was opened to traffic in two parts, in 2008 and 2009, respectively.

The concession contract signed in 2005 ends in 2029.

==Project Locality and Market Geography==

The road links two major Finnish cities, Turku and Helsinki. Also, the corridor of E18 forms a notable economic area with the country’s strongest concentration of population and business. A railway line, also one of the busiest in the country, runs along the same corridor, and there is a natural competition between modes. The new road seems to have strengthened the road transports’ competitiveness.

==Procurement& Contractual Structure==

The project company Ykköstie Ltd. representing the consortium and assuming the concession was the signing party. The other side was the Finnish Road Administration.

===Tendering===

Following the political decision to go ahead with the PPP model of delivery, the official public announcement for expressions of interest was made in March 2004. The expressions of interest were submitted in July 2004. Selected calls for tenders were released in September 2004, and first bids were submitted in March 2005. These were evaluated and a second round of qualified bidders was launched in May 2005. Bids were submitted in June 2005. Contract negotiations followed between June-October 2005, after which the final service contract was signed.

Several international and domestic consortia took part in the bidding process.

===Contract Structure===

Two parties are in the contract: the concessioner YkköstieLtd. and the Finnish Road Administration. The contract covered the construction and operation of the road.
The state owner pays availability payments to the concession company when the road is in impeccable condition for the road users. The exact payment mechanism is not publicized.
Indexing of the works and availability payments were not made public. Any possible changes to the contracts were also not publicized.

===Risk Allocation===

The risk allocation is depicted in Figure 3.

[[Image:E18_2.png]] 

''Figure 3: Risk allocation (author’s own estimate)''

===Performance===

A number of performance indicators are associated with the contract and availability payments. These include, in addition to availability, safety, standard conformance, certain functionality requirements, etc.

==Project Outcomes==

The process of project execution, starting from political decisions and ending to the commencement of the service, has been deemed very efficient, especially when compared to international experiences (KPMG 2013). For example, the period (i.e. months) spent for contract negotiations was considered short and efficient but at the same time challenging.
The second half of the project was opened to traffic two months after scheduled because of challenges and discussions on the tunnel safety systems’ conformance and testing. However, the total project schedule was still ahead of the original one. (KPMG 2013)

So far, the road has been serving the road users well without any major interruptions or defects in construction or maintenance.

==References==

* KPMG (2013).Elinkaarimallinjälkiarviointi [Ex post evaluation of life-cycle PPPs]. Report for the Finnish Transport Agency, available at:

http://www2.liikennevirasto.fi/julkaisut/pdf3/lr_2013_elinkaarimallin_jalkiarviointi_web.pdf

Case Studies: Combiplan Nijverdal, The Netherlands

2016-09-22T08:43:01Z

Nimda:

{{Infobox
|header1 = Combiplan Nijverdal
|header2 =
|label2 = Project Type:
|data2 = Brownfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 68 months
|header5 =
|label5 = Budget:
|data5 = €272 million (2009)/€90 million (Construction). Total investment €316 million (2014)/€165 million (Construction and terrains acquired)
|title = Project Overview
|image = [[Image: Combi.png|300px]]
|caption = ''Figure 1: Combiplan Nijverdal, The Netherlands''
|header6 = Project Time Line
{{Infobox
| child = yes
| label1= June 21, 2010:
| data1 = Construction works started
| label2= 2010 – 2014:
| data2 = Tunnel structure construction
| label3= March 2013:
| data3 = Tunnel roof completed
| label4= April 1, 2013:
| data4 = Opening of the new station Nijverdaland train tunnel
| label5= 2014-2015:
| data5 = Information safety system test in the road tunnel

}}
}}

==Introduction==

A new rail and motorway were constructed across the centre of the Nijverdal city over a distance of 6 kilometres, as part of a transportation link connecting the cities of Zwolle, Nijverdal and Almelo in the Netherlands. The infrastructure built is connected to the central train station. This train station is a central node of the town’s transportation network, and this shows the exclusive nature of the project in terms of infrastructure competition.

A 500 metres length tunnel that accommodates two train tracks and 2 x 2 lanes is part of the project. The tunnel alignment goes along the old railway path. The width of the tunnel structure ranges from approximately 26 to 36 metres. The tunnel depth varies along the route between 6 and 10 metres. Local infrastructure was relocated for the new project. Two slow traffic depressed crossings, two road bridges, two railway bridges, a railway viaduct and the necessary noise barriers were also built.

The idea of building a railway and roadway running parallel and attached to one another was conceived in the 70’s. The decision on the definitive alignment of the project was made in 1995.

==The Contracting Authority (Public Party)==

Rijkswaterstaat is the Government agency and national authority attached to the Ministry of Infrastructure and Environment. Rijkswaterstaat invests about 3 billion euro a year. ProRail is the Government agency that carries out the maintenance of the national railway network infrastructure, provides rail capacity and controls traffic. In 2013, ProRail invested €1.2 billion in rail and stations infrastructure.

Rijkswaterstaat in conjunction with ProRail are the client and public party, respectively, involved in this project.

The contractor responsible for the design, construction, as well as road maintenance for the first ten years after the full completion of works is a consortium consisting of Van Hattum & Blankevoort, HegemanBeton- en Industriebouw, Koninklijke Wegenbouw Stevin bv (KWS) and VolkerInfra Systems (Vialis).

The design of works was executed by VolkerInfra Design. Royal Haskoning DHV acted as advisor to the consortium and to ProRail. Hans van Heeswijk Architects delivered the architectural design.

==Sources of Financing==

The project was financed through public sources. The national government contribution was €272 million (2009). In addition to this budget, there are regional contributions as follows:
* €5.2 million by Nijverdal (village of the municipality Hellendoorn)
* €16 million by Zwolle municipality
* €14.6 million by the Overijssel province
* €30 million from the Region of Twente (association of certain municipalities in the area of influence).

==Users==

The project enables freight and passenger mobility. Road and railways benefit Nijverdal citizens directly, as well as residents and visitors from the Zwolle, Nijverdal and Almelo municipalities. Since the Combiplan project is highly connected with the Dutch transport network, it involves other regional and national users.

==Key Purpose for Public Financing Model Selection==

For the project, the original initiative was to undertake it using the Public Private Partnerships scheme. Eventually, it was decided to award a traditional Design and Construction contract, which were common practice. At the time, the national government did not stimulate much the use of Public Private Partnerships contracts.

==Project Timing==

At the time the project was planned and constructed, the socio-economic conditions were favourable. Following project award in 2006, the GDP growth rate increased. Comparing the years of planning (between 1990-1998) with those during construction and first operation (2005-2012), there was an incremental variation beyond expected values of the per capita income level of the region. Likewise, the unemployment rate dropped after 2006 (contract award year).

==Project Locality and Market Geography==

The Combiplan project can be considered an inter-urban infrastructure. This is because the project is a link connecting the cities of Zwolle, Nijverdal and Almelo. Some other characteristics of the market geography in the region show that the population density at the time of the project award was higher than the one during the project planning stage. Similar trends were observed for the level of industrialization and economic activities at the time of data collection of the project with respect to industrialization at project award. No new specific production activities started during or after the completion of the project and none was foreseen in the planning stage of the project.

==Procurement & Contractual Structure==

The contracting authority awarded a Design and Construction contract. However, after some contract modifications, maintenance services were included. The maintenance service period was agreed to be 10 years for both the road and the accompanying information transport system. Road and rail operation are the responsibility of the Nederlandse Spoorwegen, NS, a State Owned Company Dutch Railways, and Rijkwaterstaat, respectively.

===Tendering===

For this project, the procurement process consisted of a two stage procedure in which there was an open call first and, following this, a competitive dialogue procurement procedure. Five bidders participated in the tendering process, which lasted twelve months.

===Contract Structure===

Unit costs is the payments basis for the contract. Contract duration was agreed to be 68 months.

===Risk Allocation===

The respective allocation of risk is presented in Figure 2. It should be noted that the contracting authority awarded a design and construction contract.

[[Image: Combi1.png]] 

''Figure 2: Risk allocation''

==Performance==

In general, there were cost overruns equivalent to 5- 10%. This fits within the bandwidths, as forecasted in the estimate, and thus, fits within the amount of the project scope of the MIRT.

Along with the budgeted costs, from 2006, the initial project scope is extended. This means that, from the start of the project, the total amount of investments has been expanded.

A number of scope changes occurred in the Combiplan Nijverdal project. For each change, budget is allocated and the scope is adjusted accordingly. The initiative of the municipality and the province parts are added to the scope. The initiating party also bore the associated costs. In 2011, the new national tunnel standard is also implemented in the project and the project scope was adjusted accordingly.

The overall development of the contract scope amounts from the start to the end of the works to about 30%. Of this 30% of the development of the contract scope, 40% can be allotted to new design requirements. 20% of the changed design requirements arises from the application of the new tunnel standard.

The impact of the revised transfer prices amounted to 5% of the initial contract sum.

The resulting delay of the opening was due to connection problems in the network between the traffic control centre and the tunnel. The delay was approximately 6-9 months. The impact is about 5% of the total forecasted lead time. Three items are handled as, legally called, "claims", because of delay-and acceleration costs and changed laws and regulations (e.g. red diesel could not be used on the building site).

The project is executed within the total amount as mentioned in the MIRT of 2015.

==Project Outcomes==

The project had a relatively long planning period starting in 1990 and awarded in 2006. During this period, project scope and budget were adjusted. Few changes were made following project award.

The rail station and the railway tunnel were completed on time and within budget. The opening of the road tunnel was delayed due to the need to implement the new national tunnel standard and connection problems in the network.

Despite the above setbacks, the future opening of the road tunnel is expected to reduce travel time, improve traffic flow and road safety on the N35 and at the same time the quality of life in the centre of Nijverdal.

==References==

* www.rws.nl/wegen/plannen_en_projecten/n_wegen/n35/combiplannijverdal/

* www.volkerinfradesign.nl/nl/projecten/detail/combiplan-nijverdal

* www.infrasite.nl/projects/project.php?ID_projecten=1116

* www.rijksoverheid.nl/onderwerpen/ruimtelijke-ordening-en-gebiedsontwikkeling/meerjarenprogramma-infrastructuur-ruimte-en-transport-mirt

* www.cbs.nl/

Case Studies: The Lyon's Tramway T4, France

2016-09-21T15:48:17Z

Nimda:

{{Infobox
|header1 = Phase 1 of the Lyon T4 Tramway, France
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 72 months (Project Management contract)
|header5 =
|label5 = Budget:
|data5 = €185.3 million (2004) This cost includes expenditure relating to the contracting authority, project management, work carried out and land acquisitions necessary in order to complete the project.
|title = Project Overview
|image = [[Image:Lyon.png|300px]]
|caption = ''Figure 1: T4 Tramway, Lyon (France) Source: Cerema''

| header5 = Project Time Line
{{Infobox
| child = yes
| label1= June 2005:
| data1 = approval of the sustainable urban mobility plan for the Lyon urban area
| label2= February 2005/March 2005:
| data2 = Public consultation
| label3= April 2006:
| data3 = Public inquiry (only concerning phase 1 of the project)
| label4= July 2006:
| data4 = Declaration of Public Utility for phase 1
| label5= 2006/2009:
| data5 = Works
| label6= April 2009:
| data6 = Commissioning of phase 1 of the line

}}
}}

==Introduction==

Lyon Tramline T4 provides a South-East/North-West connection between the Part Dieu in Lyon and the Minguettes neighbourhood in Vénissieux. It was built in two phases:
* Phase 1: Construction of the South section between the T2 Tramway station (Jet d’Eau – Mendès France) and the Minguettes neighbourhood in Vénissieux. This phase was commissioned in April 2009;

* Phase 2: construction of the section to the Part Dieu Dieu railway station, and then, using the T1 tramway infrastructure, between the Part Dieu railway station and university campus of “la Doua”. This second phase was commissioned in September 2013.

The present project description concerns Phase 1.

[[Image:Lyon1.png]] 

''Figure 2: T4 tramway route (phases 1 and 2), Lyon (France)'' 
''Source: Public inquiry prior to the Declaration of Public Utility (DUP) for the T4 tramway line.''

The first phase of the tramway is for a linear distance of 9.5 km, and comprises of 18 stations. It replaces the route of bus no.36, offering a connection that is:

* Faster (the commercial speed of the bus varies, at peak time, between 15 and 20 km/h, whereas the DUP file forecasted a commercial speed for the tramway of 23 km/h);
* More reliable, being less affected by automobile congestion.

This new line connects two transport hubs: the Vénissieux railway station (D Metro line), and the Jet d’eau – Mendès France station (T2 Tramway). Its aim is, therefore, to improve accessibility to the centre of Lyon for the South-East quadrant of the urban area, and in particular the Minguettes district classified as a ZUS (sensitive urban area).

==The Contracting Authority (Public Party)==

In France, the development and operation of urban public transport networks is the responsibility of the Mobility Organising Authorities (AOMs). In the case of the Lyon public transport network, this responsibility is delegated to a specific public body named Sytral (Syndicat mixte des transports pour le Rhône et l’agglomération lyonnaise). This body includes the urban community of Grand Lyon (today called “Métropole de Lyon”) and the Rhône Departmental Council.

Sytral is the contracting authority for project construction and for the operation of the entire urban public transport network (including the tramway line 4). In 2009, Sytral assumed this role within an Urban Transport Perimeter (PTU) comprising 57 municipalities.

==Sources of Financing==

The project was financed exclusively by public subsidies. Its initial financial package of €185.3 million (in 2004 prices) was allocated as follows:

* Urban community of Grand Lyon (today “Métropole de Lyon”): €24.1 million (13%)
* Municipality of Vénissieux: €0.9 million (0.5%)
* Municipality of Lyon: €1.0 million (0.5%)
* Rhône Departmental Council €0.5 million (0.3%)
* State through AFITF (Agency for Financing French Transport Infrastructures): €20 million (10.8%)
* Sytral: €138.8 million (74.9%)

The main financial backer of the project is therefore Sytral. Its subsidy is based on two main sources of financing: the Versement-Transport (tax paid by employers and based on payroll) and loans.

==Users==

Due to the location of the stations, the first phase of the T4 line serves the municipalities of Lyon and Vénissieux. In terms of population, these two municipalities are respectively the largest and the third largest in the Métropole de Lyon (529,000 inhabitants in all in 2007). The line is also directly accessible to the inhabitants of Feyzin and Saint-Fons by means of the terminus station (Feyzin Vénissieux hospital).

Preliminary studies estimated the rate of use of the line at 21,700 trips per day. In 2012, prior to commissioning of phase 2, the number of trips per day ranged between 27,300 and 39,600.

==Key Purpose for Public Financing Model Selection==

Sytral decided to act as its own contracting authority for the project (with the support of a project management consortium), and to deal separately with the construction and operation of the new line.

There were several reasons for this choice:
* In the past, Sytral has fulfilled the role of contracting authority for the three tramway lines in Lyon and Villeurbanne (T1, T2 and T3). It has, therefore, developed a high degree of technical expertise, enabling it to assume the design and construction risk and monitor construction;

* The proportion of operating expenditure covered by fare revenue is high on the Lyon public transport network (in comparison with other French public transport networks). This coverage rate reduces Sytral's need for subsidies, therefore, enabling it to capitalise part of the Versement Transport payment. At the project definition stage, Sytral has financial resources and borrowing capacities, which make it unnecessary to seek further financing from a private sponsor.

* Sytral is its own contracting authority. Financing sources are provided entirely from public subsidies. This high level of public involvement guarantees the local population a high level of control during the execution of the project.

==Project Timing==

The 1997 Lyon Sustainable Urban Mobility Plan (SUMP), followed by the 2005 SUMP, planned the construction of a backbone line of public transport named "A4". This line, in its Southern part, corresponds to the route of T4 tramway phase 1. In accordance with these plans, preliminary studies were carried out by Sytral (on the engineering structures, route variants, etc.).

In October 2004, Sytral issued a tender for the project management contract. The project management consortium (SYSTRA/ARCADIS ESG/ATTICA/ILEX) was selected in December 2004. This consortium drew up the design of the line in October 2005 and then compiled the public inquiry file necessary to obtain the Declaration of Public Utility (DUP).

The Declaration of Public Utility was obtained in July 2006. The works contracts (33 in total) were issued throughout the works phase between October 2006 and April 2009. Phase 1 of the project was commissioned in April 2009.

==Project Locality and Market Geography==

The T4 tramway is an urban transport project. However, this new line has been integrated into the Sytral public transport network (bus, tramway and metro). This integration is achieved through:
* Links between the new line and the existing lines: in the case of phase 1, the T4 tramway links up with the D metro line at the Vénissieux railway station, with the T2 tramway line at the Jet d’Eau – Mendès France station, and with several bus lines. Following the commissioning of phase 2, the T4 tramway line makes it possible to access the Part Dieu transport hub (D metro, tramways T1 and T3, etc).
* Fare integration: to access the T4 tramway passengers use the same tickets as for the rest of the urban public transport network. Connections between two lines on this network are free of charge.

Two park-and-ride facilities are also immediately accessible from the T4 tramway line: at Vénissieux railway station and Feyzin Vénissieux hospital station.

==Procurement & Contractual Structure==

Implementation of phase 1 of the T4 tramway clearly dissociated design/construction from operation/maintenance of the new line. This section, therefore, presents the contractual procedures for these two stages in succession.

* For the construction of the line, there were two types of contracts:
** A project management contract in accordance with law no.85-704 of 12 July 1985 concerning the role of the public contracting authority and its relations with the private sector project management consortium;
** A series of 33 construction contracts drawn up separately with the different contractors responsible for the works.

*Operation and maintenance of the T4 line is performed by adding an additional clause to the Public Service Delegation contract signed (for the entire public transport network) for the period 2005/2010.

===Tendering===

Construction of the line

The project management contract was awarded by means of a tendering procedure in accordance with article 74 of the Public Procurement code. The tendering procedure consisted of an open call for tenders.

The bids were submitted by 20 October 2004, and assessed by a jury, based on their technical value, their coherence and price. There were three bids submitted, all authorised. The SYSTRA/ATTICA/ILEX/ARTELIA consortium was selected in December 2004.

The contracts for works were awarded by means of separate public procurement procedures. Contracts for works were awarded by means of open tenders, evaluated by a jury based on criteria defined within the tender. In total, it was necessary to award 33 contracts for works to complete the project, for amounts varying between €30.706 million (2007) and €0.039 million (2008), excluding VAT.

The largest contract for works concerned the construction of the railway platform. For this contract, the awarding procedure lasted roughly 2 months:

* The candidates had to submit their bid before 5 December 2006;
* The bids were analysed on 10 January 2007;
* The contract was awarded on 7 February 2007, for an amount of €30.706 million excluding VAT.

Operation/maintenance of the line

The public transport network for the Lyon urban area (TCL) is operated by means of a Public Service Delegation contract (DSP). When this line was commissioned in April 2009, the DSP contract was defined for the period 2005/2010. Clause 8 of this contract indicated that the operator did not benefit from any guarantee of exclusive operation of the future tramway line. Hence, in December 2004, when the DSP contract was signed, Sytral was not certain that the future tramway line would be operated by the operator selected for the remainder of the network.

However, the appendices to the DSP contract described the arrangements for the operation of the future tramway line. The decision to assign operation of the new tramway line to the operator of the TCL network was finally taken by means of an amendment to the DSP contract. The amendment was signed in March 2009, one month before the commissioning date.

===Contract Structure===

Construction of the line

The structure adopted for the construction of phase 1 of the T4 tramway is based on allocation of tasks and responsibilities between the contracting authority (Sytral) and the project management consortium (SYSTRA/ATTICA /ILEX/ARTELIA). The allocation was defined as follows:

* The contracting authority (Sytral) is responsible for defining the project and for verifying the conformity and quality of the services provided in order to implement this programme. More specifically, it manages the legal procedures and the land acquisition operations. Sytral assigns the contracts, validates financial expenditure and accepts the completed works. This actor is also responsible for external communication concerning the project, to local authorities and local residents. Some responsibilities, legally held by municipalities, were delegated to Sytral to facilitate coherence of the works.

* The project manager is responsible for the detailed design of the project (in accordance with the programme defined by the contracting authority), and supervision of its construction (definition of works contracts, technical inspection of services provided, compliance with costs and deadlines, etc.).

Operation/maintenance of the line

Amendment no.3 to the DSP for the Lyon urban area transport network places on record that operation of the tramway line is delegated to the operator in place (Keolis) and defines:

* The expected service supply for phase 1 of the T4 tramway;

* The financial adjustments required due to this new offering (modification of revenue, and modification of the financial compensation paid by Sytral to Keolis).

===Risk Allocation===

Construction of the line

Although the contract defines the allocation of tasks between the contracting authority and the project management consortium, this allocation is quite different from the risk allocation.

Most of the risks concerning the T4 tramway project are borne by the public authority. Although the project management contract stipulates that the contract holder is given an incentive to comply with costs, this incentive cannot be considered as a sharing of the design and construction risk. This is because:

* The project manager carries out detailed design of the project in accordance with the contracting authority's programme;

* The project management contract only concerns part of the tramway works;

* The incentive mechanism defined by the project management contract gives the contract holder an incentive to comply with the project costs. This system cannot be considered as a sharing of financial risk. In fact, any additional cost has to be borne by the public authority.

Operation/maintenance of the line

The public service delegation contract stipulates the following risk allocation between Sytral and the operator (Keolis) concerning:

* operating costs (industrial risk);

* commercial revenues.

The contract stipulates that an annual financial compensation shall be paid, the amount of which varies according to the fare revenue collected by the operator and transferred to Sytral.

This compensation is calculated on the basis of the operating costs borne by the operator. The operator therefore assumes the entire operating risk. Although the operator is not the owner of the revenue, it undertakes to generate a certain level of revenue. Below a certain threshold, the operator must compensate the loss of earnings to the organising authority. The commercial risk is therefore shared between the operator and the organising authority.

The distribution of risk in this contract is, therefore, as shown in Figure 3:

[[Image:Lyon2.png]] 
''Figure 3: Risk Allocation''

===Performance===

Construction of the line

Each construction contract comprises of its own specific quality indicators. In the case of the contract for construction of the railway platform, the main quality indicator concerns the deadline for completion of construction. Although no bonus is paid if the mission is completed in advance of the deadline set, a penalty of 1/2000th of the total contract amount must be paid for each day of delay after the deadline.

However, the project management contract does not contain a performance indicator concerning compliance with deadlines. The main performance indicator concerns compliance with project costs. At different stages of the project, the project manager's financial estimates are compared with the real costs. The difference between these two values, multiplied by an incentive rate varying between 3.5% and 5%, gives rise to collection of bonuses, or payment of penalties.

Operation/maintenance of the line

The quality indicators applied to the tramway line are those defined in the DSP agreement for the entire network. Although some of these indicators are specific to the tramway, none of them are specifically defined for the T4 line.

These indicators are specified in the appendix to the agreement, and relate in particular to:
* Cleanliness of the facilities;

* Quality of user reception and level of information given to users;

* Quality of the transport service provided (availability of the service, regularity of the service, quality of driving).

Each indicator is tracked on a quarterly basis and, depending on the outcome, leads to payment of penalties or collection of bonuses.

==Project Outcomes==

Overall, the outcomes of phase 1 of the T4 tramway project are very close to the objectives that were set for it initially. For the design/construction phase of the line, the additional construction costs were limited:

* €177.0 million 2004 budgeted in the preliminary studies;
* €185.3 million 2004: financial package adopted in 2004 by the different public financing bodies;
* €207.249 million: final cost of the operation (calculated in December 2014).

The increase in costs observed between the preliminary studies and the definition of the financial package can be explained by isolated modifications, in most cases not linked directly to the tramway itself (public lighting, green areas, renovation of pavements, etc.). Increase in costs between the financial package in 2004 and the evaluation after implementation in 2014 can be explained mainly by the phenomenon of inflation.

In the final analysis, the construction of phase 1 of the tramway was not affected by significant additional costs or delays in commissioning:
* financial additional costs in the order of 2.7% between the financial package adopted by the financial backers and the total cost of the operation, evaluated after the event;
* at the DUP stage, commissioning of phase 1 had been planned to take place in two steps (January 2009/late 2009). In fact, the whole of phase 1 was commissioned in April 2009 (i.e. between the two dates initially planned).

Concerning the rate of use of the line, the preliminary studies estimated it at 21,700 trips per day. In 2012, (one year before commissioning of phase 2, which led to an increase in rate of use), the daily rate of use varied between 27,000 and 39,600 trips per day. The outcomes in terms of rate of use are therefore greater than had been envisaged.

Performance indicators are hardly ever calculated for a specific line, and so it is difficult to verify whether the performance of the T4 tramway line is in line with the forecasts. However, the line's commercial speed (estimated at the DUP stage at 22.86 km/h) is slightly lower than planned (20.30 km/h in 2012). The latter, therefore, slightly reduces the time saving for users, compared to the planned time saving. However, this difference in speed is only small (for a user travelling from terminus to terminus on the T4 line the reduction in time saved would be in the order of 3 minutes).

Although this performance is slightly weaker than had been anticipated, this does not seem to have limited the line's attractiveness.

==References==

* SYTRAL, Convention portant délégation de service public du transport urbain de l’agglomération lyonnaise, (Public service delegation agreement for public transport in the Lyon urban area) December 2004, 77 pages (except appendices)

* SYTRAL, Avant projet ligne T4 (T4 line concept design), October 2005, 38 pages.

* SYTRAL, Dossier d’enquête publique préalable à la DUP des travaux de la ligne de tramway T4 Jet d’Eau – Mendès France / Vénissieux –Minguettes, (Public inquiry document prior to the DUP for T4 tramway works) July 2005, 305 pages.

Case Studies: The Blanka Tunnel Complex, Czech Republic

2016-09-19T11:10:43Z

Nimda:

{{Infobox
|header1 = Blanka Tunnel Complex
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Contract duration:
|data3 = original date for completion of all works was set to 2011(5 years) but has been postponed to 2016.
|label4 = Budget:
|data4 = 766 mil Euros

|title = Project Overview
|image = [[Image:Blanka.png]]
|caption = ''Figure 1: Blanka tunnel complex, Czech Republic''

|header4 = Project Time Line
{{Infobox
|child = yes
|label1 = 1993:
|data1 = Project conceived
|label2 = 1998:
|data2 = Project company SATRA awarded the contract to prepare studies and design for the tunnel complex
|label3 = 2003:
|data3 = Planning decisions and zoning permit issued
|label4 = 2006:
|data4 = Launch of tenders
|label5 = October 2006:
|data5 = Construction contract signed with Metrostav
|label6 = May 2007:
|data6 = Second tender for technology part signed with ČKD DIZ
|label7 = June 2007:
|data7 = Beginning of construction
|label8 = December 2013:
|data8 = Metrostav halts all construction works
|label9 = May 2014:
|data9 = Metrostav resumes construction and ČKD DIZ begins to work on technology part.
|label10 = September 2014:
|data10 = Construction is finished
|label11 = October 2014:
|data11 = Trojský bridge opens

|header5 = Other important dates
{{Infobox
|child = yes
|label1 = November 2009:
|data1 = Announcement that opening of the tunnel postponed by 13 months to 2012
|label2 = May 2012:
|data2 = City of Prague ceases payments to contractors
|label3 = January 2014:
|data3 = Arbitration between the city of Prague and Metrostav begins
|label4 = September 2014:
|data4 = Arbitration ends
|label5 = Early 2015:
|data5 = Evidence of technical problems related to dampness and cabling system.

}}

}}

}}

==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==

* Auto*Mat (2009). Dejme tunelu Blanka smysl. Available from: http://tunel-blanka.cz/chci-pomoci/co-chce-automat/ (Accessed on 5 May 2015).

* Bělohlav, Jiří (2015). ‘Šéf Metrostavu: Tunel Blanka se může rozjet, ale jako by to někdo nechtěl.‘ Interviewed by B. Pečinka in: Reflex, published 11 March 2015. Available from: http://www.reflex.cz/clanek/rozhovory/62771/sef-metrostavu-tunel-blanka-se-muze-rozjet-ale-jako-by-to-nekdo-nechtel.html (Accessed on 15 May 2015).

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

* Mestskyokruh.info (2007). ‘Přínosy a důsledky výstavby městského okruhu.’ http://mestskyokruh.info/mestsky-okruh/vychodni-cast-mo-libenska-spojka/prinosy-dusledky-vychodni-cast-mo-libenska-spojka/celospolecenske-prinosy-vychodni-cast-mo-libenska-spojka/ (Accessed on 15 May 2015).

* Oživení (2012). Otevřenost zadávacích řízení v ČR. Available from: http://www.bezkorupce.cz/faqs/co-je-to-zadavaci-rizeni-jake-jsou-druhy-zadavaciho-rizeni-a-jaky-je-mezi-nimi-rozdil/ (Accessed on 5 May 2015).

* Prague City Hall (2015) Rozpočet hl.m. Prahy 2015 (Prague City budget 2015). Available from: http://www.praha.eu/jnp/cz/o_meste/magistrat/tiskovy_servis/tiskove_zpravy/rada_hl_m_prahy_odsouhlasila_navrh.html (Accessed on 25 May 2015).

* White & Case (2011). ‘Zpráva o právní prověrce smluvní dokumentace k výstavbě tunelu Blanka‘ (‘Report from the legal audit of contracts concerning tunnel Blanka‘). Document available from: http://www.praha.eu/public/48/37/a1/1142985_153973_Tunel_Blanka___Red_Flag_Report.pdf (Accessed on 5 May 2015).

Case Studies: Vélo’v, France

2016-09-19T10:00:31Z

Nimda:

{{Infobox
|header1 = Lyon’s Velo’V, France
|header2 =
|label2 = Project Type:
|data2 = Greenfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Private co-financing
|header4 =
|label4 = Contract duration:
|data4 = 13 years
|header5 =
|label5 = Budget:
|data5 = approx. €53 million 2004 (This cost includes the operating expenses (operation and maintenance) for the confirmed phase and two conditional phases of the contract, and the construction costs of 348 stations.)
|title = Project Overview
|image = [[Image:Velo.png|400px]]
|caption = ''Figure 1: Velo’V, France (Source: Cerema)''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= December 22, 2003:
| data1 = validation of the tender documents by the urban community of Grand Lyon (today Métropole de Lyon)
| label2= December 22, 2004:
| data2 = signing of the public contract
| label3= 2006:
| data3 = decision to set up the first conditional phase
| label4= 2007:
| data4 = decision to set up the second conditional phase
| label5= November 22, 2017:
| data5 = end of the contract
}}
}}

==Introduction==

Velo'V is a bike sharing network proposed by Grand Lyon (today Métropole de Lyon), mainly in Lyon and Villeurbanne. This service was set up in 2005. It now has 4,000 bicycles divided over 348 stations. These bicycles are available for short-term rental. Using a credit card, each user can:

* rent one of the bicycles at any one of the 348 stations;

* use this bicycle for a period not exceeding 24 hours (but rental prices are designed to be unattractive above one hour);

* return the bicycle at any one of the 348 stations.

Fees for short-term rentals are limited, as this service is primarily financed by advertising revenues earned by the service provider from simultaneously operating street furniture (passenger shelters and advertising hoardings).

Although developed within towns that are already well served by public transport, the aim of the Velo'V service is to complement other modes of transport rather than replace them.

==The Contracting Authority (Public Party)==

The Velo'V service comes under the responsibility of Grand Lyon. On January 1, 2015, this inter-communality became “Métropole de Lyon” under law n°2014-58 of January 27, 2014. This resulted from the merging of the responsibilities of the former urban community of Grand Lyon and the Rhône Departmental Council and covers an area of 59 towns.

Métropole de Lyon is in charge of managing public spaces, which includes urban furniture. In this sense, this institution is responsible for installing and maintaining passenger shelters and advertising hoardings. This service is accomplished through a delegated management in the form of a public contract. The current contract, which runs for the period 2005/2018, has one special feature: in addition to the management of passenger shelters and advertising hoardings, it includes a fleet of bicycles available for short-term rental.

Although public transport is also within the jurisdiction of Métropole de Lyon, this service is delegated to Sytral, the transport authority of Metropole de Lyon and the Rhône Departmental Council. Vélo'V (the cycle hire service) and TCL (the Lyon public transport service) are, therefore, two services managed by separate authorities.

==The Concessionaire (Private Party)==

The successful tenderer for the public contract drawn up for the period 2005/2018 is J-C Decaux through its Cyclocity subsidiary.

The principle adopted is that of a public contract for the provision and operation of street furniture, within which J-C Decaux operates and maintains a set of urban furniture (2,200 bus stops and 536 information boards). Its main remuneration comes from the sale of advertising space on this urban furniture. This remuneration has to finance the construction, operation and maintenance of the bicycle service.

==Users==

Due to the location of the stations, the Velo'V service is aimed mainly at people moving within Lyon and Villeurbanne. Nevertheless, the service does not target specific users. The Velo’V service is accessible to all types of users (whether or not these live in Métropole de Lyon, are occasional users or others) provided that the user has a credit card or has signed up for a long-term subscription.

The tender for the contract, however, imposed a number of technical conditions to make the service as accessible as possible:
* the system should be user-friendly;

* the bicycle booking process should be brief;

* the fees charged should remain modest.

The fee structure for this service offers a long-term subscription (for a year) and two short-term subscriptions (for a week or for a day). The system, therefore, captures both occasional users such as tourists and more regular users such as residents and employees in Lyon and Villeurbanne.

In 2014, the service was used between 20,000 and 25,000 times a day (or 8 million times for the year).

==Key Purpose for PPP Model Selection==

The choice of a public-private partnership (PPP) for constructing, operating and maintaining the service is due to both technical and financial reasons.

Financially, the chosen system enabled Grand Lyon (today Métropole de Lyon) to avoid having to fund the service directly. The latter simply gives up the advertising revenues that should have been paid by J-C Decaux for operating the urban furniture.

From the technical standpoint, in 2004/2005, the Velo'V project needed to show considerable innovation. While self-service bicycle systems had already been tested in the past (particularly in Rennes as of 1998), none of these systems had been developed on such a scale. 2,000 bicycles were made available to be put into service with the option of extending the offer to 4,000 bicycles, compared to about 900 bicycles in Rennes. The choice of a PPP made it possible to base responsibility for managing the project (both setting it up and running it) on the concessioner, whereas the same service directly controlled by the public authority would have necessarily required a longer period of time for staff to acquire the required skills.

In addition, several reasons justify the choice of including the Vélo'V service in a street furniture contract, rather than going through a public service delegation or a specific public contract:

* Preliminary studies about developing a bike sharing service were led simultaneously with the completion of the urban furniture contract. Because of legislative changes, Grand Lyon had to renew the former contract in the form of a public contract;

* These contracts have the distinctive feature of generating a profit. It was, therefore, decided to reuse this profit to finance the new service, which was necessarily loss-making;

* The use of advertising revenues was facilitated in this case. In fact, the highest part of these resources was captured with the street furniture installed in the two main towns of the Metropole de Lyon. The Velo’V network is mainly available in these towns.

==Project Timing==

The Velo'V service is the first bike sharing network developed on a large scale. Following this, many French cities were to set up similar services.

In the case of the Velo'V service, the principle of launching the consultation was approved in July 2003. In September 2003, the consultation package was adopted by the Grand Lyon Community Council. The contract was signed in November 2004 with the scheme planned to come into service gradually between March and June 2005.

The contract is scheduled to end in November 2017. There have been no renegotiations of the contract to date; only four amendments to the initial contracts have been signed.

'''Number of Contracts signed'''

[[Image:Velo2.png]] 
''Figure 2: Number of contracts signed with a bike sharing service in France, Source: Cerema''

==Project Locality and Market Geography==

Due to the location of the stations, the Velo'V project can be considered as an urban project. This project, however, was designed to facilitate intermodality with other modes of transport in the Lyon urban area. Combined offers exist with subscriptions for the urban public transport network and car parks managed by Lyon Parc Auto (a semi-public company whose main shareholders are the city of Lyon and Métropole de Lyon). These offers do not entitle users to fare reductions, but extend the use-free period of Velo’V (1/2 hour for conventional subscription holders against one hour for users combining two subscriptions).

These offers are, therefore, intended to facilitate the use of Vélo'V for other people in addition to residents of Lyon and Villeurbanne. In this way, the impact of this urban project must be analysed across the entire Métropole de Lyon.

==Procurement & Contractual Structure==

===Tendering===

The contractual structure selected by Grand Lyon (today Métropole de Lyon) is a call for tender based on performance, a procedure defined in Article 36 of the French public procurement code. This procedure has now been repealed and has been replaced by a competitive dialogue procedure (Article 67 of the French public procurement code). This type of procedure can be used when:

* the contracting authority is not objectively able to define the technical means required to meet the needs identified by itself, in advance and in sufficient detail;

* the contracting authority is not able to draw up the financial or legal structure of the project.

In the case of the Velo'V project, these two conditions were met. The call for tender based on performance allows the contracting authority to define a detailed functional programme including the results to be achieved and indicators to judge the expected results. Each candidate puts forward a bid detailing the service to be provided.
In the case of the Velo'V project:

* the consultation package specifying Grand Lyon's expectations was validated in September 2003;

* two candidates submitted a bid to the call for tender;

* negotiations (in two stages) with the two candidates took place in July 2004;

* following this, the final choice was made in October 2004.

The contracting process therefore took place over a period of 11 months.

===Contract Structure===

The contract is a public contract (a procedure defined in the French public procurement code). This contract covers construction, operation, maintenance, renewal and dismantling of the equipment (self-service bicycles, passenger shelters, advertising hoardings). The contract includes a confirmed part and two conditional parts:

* In addition to providing passenger shelter and advertising hoardings, the confirmed part includes provision of a fleet of 2,000 bicycles;

* conditional phase n°1 includes an additional 1,000 bicycles;

* conditional phase n°2 includes an additional 1,000 bicycles;

The contract defines:

* the costs of the different operations,

* the amount of tax for occupancy of public space paid to Grand Lyon (today Métropole de Lyon) by J-C Decaux.

The public space occupancy tax is due as a consequence of the space occupied by the different types of street furniture within the public space. The contract defines the amount of this tax that is due and the part of the tax actually paid by J-C Decaux to Grand Lyon. In fact, only a fraction of this tax is actually paid, the rest of the amount due kept by J-C Decaux, which, on the basis of estimated advertising revenue, ensures the financial viability of the service.

In the 13 years of the contract, the amount of tax paid by J-C Decaux to Grand Lyon (and now to Métropole de Lyon) is €18.2 million (2004 prices).

The total amount for the services provided (for 2,200 passenger shelters, 536 advertising hoardings and 2,000 bicycles) is estimated by J-C Decaux at €31.7 million (2004 prices).

The costs of the two conditional phases 1 and 2 are estimated at €9.0 million (2004 prices) and €9.2 million (2004 prices), respectively. These estimates only partially reflect the cost of services since they take into account advertising revenues estimated by J-C Decaux. This amount of advertising revenue is data kept by J-C Decaux and is not mentioned in the contract.

The contract does not specify the fares for using the Vélo'V service; this amount is set unilaterally by Grand Lyon (today Métropole de Lyon). In the contract signed in 2004, Grand Lyon chose to keep all future revenue from fares. So this financial revenue is not taken into account by J-C Decaux in assessing the profitability of the service.

In addition, the contract states:

* the conditions for setting up the Velo'V service;

* the conditions and the resources allocated for operating it (including the regulation of the fleet between different stations during the operating periods);

* the conditions for completion of the contract.

===Risk Allocation===

The contract defines the obligations of both parties. The holder of the contract is responsible for:

* designing the service in response to conditions set out in the tender. Upon signing the contract, the design phase is almost complete as it took place during the negotiations;

* the construction of all the equipment necessary to operate the service (stations, purchase of bicycles, information system for managing it, etc.);

* operating and maintaining the service (distributing bicycles between the stations during operating periods, repairing bicycles, etc.)

The public authority is responsible for:

* defining the fare system;

* the location of stations and negotiating with landowners (mainly the municipalities concerned), enabling them to be constructed;

* the choice of implementing the conditional phases of the public contract (moving from 2,000 to 3,000 bicycles and then to 4,000 bicycles);

* Six months before the date of completion of the contract, Métropole de Lyon is allowed to exercise an option to purchase from the holder of the contract. The latter is free to either accept this option or not and to make its proposed price known. In the event of failure to agree on the purchase price for the equipment, the contract holder must dismantle all the equipment in the contract.

Based on the above, the allocation of risk in this contract is depicted in Figure 3.

[[Image:Velo3.png]] 
Figure 3: Risk Allocation

===Performance===

The contract contains a number of service quality objectives entitling J-C Decaux to bonuses or subjecting it to penalties. These objectives were defined by the candidates during the negotiation process.

The main quality criteria used by the contract are:

* The number of bicycles and stations in operation;

* The availability of stations (avoiding having full or empty stations);

* The level of cleanliness of stations and bicycles.

These criteria are designed to ensure user comfort and ease of use. The thresholds of the various quality criteria changed after signing the contract via an additional clause, but the way of calculating these has remained relatively unchanged. An incentive payment is also specified by the contract. It aims to ensure a good turnover of the bicycle fleet (i.e. both significant usage of the bicycle fleet and short duration of such usage). While this indicator existed in the initial version of the contract, it became necessary to revise the formula for calculating it (amendment dated November 13, 2006). It is based on the annual average daily rotation of bicycles. The amount of the incentive payment may not exceed 15% of commercial revenue.

==Project Outcomes==

The outcomes of the Vélo'V project can be analysed through the development of similar projects in French towns as of 2007 (see Figure 2). While the example of Rennes (1997) had remained isolated, the Vélo'V project highlighted:

* the technical feasibility of large-scale bike sharing networks;

* people's enthusiasm for this type of service.

In 2014, the Velo'V service counted between 20,000 and 25,000 users per day, or about 6 trips per day per bicycle. Because of the innovative nature of the project, few ridership or revenue goals had been assigned to the holder when the contract was signed. Consequently, it is difficult to line up these results with forecasts.

Project success, however, can be described in terms of use, through:
* the speed with which the implementation of the conditional phases was decided upon;

* the need for the contract holder to take on extra staff to meet the needs of maintenance and regulation.

'''Table 1- Vélo’V – 2015 rates (not including combined offers)''' 
[[Image:Velo4.png]]

While it was possible to make these changes without renegotiating, underestimation of maintenance and operating costs led Grand Lyon (today Métropole de Lyon) to increase the number of advertising hoardings (which means increasing advertising revenue for the operator) and redefining revenue sharing:

* there was no sharing of fare revenue between operator and contracting authority in the original contract. These revenues were collected by J-C Decaux and paid to Grand Lyon (today Métropole de Lyon). A bonus incentive scheme linked remuneration of the service provider to use of the service;

* an additional clause allowed the service provider to keep the revenues from subscriptions (about 60,000 annual subscriptions in 2014). Grand Lyon (today Métropole de Lyon) currently keeps only the revenues from service charges[1] (after the first free ½ hour which relates to approximately 4% to 5% of trips). Métropole de Lyon estimates, in 2015, that 50% of the operator's revenue is fare revenue (the remaining 50% being from advertising).

These necessary adjustments result from the success of the project. However, three disadvantages related to the form of the contract have been identified by Métropole de Lyon:
* the lack of clarity about advertising revenue earned by the private service provider, which limits Métropole of Lyon’s knowledge of the business model for the service. This ignorance may be detrimental to its ability to encourage competition when renewing the contract;

* in the case of absence of agreement between J-C Decaux and Métropole de Lyon, the contract specifies, at its completion, that J-C Decaux has to remove all the equipment. This clause may lead to an inconvenient interruption of service for users and, therefore, puts the service provider in a strong position when the contract is up for renewal.

* public contracts display a certain rigidity in their openness to change. For example, the number of 348 stations was defined in the contract, and this figure could not change throughout the contractual period to cope with new demands. The only way to build stations in new areas was therefore to move older stations, which could hinder the development of the service.

[1]These fees are in shaded boxes in Table 1

==REFERENCES==

* CEREMA, Contractualisation des vélos en libre-service en France, Etat des lieux 2005-2013, June 2015, 60 pages.

* Communauté urbaine de Lyon, Marché de fourniture et de prestations de services, November 2004.

* Roussel, Sophie, Vélo’V Un marché public innovant, Masters' dissertation, IEP de Paris, October 2005
http://www.velov.grandlyon.com/ : Consulted in January and June 2015

Case Studies: Motorway E-75 Horgos – Novi Sad, Second phase, Serbia

2016-09-19T09:40:28Z

Nimda:

{{Infobox
|header1 = Motorway Е-75 Horgos – Novi Sad (second phase)
|header2 =
|label2 = Project Type:
|data2 = Both
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 15 months (construction)
|header5 =
|label5 = Budget:
|data5 = €146 million (2009)
|title = Project Overview
|image = [[Image:Horgos.png|400px]]
|caption = ''Figure 1: Horgos – Novi Sad Project, Serbia''
| header5 = Project Time Line
{{Infobox
| child = yes
| label1= 1970-1988:
| data1 = The first (right) carriageway of the motorway Horgos – Novi Sad was built. It was financed from foreign loans.
| label2= 2005-2008:
| data2 = The motorway Horgos – Novi Sad (the existing carriageway and a plan to build a second carriageway) was part of the scope of a concession for Horgos – Pozega Toll Motorway. The tender for the concession was held in October 2005, the contract was awarded in March 2007, and the concession was cancelled in December 2008.
| label3= 2008:
| data3 = Project conceived, after the concession had been canceled.
| label4= 2009:
| data4 = Open call for construction of two sections of the second carriageway (section from km 28 to km 38 and section from km 98 to km 108).
| label5= 2009:
| data5 = Construction of sections from km 28 to km 38 and from km 98 to km 108 (May 2009 to November 2009).
| label6= 2010:
| data6 = Open call for the construction of sections km 00 to km 28 and km 38 to km 98.
| label7= 2011:
| data7 = Completion of construction (March 2010 - December 2011).
| header8= Sections of the road were opened to traffic in 2011:
| label9 = July 15th, 2011
| data9 = km 00 – 28
| label10 = July 20th, 2011
| data10 = km 38 – 50
| label11 = August 5th 2011
| data11 = km 85 – 98
| label12 = August 29th, 2011
| data12 = km 50 - 71
| label13 = September 26th, 2011
| data13 = km 71 - 80
| label14 = December 20th, 2011
| data14 = km 80 - 85
| data15 = Although the second carriageway was built and opened to traffic, there is still an issue of an unfinished lay-by on the section from km 38 to km 98, which caused a delay in operation of the particular section.
There is also a lawsuit about cost adjustment, which is still not resolved (2015).

}}
}}

==Introduction==

The project concerns the construction of the second phase of E-75 (M-22) motorway in the stretch from the Hungarian border (Horgos) to Novi Sad, i.e. construction of the second (left) carriageway of a total length of 107km.

The stretch from Horgos to Novi Sad consists of four traffic lanes (two in each direction), two stopping lanes, with central reserve, and with a design speed of 120 km/h.

The project also includes a total of 13 pairs of bridges, nine interchanges, three large fills, one main toll gate and another under construction, two rest areas and two more under construction, 44 pipe, frame and box culverts, and several multipurpose lay-bys with gas stations and motels.

The motorway Horgos – Novi Sad was part of the scope of a concession Horgos – Pozega Toll Motorway, cancelled in 2008.

Instead of the concession, two sections of the road (section from km 28 to km 38 and section from km 98 to km 108) were completed in 2009 on a design-bid-build contractual basis.

During 2011, the construction of the remaining 86.88 km long left carriageway was completed on a same basis and the section from Horgos to Novi Sad was opened to traffic.

This project does not include the “Y branch (Y krak)” (from Kelebija to Subotica South loop).

==The Contracting Authority (Public Party)==

The former Ministry of Infrastructure (now Ministry of Construction, Transport and Infrastructure) was the contracting authority.

The project coordinator (Project Implementation Unit) was the company Koridori Srbije Ltd., that was founded in 2009 by the Government of the Republic of Serbia, with the aim to perform works in the sphere of the transport infrastructure – highways on the territory of the Republic of Serbia, and also for the purpose of investing in the construction of highways, organizing and performing professional activities related to the construction of highways, including the activities related to the expropriation, drafting of plans and design documents and performing of works, organizing of professional supervision over construction, as well as the activities related to the planning of highways construction.

==Sources of Financing==

The project was financed 100% from public funds (budget of the Republic of Serbia).

According to the conditions of the construction contract for the sections from km 00 to 28 and from km 38 to km 98, the payment to the contractor was to be made in the following manner:

* 35% from the Interim Payment Certificate (IPC) value was to be paid during construction, the rest was to be payed after 30 months

==Users==

Individual national and international users, as well as local, regional and international industry users (freight transport).

==Key Purpose for Public Financing Model Selection==

The project, along with other parts was initially tendered and awarded as a concession. Following the cancellation of the concession contract, the project went ahead with public funding.

==Project Timing==

The forecasted growth of GDP for Serbia in the feasibility study was 6% for the period 2006-2011 and 3.5% for 2012-2025. However, the average growth of Serbian GDP in the period from 2006-2014 was 1.38%. GNI per capita is lower than expected, while unemployment rate is higher than expected.

==Project Locality and Market Geography==

The motorway connects the Hungarian-Serbian border and the city of Novi Sad as the capital of northern Serbian province Vojvodina.

It was a part of the former Pan European Transport Corridor X, which connects Austria, Hungary, Croatia, Serbia, the former Yugoslav Republic of Macedonia, Bulgaria and Greece. Nowadays, it is marked as comprehensive TEN-T corridor.

==Procurement & Contractual Structure==

The contractual basis for project delivery was a Design Bid Build contract. PE Roads of Serbia, after the end of the guarantee period, should have taken over the responsibility for operation and maintenance. However, due to unfinished work on one rest area, the section from km 38 to 98 has not yet been taken over (2015).

===Tendering===

The tendering for construction was organized as an open call.

For sections from km 28 to 38 and from km 98 to km 108, the open call tender was launched in April 2009. Two national companies (PZP Beograd and Putevi Uzice) won the tender.

For sections from km 00 to 28 and from km 38 to km 98 (one contract), the open call tender was launched in February 2010. The results were, however, annulled. The procedure was changed to negotiations, with the Serbian consortium that offered the lowest price in the annulled tender. As a contractor for sections from km 00 to 28 and from km 38 to km 98, a consortium of the following contractors was enrolled: Preduzece za puteve Beograd (PZP Beograd), AD Putevi Uzice, GP Planum, Borovica transport. PZP Beograd went into the bankruptcy 12 months after the beginning of the works on this project.

===Contract Structure===

The contractual basis for project delivery was Design Bid Build contract with unit price payment. No standard form of contract agreement was used.

===Risk Allocation===

The risk allocation is depicted in Figure 2.

[[Image:Horgos2.png|400px]] 

''Figure 2: Risk allocation'' 

===Performance===

In the design and construction phase, performance was measured in relation to:

* Cost: There were defined planned costs as well as planned cash flow, based on the planned progress of works. Actual costs were compared to the planned costs and the trend in achieving planned costs on a monthly basis;
* Time: There was also defined planned time for completion with milestones for key phases. Actual progress of works was compared to the planned on a weekly basis;
* Quality objectives: The level of the required quality of executed works was defined in Design and in domestic legislative. The achieved quality of executed works was controlled by an expert supervisor on a daily basis and approved on a monthly basis.

The performance goals for operation and maintenance phase were related to:

* Reduction of travel time through increase of operating speeds;
* Reduction of vehicle operating costs;
* Reduction of number of traffic accidents caused by inadequate cross section of semi-highway.

==Project Outcomes==

The investor personnel stated that the project can be considered as very successful. Although there is a cost overrun of 25.9% of the original budget, actual construction costs of 1.72 MEUR/km are considered as a very good achievement.

However, the specific payment method for part of the project, that allowed 35% from the IPC value to be charged during construction, and the rest to be paid after 30 months, lead to the bankruptcy of one of the consortium members.

==References==

* Pre-Feasibility Study of Second Carriageway Lane Construction on E-75 Highway Stretch: Hungarian Border (Horgos) – Novi Sad L=108,00 km, COWI Consulting Engineers and Planners AS, Belgrade, March 2003.
* Nevena Vajdic and Goran Mladenovic. (2013). Horgos-Pozega, Toll Motorway Concession, Serbia, in COST Action TU1001 - 2013 Discussion Papers: Part II Case Studies, Edited by Athena Roumboutsos, Sheila Farrell, Champika Lasanthi Liyanage and Rosário Macário, COST office, ISBN 978-88-97781-61-5, pp. 47 - 54.
* http://www.koridor10.rs/en/project-north [Accessed 15 December 2014]
* http://www.putevi-srbije.rs/index.php?lang=sr&Itemid=2754 [Accessed 15 December 2014]
* http://www.blic.rs/Vesti/Ekonomija/184687/Trasu-Koridora-10-gradice-konzorcijum-srpskih-preduzeca [Accessed 17 December 2014]

Case Studies: Motorway E-75, Section: Donji Neradovac – Srpska Kuca , Serbia

2016-09-19T08:42:54Z

Nimda:

{{Infobox
|header1 = Motorway E-75, section: Donji Neradovac – Srpska kuca, Serbia
|header2 =
|label2 = Project Type:
|data2 = Brownfield
|header3 =
|label3 = Type of Project Financing:
|data3 = Public
|header4 =
|label4 = Contract duration:
|data4 = 540 days (18 months)
|header5 =
|label5 = Budget:
|data5 = 21.847.838 Euro (2010)
|title = Project Overview
|image = [[Image:Donji.png|400px]]
|caption = ''Figure 1: Section Donji Neradovac – Srpska kuca, Serbia''
| header6 = Project Time Line
{{Infobox
| child = yes
| label1= 2009:
| data1 = Project Design
| label2= 2010:
| data2 = Budget allocation
| label3= February 2011:
| data3 = Start of construction
| label4= July 19th, 2012:
| data4 = Planned completion date
| label5= November 14th, 2013:
| data5 = Section opens to traffic

}}
}}

==Introduction==

The former Trans European Corridor X connects Central and South-East Europe, with its main route Salzburg (Austria) – Ljubljana (Slovenia) – Zagreb (Croatia) – Belgrade (Serbia) – Niš (Serbia) – Skopje (FYR Macedonia) – Thessaloniki (Greece) (Figure 1).

The part of Corridor X that goes through Serbia consists of a motorway from the Croatian and Hungarian border to the city of Leskovac (Grabovnica), and a two-lane road from Leskovac to the border with the former Yugoslav Republic of Macedonia, which is currently under construction to be upgraded to full motorway.

The section is divided in six sub-sections:

1. Grabovnica - Grdelica (Gornje Polje)
2. Gornje Polje – Caričina Dolina
3. Caričina Dolina - Vladičin Han
4. Vladičin Han – Donji Neradovac
5. Donji Neradovac – Srpska kuća
6. Srpska kuća – Levosoje

Additionally, the sub-section Donji Neradovac – Srpska kuca, which is presented in this case study, has been completed and opened to traffic first.

The construction of this section was funded by the Republic of Serbia with the financial support of the Government of Greece within the framework of the Hellenic Plan for Economic Reconstruction of the Balkans (HiPERB).The contractor was the Greek company “Aktor”. The design consultant was the Institute of Transportation CIP, Serbia, and the Engineer was “Louis Berger”, France.

The works comprised of the construction of the highway, mainly along the existing main road M-1, including reconstruction and widening of the existing (left) carriageway for the emergency/stopping lane, and construction of a new carriageway on the right side with two traffic lanes and emergency lane, and central reserve, so that the total width was 27.4 m. Design speed was 120 km/h. The project also included the construction of grade-separated interchange and noise protection walls.

As part of the project, a non-commercial parallel alternative road R-214 of 8.2 km length was reconstructed, together with local access roads.

The section was opened to traffic on 14 November, 2013, although construction was not completed as anticipated. The scope of the project was reduced for the grade-separated interchange and asphalt works on the approximately last 500 m of the section (from the interchange to the end of the section) due to lack of financing.

==The Contracting Authority (Public Party)==

The project Donji Neradovac – Srpska kuca is nationally driven with absolute direct involvement of the public company Koridori Srbije Ltd.

The Koridori Srbije Ltd. was founded in 2009 by the Government of the Republic of Serbia, with the aim to act as funding authority in the construction of the highways, including in activities related to the expropriation, planning, design and supervision works. Therefore, the company was responsible for the construction and finalization of all sections of the former Corridor X, including the section Donji Neradovac – Srpska kuća.

==Sources of Financing==

The construction/reconstruction of the section Donji Neradovac – Srpska kuca was funded by the Republic of Serbia with the financial support of the Government of Greece through the Hellenic Plan for Economic Reconstruction of the Balkans (HiPERB).The Serbian government and the Ministry of Transportation were responsible for expropriation and design. HiPERB actually financed 16 million Euros (compared to the contracted 21 million Euros). Therefore, all the costs beyond 16 million Euros, including delivered works, claims, etc. are currently the responsibility of the Serbian government.

==Users==

The realization of this project will have an impact on both industrial and private users. Since this section is part of former Corridor X, which links Central and South-East Europe, it is planned to be used by international, regional and local users.

==Key Purpose for Public Financing Model Selection==

The project was financed as 100% Public. The main reason for selection of this type of financing was the fact that most of the funding for the project development was obtained through support from the HiPERB program.

==Project Timing==

The section is part of the former Trans-Yugoslavian highway, whose first section was opened to traffic in 1950, and was completed by the end of 1960s. Later on, during the late 1980s, a need for modernization of the main network arose, and several sections were reconstructed and upgraded into modern two-carriageway highway with 2+1 traffic lanes in each direction.

The section Donji Neradovac – Srpska kuca was initially constructed as a two-lane road in 1964 (according to the Serbian road data base). The first initiative for its reconstruction and upgrade was inspired by the 2004 Olympic Games, held in Athens, Greece. However, the Project was put on hold, and only the feasibility study was carried out in 2004. The Project started only after the Serbian Government announced in 2008 that the completion of the Corridor X was national priority no. 1 regarding construction works on the state road network (“National strategy of development of rail, road, aquatic, air and intermodal transport in Serbia from 2008 to 2015”).

==Project Locality and Market Geography==

The project is located in the southern part of Serbia, being quite not exclusive, as there is the existing regional road R-214 going in the same direction with local access roads, as well as an existing railway Belgrade – Nis – Tabanovce, which runs in parallel to the motorway. The project represents an inter-urban link, which will allow physical network integration. It is not included in the TEN-T network; it is marked as comprehensive TEN-T corridor.

The industrial activity in the southern part of Serbia, where the section is located, is relatively low, following the crisis caused by the disintegration of the former Yugoslavia, and many existing factories and companies went bankrupt in recent years. However, Corridor X serves international traffic, connecting South-East to Central Europe, and also links Vojvodina – the northern part of Serbia, and central Serbia to southern Serbia, facilitating transportation in the country.

==Procurement & Contractual Structure==

The procurement for this project was in its entirety realized according to the International competitive procurement procedure (according to PRAG procedure of EU Commission). The project was delivered as Design Bid Build.

===Tendering===

The tendering process for construction works started in 2010 (right after the global financial crisis). The estimated price was 40 million Euros, but the contract amount was almost half of that, i.e. approximately 21 million Euros.

According to sources from Koridori Srbije Ltd., nowadays, the offers are generally much more in line with the estimated price, but at the time of project implementation, the offers for several tenders were much lower than the estimated cost (which may or may not be related to the timing of the global financial crisis).

The type of tender for construction works was “open call”. Nine bidders submitted the bids. The tender for road maintenance (after construction has been completed) has not been announced yet.

===Contract Structure===

The Contract was completely developed according to the FIDIC red book. The contract amount was expressed based on quantities and unit costs.

===Risk Allocation===

All the risks specified in the Contract were defined according to the FIDIC red book and allocated as shown in Figure 2.

[[Image:Donji2.png|400px]] 
''Figure 2: Risk allocation''

===Performance===

In the design and construction phases, performance was measured in relation to Cost, Time and Quality objectives. Louis Berger, as Engineer, was responsible for measuring overall performance in terms of cost, time and quality.

The performance goals for operation and maintenance phases were related to:

* Reduction of travel time;
* Reduction of vehicle operating costs;
* Reduction of number of traffic accidents.

Cost overrun up to date has not been fully assessed. The claims were estimated to be approximately 1.3 million Euros and have been based on unstable funding, problems with expropriation, problems with design, etc.

The delay in completion of works/opening to traffic was 500 days due to land acquisition – expropriation issues, unstable financing, missing details in design and archaeological findings.

==Project Outcomes==

Due to cuts in funding from the program HiPERB, key project elements are missing, and the section has not been finished (the grade separated interchange was not constructed, as well as the last 500 m of asphalt works).

The success of this project lies in the fact that the unit cost of road (cost per km) was low compared to many other projects in Serbia, being contracted significantly lower than the estimated price. It would be possible to estimate the real success of this project in terms of evaluating the performance of the section only upon completion of all six sections.

The major problems during the implementation of the project were related to untimely expropriation, unstable financing and incomplete design, all leading to a significant time overrun.

==References==

* Feasibility Study for I phase construction of E-75 (M-1) motorway, section Vladicin Han – Srpska kuca, Length = 33.658 km, Book 1: Feasibility Study, Faculty for Transport and Traffic Engineering, Belgrade, January 2004

* National strategy of development of rail, road, aquatic, air and intermodal transport in Serbia from 2008 to 2015, Government of Serbia, 2008

* Tender Opening Report, Construction of Corridor X, Highway E-75 Nis-FYROM border, Section: Srpska Kuca - Donji Neradovac (report id number: Koridor10 doo, 1241/10 from 07.09.2010.)

* Koridori Srbije Ltd. <27.01.2015.> http://koridorisrbije.rs/lat/search/node/donji%20neradovac

* CIP Institute <27.01.2015.> http://www.sicip.co.rs/sr/delatnost/tehnickaDokumentacija/gradjevinskiProjekti/drumskaInfrastruktura/autoputevi/story/382/Glavni+projekat+autoputa+E-75,+Ni%C5%A1+-+Granica+Makedonije,+deonica%3A+Donji+Neradovac+-+Srpska+Ku%C4%87a.html )