Project delivery to construction where do the problems occur for the public sector?

K.J. Allen NSW Premiers Department This Paper is the Authors view only and does not reflect in any way the view of the Premiers Department. ABSTRACT: This Paper seeks to examine project delivery of major tunnelling projects conducted by the public sector up until construction commences or traditionally when the private sector comes on board. In this examination there appears to be consistent trends emerging which lead to delays, budget increases and community unrest. Moreover, there are lessons not being learnt at a strategic level, which could improve the knowledge and preparedness of Public Sector project delivery teams. Some of these lessons include: Selection of the project delivery team, Understanding the need for the project, Identifying the strategic and local community and environmental issues, Estimating the cost of options and the preferred option, Appreciation of latent conditions and contingencies and tendering. However, on a positive note there are improvements being made too. This paper also seeks to highlight these. 1 INTRODUCTION This Paper1 will review the delivery by the public sector of two major tunnelling projects in Sydney, Australia. These are: The Northside Storage Tunnel (the NST). The paper will consider delivery of this project up until planning approval. The Parramatta Rail Link (the PRL). The paper will consider delivery of this project up until January 2001; this is prior to the finalisation of the EIS exhibition2. The review will concentrate on the following elements of project delivery: Selection of the project delivery team. Selection of options and relationship with the need for the project. Identifying the strategic and local community issues. Estimating the cost of options and the preferred option. Appreciation of latent conditions and contingencies. Tendering. It is important to note that the agencies mentioned who manage these projects have independently recognised the issues raised in this paper and have undertaken changes for the better. The paper will seek to describe these beneficial changes.
Route maps supplied with permission from Sydney Water and Parramatta Rail Link. 2 There are references to a few newspaper articles after this period and also a reference to the Preferred Activity Report (August 2001).
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2. WHAT IS THE NST AND THE PRL?

Figure 1: Location Map of Northside Storage Tunnel

2.1 The Northside Storage Tunnel Sydney Waters NST (figure 1) is a tunnel collecting wet weather sewage overflows from Sydneys four largest sewage overflow points located at Lane Cove River, Scotts Creek, Long Bay and Quakers Hat Bay along the north shore of Sydney Harbour. These wet weather overflows are stored and transferred to North Head Sewage Treatment Plant for treatment before being transferred to a deep ocean outfall. The NST traverses some 25 kilometres along with its branch tunnels and through six local government areas. The wet weather sewage overflow structures are located in community parks surrounded by dense urban environments with narrow feeder roads. The NST was conceived as part of the development of Sydney Waters strategic wastewater plan, Wa-

terPlan 21. The NST was brought forward in order to deliver water quality improvements in Sydney Harbour in time for the 2000 Olympics. Consequently project delivery commenced in February 1997 and this followed with the exhibition of the environmental impact statement (EIS) and call for proposals from prospective Alliance Partners in September 1997, planning approval in December 1997 and an award of contract in January 1998. During this time, the NSW Government set up a Waterways Advisory Panel to investigate and report on Sydney Waters proposal (Waterways Report, 1997) and the Legislative Council of the NSW Parliament established a Select Committee also examining Sydney Waters proposal (Select Committee Report, 1997). These timings are important for the purposes of this paper. At the time of writing this paper the NST is in its commissioning phase and this phase is dependent upon rainfall events. 2.2 The Parramatta Rail Link The PRL (figure 2) is a major public transport initiative by the NSW Government to increase the longterm capacity of the Sydney metropolitan rail network and provide rail access to new areas. The PRL comprises a new 28-kilometre railway linking Parramatta and Chatswood via Epping with most of the route to be located underground. The new line will be fully integrated into the existing rail network, with connections to the Main West Line, Main North Line and North Shore Line. The PRL link will add 5 new stations to CityRail's current network with seven existing stations to be rebuilt or upgraded. As such the stations along the rail link are Rosehill, Parramatta, Rosehill/Camellia (existing stations combined), Dundas, Telopea, Carlingford, Epping, Macquarie University (new), Macquarie Park (new), Delhi Road (new), UTS Ku-ring-gai (new) and Chatswood. The PRL traverses through Parramatta Regional Park, an important historical site to NSW and also Lane Cove National Park. Approximately 20km of bored tunnel between Carlingford and Chatswood and between Parramatta and Rosehill/Camellia; 0.2km of cut and cover tunnel under the Lane Cove River; Chatswood, Epping and Westmead dive structures and surface track totalling almost 3km; and approximately 5km of upgrade and duplication of the existing track between Camellia and Carlingford. The purpose of the PRL is to: Support the development of Parramatta as Sydneys second CBD.

Support key educational and employment centres along the route.

Figure 2: Parramatta Rail Link Location Map

Improve public transport access for residents of western, southwestern and northwestern Sydney and the Central Coast to employment, education and health facilities. Assist in improving Sydneys air quality. Increase the benefits of other public transport initiatives such as Liverpool to Parramatta rapid bus transitway. Improve the efficiency and reliability of Sydneys' rail network (Department of Transports Parramatta Rail Link Overview Report). The proponents of the PRL are Rail Infrastructure Corporation (RIC) (formerly known as Rail Access Corporation) and State Rail Authority (SRA). This is due to the arrangements contained in the Transport Administration Act 1988 where rail infrastructure has been divided up so that, among other things, SRA is responsible for passenger trains and railway stations and RIC is responsible for rail access, rail tracks and its infrastructure. However, the Department of Transport had project management and responsibility for the delivery of the project. To facilitate the delivery, a Parramatta Rail Link Company has been formed and the Board comprises of chief executives from the Department of Transport, SRA and RIC. According to Rail Access Corporation in 1997 (Public Accounts Committee, Report No. 126, 2001), there were eleven phases prior to the development of a preferred option and the recommendation to conduct an environmental impact statement. These phases included: Compilation of a long list of alternatives which would achieve the project objectives. Establishing their technical feasibility.

 Shortlisting modes, routes, and station/stops based on capital and operational cost, land-use, environmental considerations and projected patronage. More in depth studies of the short-listed options. In addition the following were undertaken in support of the project: Greater Western Sydney Planning & Transport Review and Priorities Study (1996). Parramatta-Chatswood Rail Link: Economic and Financial Assessment, (December 1996). Greater Western Sydney Public Transport Strategy (1997). Parramatta-Chatswood Rail Link Evaluation Report, (1997). Parramatta Rail Link Overview Report, November 1998. Advertisement calling for comments on proposal as outlined in Overview Report, (November 1998). Call for alternatives, (5 September 1998). Environmental Impact Statement exhibition, (3 December 1999). Establishing the Parramatta Rail Link Company, (1999). Invitation for Registrations of Interest and Co nforming Proposals, (April 2000). During the development of PRL the NSW Parliaments Public Accounts Committee inquired into the funding of Capital Projects by the NSW Government and used the PRL pre-tender procurement as a case study (Report No. 126, January 2001). Furthermore, the NSW Government announced in March 2001 that the sections of the PRL would be progressively delivered due an increase on the initial estimate of $1.4 billion and due to a delay in the commencement of construction. Accordingly the Epping to Chatswood line will be built first followed by Parramatta to Epping (SMH, 23 March 2001). At the time of writing this paper the Department of Urban Affairs and Planning is considering the PRL proposal to enable the Minister for Urban Affairs and Planning to decide as to whether or not to grant planning approval. 3. SELECTION OF THE PROJECT DELIVERY TEAM 3.1 What was done on the NST? In early 1997 as part of the scoping of the NST, Sydney Water set up an integrated project team comprising of expert Sydney Water staff and complementary expertise from the private sector. The selection of external expertise was through competitive tender. This team which had probity, tunneling,

economic, estimating, design, scheduling, environmental, regulatory, property, legal and community relations expertise was housed within Sydney Waters head office with its own facilities and branding. Due to the team being located in one office and therefore dedicated to the one task, it generated a single focus to complete a comprehensive scoping report within agreed milestones. This approach to the project team was a distinct advantage to the quality and timeliness of the work undertaken. Soon after the scoping report was completed, the private sector was released from its duties and the Sydney Water team undertook the preparation of the environmental impact statement (the EIS) and procurement. In the preparation of the procurement and the EIS, Sydney Water sought further private sector assistance adopting the same approach of having an integrated in house team. This was again advantageous particularly due to the time constraints of the project and the intervention of two pub lic inquiries (Waterways Advisory Panel Report, August 1997), but it also enabled all the resources working together so as to provide consistency in the material produced. Unfortunately, there were deficiencies in the expertise in the EIS and the procurement project team and this contrasted with the project team who prepared the scoping report. Essentially, the EIS and procurement team lacked expertise in developing construction concepts and methodology as well as estimating. When you combine these issues you realise particularly when preparing an EIS there is potential for: A lack of definition on how excavated material is to be transported and disposed of. A lack of definition on how the construction sites will look. An inability to describe and assess impacts from construction sites upon local communities. An inability for local communities to appreciate impacts from construction. An increase in project costs. 3.2 What was done on the PRL? Since creating its strategies in 1996, the Department of Transport had management of the project relying on a project team comprising of its expert staff located in its head office as well as staff from SRA and RAC located in their offices. This project team was coordinated through a project control group (the PCG) chaired and joined by executives from the agencies and some members of the project team. The PCG met weekly to discuss issues necessary for progressing the project.

The expertise of the project team comprised of mainly economic, town planning, policy and rail expertise. The PCG recognised the need for external expertise and sought private sector assistance such as probity, legal, tunneling, design, construction concepts and environmental impact assessment expertise. Whilst the PRL project team comprised of necessary expertise, the project management lacked experience and expertise in managing the delivery of all the elements of a major tunneling project. Accordingly this led to: An uncoordinated use of expertise which led to certain disciplines preparing information in is olation. For example, sometimes construction concepts were prepared in isolation of background environmental and heritage information. A lack of attention to the importance of schedules. There was a lack of input into the deve lopment of the projects schedule and as such the schedule reflected little on the necessary steps for developing and delivering PRL. The schedule therefore lacked relevance and its milestones were sometimes not achieved. No one person in an executive position had his or her eye on the ball. Due to the uncoordinated use of expertise and lack of input into the schedule there was a lack of focus within the project team. A consequence of this included that no one person had his or her eye on the manag ement of cost. 3.3 What are the lessons then? Selection of a project team is crucial. The public sector should give more weight to this issue and consider the consequences of project teams upon the ability to deliver major projects. So what are the lessons from the NST and the PRL? Project management must have strong leadership and experience in delivering major projects. Experience in linear projects and government processes is impo rtant. Expertise in scheduling in this phase is essential and disciplines within a project team must be vigilant to provide detailed information to support the schedule. Clearly, this information will assist in a strategic overview of the tasks ahead and an ability to forecast funding for these tasks. Recognition of the necessary expertise for d eveloping a tunneling project and when this expertise is required as well as issues management skills as part of the project management team. Recognising the advantages of having an in house integrated team to enable quality, con-

sistency and timeliness for the delivery of material. 4. SELECTION OF OPTIONS AND RELATIONSHIP WITH THE NEED FOR A PROJECT The need of a project seems simple. The need for the NST is to reduce wet weather overflows into Sydney Harbour. The need for the PRL is to improve efficiency and reliability and providing public transport access and choice. However, describing why: Certain technology was chosen? The route was chosen? The mode was chosen? Certain stations are necessary? The location for launching TBMs was chosen? Is not always done robustly and these issues are inextricably linked to the need for a project. Consequently communities (particularly those who will live next to or on top of this infrastructure), will ask what is the need for the project? 4.1 What was done on the NST? A criticism of the NST, which persists to some extent today, is why was a storage tunnel built as opposed to on-site treatment technology at the location of the sewage overflows entering into Sydney Harbour? Whilst there are numerous tech nical advantages for the NST, these advantages were arguably never described well. The reason for this lack of description is probably because Sydney Water relied on the work of the Waterways Advisory Panel (August 1997). This was a panel set up by the NSW Government to inquire and report on Sydney Waters proposed NST. The Panel, among other things, invited alternatives from the market place in order to assess the feasibility of the NST and whether the NST should take place. Sydney Waters NST was successful. Unfortunately, the lack of robust answers found in a transparent and comprehensive evaluation process available to the public through the NST EIS led to the Legislative Council in the NSW Parliament calling for a Select Committee inquiring into the NST (December 1997). 4.2 What was done on the PRL? It would appear that there have been numerous studies into routes, passenger demand and growth forecasts, and analysis of transport modes and technologies. As well as, operations study into timetabling issues and interchange provision and passenger station locations over the years (PRL, EIS 1999) community consultation on transport alternatives for

PRL too (Call for Alternative Transport Suggestions Assessment Report, 1998). Whilst the strategic objectives for the PRL have remained consistent and are sound as they meet government plans and priorities as such the strategic criteria for evaluating options have remained the same3. However it is arguable whether the communication of the criteria in evaluating the location for individual passenger stations has been sound. This is highlighted by community concern over the options for choosing a Parramatta to Chatswood route or a Parramatta to St Leonards route. The objectives for the operation of PRL (1999) include among other things: supporting the development of Parramatta as Sydney's second CBD" [s]upporting the development of key employment and commercial centres at North Ryde, Chatswood and St Leonards, and key educational and health facilities at Westmead, Rydalmere, North Ryde, Lindfield and St Leonards (PRL EIS, 1999). St Leonards according to this criterion is a key location. There are questions such as why Chatswood when St Leonards has a large regional hospital and a growing commercial centre? Why St Leonards, when Chatswood is an established commercial centre enabling future heavy rail extensions to the Northern Beaches? Furthermore this alignment allows access to UTS Ku-ring-gai. Why UTS Kur-ring-gai as opposed to a regional hospital? There would appear equal arguments either way, indeed the PRL EIS states The Chatswood alignment is considered to meet the project objectives at least equally well as St Leonards (1999:pp4-38). What this discussion at section 4.5 of the PRL EIS highlights is the need for clear objectives and articulating them well. Perhaps the project delivery team should have considered prioritising the objectives. 4.3 What are the lessons then? Before any public information is released on the need for a project and its link to why certain technology, routes, modes are chosen, robust answers to these questions must be provided and this must be based upon consistent evaluation criteria. This should be done through early scoping of a project and consideration should be given to testing assumptions and proposed criteria within an agency and its
The objectives and criteria for evaluating transport options in 1998 contain consistent criteria to the objectives used in the PRL EIS (1999) albeit the language is different.
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executive, testing assumptions with users, industry representatives and community focus groups. 5. IDENTIFYING THE STRATEGIC AND LOC A L C O M M U N I T Y A N D E N V I R ONMENTAL ISSUES In addition to testing assumptions on the need for a project, identifying community and environmental issues prior to the public release of information cannot be overstated for tunneling projects within dense urban environments. There are two categories to this issue. That is, those strategic community and environmental issues, for example: The NST: the need for improvements in water quality in Sydney Harbour, which support aquatic ecosystems and recreational use. The PRL: the need for improved efficiency and reliability in public transport to assist access, choice and assisting with reducing VKTs and greenhouse emissions. And local community and environmental issues, for example: Who are the neighbours to the project and do they have any special interests or needs? Do these neighbours have any specific issues regarding the construction and operation of the infrastructure? 5.1 What was done on the NST? The NST project team identified local community groups through information gathered from local councils and also calling public meetings. In parallel to this, background environmental information was being sought on the proposed construction sites. It should be noted that because of the depth of the NST, only residents at the sewage overflow and construction sites had a direct impact from the construction and operation of the NST. But what the NST project team did not do is tho roughly identify if there were any sensitive neighbours such as schools 4. Nor did it have time on its side or the ability due to lack of construction detail to comprehensively discuss and respond to issues like the expected noise level that would be generated from transferring excavated material from the tunnel to outside stockpile areas at Tunks Park5.
Located opposite the Scotts Creek overflow is the Rudolf Steiner Gleneaon School. It was realised by Sydney Water that a factor contributing to the Schools concern and opposition to the construction of ventilation facilities at Scotts Creek was the schools belief against inoculation. 5 As this issue turned out, the design and construction d elivery team realised that the only way to carry out this activity
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More importantly, the NST project team never harnessed to the fullest extent the strategic community and environmental issues relating to the benefits of improved water quality in Sydney Harbour upon tourism, recreational use and the overall pride by Sydney residents with their Harbour. Clearly this was a weakness, identifying these issues and harness the strategic benefits may have improved the profile of the project in the community and the media. 5.2 What was done on the PRL? Unlike the NST, the depth of the PRL is relatively close to the surface. As such the number of res idents, community groups and the extent of the environment affected is substantially larger than NST and is no small feat. Consultation activities to guide project development included: a public Call for Alternative Transport Suggestions; publication of a Parramatta Rail Link Overview Report inviting comments on the proposal; establishment of a website, email address, freecall telephone number, dedicated facsimile number and freepost service for public comments; a Planning Focus Meeting with key stakeholders and government agencies; and consultation with councils, project stakeholders and Government agencies. These activities, as well as others, encouraged community involvement in the development of the project. Over 10,000 people visited the mobile display and an estimated 950 people attended the community meetings. Over 1,100 calls were received on the freecall number and 2,300 submissions were received. The project team did raise the attention of the community. However, the project team probably underestimated the level of opposition to some issues, for example the developing the construction concepts within Parramatta Regional Park (SMH, 26 January 2000). This was probably due to the insufficient appreciation of the extent at which the Parramatta Park Trust wanted to protect the park from construction and operational impacts. The EIS included an area in Parramatta Park where two dive structures would be built parallel to the existing rail line. This would have required three heriand meet the required 5dB(A) above background was to house that activity within an acousti cally treated enclosure.

tage hoop pine trees to be removed and a section from Park Parade road reserve and Parramatta Golf course to be acquired on a permanent basis. Construction activity would have occurred near a number of heritage sites Governor Brisbanes observatory marker trees and Governor Macquaries bathhouse. Following strong opposition, these impacts were reduced, among others, and so the dive structures were relocated so that the new tracks run under Park Parade. The construction zone is relocated and contained in the in the rail corridor to avoid impacts upon the heritage trees and other significant heritage items. 5.3 What are the lessons then? Know your constraints and identify your strengths and champions for your project. Proactively identify issues and the extent to which these issues will be voiced is essential because it avoids possible crisis management and the real chance for major rework, which causes project delays. Also, identifying, discussing and responding to these issues does not necessarily take a long time, but it does take time to plan, resource and carry out these community relations activities and its feeding into concept designs and methodology. 6. ESTIMATING THE COST OF OPTIONS AND THE PREFERRED OPTION For both the NST and the PRL the cost for these projects and options was stated in their respective EISs (NST EIS 1997, PRL EIS 1999). Without these EISs, it would appear, a review to consider accuracy of the proposed costs in the same way environmental and community issues and mitigative measures are considered at this stage. EISs and subsequent approvals are important documents supporting contracts (i.e., EISs describe the conduct in which construction and operation will be carried out), and are arguably under-estimated by project delivery teams. They are the public face to the project and so communities attach a significant amount of weight to them. Accordingly, when an EIS fully describes a project, its impacts and mitigation measures, the public, private sector and the Government assume that these matters have been costed and fall within the overall proposed project cost. Unfortunately, both the PRL and the NST demonstrate that this is not carried out to the level expected by the public. These projects both have incurred increases in cost.

6.1 What was done on the NST? The NST was publicly announced at $300M to the Waterways Advisory Panel (1997) in community consultation for the preparation of the EIS, in the September 1997 EIS and also to th e Select Committee in the NSW Upper House (December 1997). This cost excluded an added benefit to the project, which was the construction of a biosolids pipeline within the NST and a proposed treatment facility at Camellia. The total cost therefore was advertised at $375M (Manly Daily, 18 October 1997). The increase in cost was realised after planning approval of the project and after construction had commenced. Presenting and communicating this increase was a significant burden for the team designing and constructing the project. As mentioned earlier, the cause of the increase was attributable to: A lack of definition on how excavated material is to be transported and disposed of. A lack of definition on how the construction sites will look. An inab ility to describe and assess impacts from construction sites upon local communities. Insufficient contingency allowance in the original estimate for design development, in particular the design changes arising from the late inclusion of the Scotts Creek overflow. Insufficient allowance in the original estimate for the consequences of the Conditions of Approval. Insufficient construction risk contingency in the original estimate. Increase in labour costs flowing from recent enterprise agreements. These deficiencies were rectified in the BAU Est imate (Target Estimate) which was validated by the external, independent estimator. The final cost therefore is about 3% of this estimate, and could be less or even marginally below the Estimate depending on the fin al outcome of major insurance claims currently being lodged. This outcome is despite significant cost increases in tunneling due to latent geotechnical conditions and has been achieved principally because of the Alliance delivery process. However, this increase in cost contributed to the Waterways Advisory Panel undertaking a second inquiry into the NST (Waterways Advisory Panel Second Report, March 2000). The increase in cost was announced as $430M6 and this did not include the
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biosolids pipeline or the construction of the treatment facility at Camellia (SMH, 10 February 2000). 6.2 What was done on the PRL? The PRL was publicly announced as $1.4B in the Overview Report (1998) and the EIS (1999). The EIS summary provided: The project has a positive cost to benefit ratio of approximately 1.6:1. This means that for every dollar invested in this project, there is a return of about $1.60. Flow-on benefits of the project, such as reductions in air pollution, greenhouse gases, noise pollution, accidents and road damage, have been valued at $59 million per year. (PRL EIS Summary Document, 1999). The PRL is now $1.6B (AFR, 24 August 2001) for the Epping to Chatswood link and Parramatta Interchange. This was due to the significant modifications and escalation in inflation undertaken which have lead to the increase in cost. As mentioned earlier the cause for the increase in cost was attributable to: No one executive had his or her eye on the ball. Due to the uncoordinated use of expertise and lack of input into the schedule there was a lack of focus within the project team. A consequence of this included that no one person had his or her eye on the management of cost. In addition one has to ask whether the PRL project team has considered the issue of labour costs in light of two other major projects will be on foot (Cross City and Lane Cove Tunnels). 6.3 What are the lessons then? Project teams should have regard to the costs from recent major tunnelling projects. Project teams must have regard to the target cost in formulating how construction and operation will be carried out. Experienced expertise in estimating is crucial; particularly having expertise whom can ask the necessary questions on all the disciplines involved in delivering such projects. Project management must be appreciative of the likely community relations costs and the impact of community issues in developing construction methodology and the function and look of permanent facilities. Project management must continuously review estimates developed in line with schedules. The cost of a project should be articulated as an estimate in that years dollars with a poss ible margin for error. Project management teams must consider costing contingencies and presently this informa-

Note that changes in accounting procedures to capitalise notional sales tax to the Government have also meant an i ncrease of $20M.

tion so that decision makers are fully informed. 7. APPRECIATION OF LATENT CONDITIONS AND CONTINGENCIES The appreciation of latent conditions and contingencies is undertaken as part of the risk assessment of any project and has been undertaken for both the PRL and the NST. For the most part these risk assessment cover the construction and operation of a project. Whilst drawing mainly on the experience of the NST because it has been built, there is arguably a view that project delivery teams underestimate the impact of actually encountering latent conditions and implementing contingencies. Furthermore, there is arguably a view that the costing of contingencies and including these costs as part a comprehensive review of the cost of the project is not done well. 7.1 What was done on the NST? When the NST project team considered the method for transporting and disposing of spoil, it was originally conceived after some initial research that it would be transferred to barges and barged to Port Botany for disposal for Sydney Ports Corporation (NTS EIS, 1997). Other options were considered but were never costed comprehensively and studied thoroughly in any scenario planning in the event that one of these options were invoked or assessed as to the impact upon cost. As it turned out, the disposal of the NST excavated material could not take place in Port Botany because Sydney Ports Corporation had not yet proceeded with its planning approval for works within the port. Of all the issues on a major tunneling project which are uncertain, spoil transport and disposal is the most uncertain because it is only until planning approval that a project delivery team can go to the market place for expressions of interest to identify what is available and achievable. Consequently, this scenario planning and an assessment of costs on such an uncertain issue are critical. 7.2 What was done on the PRL? The PRL project team described in its EIS (1999:pp. 5-14) that the rail link would traverse through Lane Cove National Park via a bridge over Lane Cove River because to tunnel under the river meant losing a station at the Ku-ring-gai campus at the University of Technology (the UTS). Due to the depth of the tunnel it would not be practical. As this option would have significant environmental impacts, in-

cluding open cut excavation across the Lane Cove River bed and does not provide convenient access to the UTS campus, it was not investigated further.(NTS EIS 1999:pp5-14). However, with the release of the Preferred Activity Report (August 2001) the preferred option is now to relocate the Lane Cove River crossing into a cut and cover tunnel (instead of a bridge) with a consequent tunnel alignment modification between the Delhi Road and Chatswood portals. The station proposed at the UTS campus is now relocated west between Lady Game Drive and the UTS campus. This major change was due to strong local oppos ition to the proposed bridge within the national park. Clearly it is a change beneficial for the users of the national park. However, this change would have come at an additional cost (AFR, 24 August 2001). It is arguably whether this was option was considered and costed as a contingency. It appears that this modification, among others lead to the increase in cost. 7.3 What are the lessons then? One has to ask if it is prudent to present preferred options to the public knowing full well there will be significant controversy particularly given that the planning system in NSW requires proponents to stand their ground and defend their proposal? However, project teams, clients and planning agencies should expect that changes would occur on a project. Such changes are likely to arise from community and stakeholder consultation before and du ring the exhibition of an EIS and also when construction commences. Often at the commencement of construction there is a realisation that certain aspects of a project cannot go ahead due to circumstance or because it cannot be built in the way originally conceived. Accordingly, it is suggested for consideration that a comprehensive assessment of likely latent conditions and the reliance of contingencies be undertaken in scenario planning and fully costed as part of a comprehensive review of costs. 8. TENDERING There are many areas in tendering that could be discussed however, this paper will concentrate on the method adopted for the NST and the PRL and the impact upon timing, project management issues and project outcomes. 8.1 What was done on the NST?

As mentioned earlier, the NST project management team undertook an Alliance contract and the project was publicly funded. The Call for Proposals September 1997) concerned itself with meeting project outcomes covering time, cost, environment, community and quality/industrial relations. Design specifications were also outcomes based such as meeting a certain containment standard for the storage capacity of the tunnel and this related to an overall outcome of twenty overflow events in ten years. These outcomes had a direct relationship with the EIS. Accordingly the project team tried to accomplish a marriage between these documents so that they were both aligned to the same outcomes. From the commencement of the preparation of the Call for Proposals (July 1997) to the signing of the contract (January 1998) the tendering phase took some six months. The project team relied on its own expertise and specialist legal advisors and alliance facilitators. It is understood that the preparation of the proposals from individual private sector consortia cost in the region of $100,000. For the most part the tender phase was successful. Two noticeable issues did arise. One was that the NST approval was not outcomes focussed; it was prescriptive and so it did not complement the outcomes based approach adopted by the NST. This was a significant fetter for the project causing delays and cost increases on the project due to four modifications sought to the planning approval7. The Sydney Water project team that joined the Alliance delivery team did not include personnel from the area managing the operation and maintenance of the sewerage system, which the NST was to form part of. As such there were some interface issues despite Sydney Water staff being part of the Alliance delivery team. 8.2 What was done on the PRL? The PRL project team has undertaken a design and construct contract and the project is to be publicly funded. The Invitation for Registrations of Interest and Conforming Proposals (April 2000) concerned itself with meeting certain specifications and some outcomes. These requirements were aligned to the EIS. Some twenty-seven packages were released as part of the registrations of interest. This tender phase is continuing and expected to be awarded in 2002 and with construction commencing within the same year. The project management has relied on its own exFor example, a modification was sought to change a timber -paling fence for bandicoot protection to a wire fence.
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pertise as well as external project management and legal expertise. It is understood that the in the preparation and response to the registration of interest etc, individual private sector consortia have spent up to $2M. The tender phase has been complex and generally this has been caused by the number of packages to be tendered upon, the major changes to the EIS and separating the project into two. These complexities have contributed to the significant tender costs being incurred by the private sector. It is understood that one significant reason for this number of packages was to promote local industry participation. This is a requirement in the NSW Code of Tendering for the Construction Industry (www.cpsc.nsw.gov.au). However, it is not understood why this many packages were necessary, as this local industry participation requirement could have been a mandatory condition of contract. Furthermore, this number of packages would have required significant management to minimise interface issues. Managing and oversighting these packages would have been a significant cost for a project spanning some five years. This tender process has since been changed for the better and has been restructured to fewer packages so as to reduce the risk of interface problems. 8.3 What are the lessons then? Government policy will dictate what kind of procurement will be undertaken; however, government should be cognisant of some key issues: EISs and procurement methods must be aligned and should be outcomes based. In order to avoid a tension between an outcomes based contract and planning approval greater effort by the proponent is required in planning, costing and negotiating conditions set by the planning regulator. Greater attention must be given to the impact a procurement method has on the cost on the private sector responding to a tender, registration of interest, expression of interest or call for proposals particularly when there is a down turn in construction. A process that is value for money should be considered. Changes to an EIS are likely to occur particularly during and after exhibition of the EIS. If there is a procurement process on foot during this, there must be recognition that this process must be managed knowing that such changes are likely to impact upon responding to tender specifications. Consequently in planning project delivery this issue must be considered, among other things, within the projects schedule.

9. BENEFICIAL CHANGES BY GOVERNMENT AGENCIES As mentioned earlier, the agencies involved in delivering the PRL and the NST have independently recognised the issues raised in the paper and implemented beneficial changes. These changes include: SWC now undertakes more rigorous investigation into options developing evaluation criteria based on community, technical, economic, operating and environmental issues. Fully costed estimates on the options are tested in public before develo ping a preferred option. SWC management is more aware of the impact on community relations upon its capital works and seeks to undertake better community relations activities to avoid delivery to the private sector. PRL Company and project management have changed and bring with it experience. Although the changes to the project are significant causing delays and an increase in cost (its now a two stage project and construction and operational features have changed) these changes are to the benefit of the project. The project is realistic before proceeding to the private sector and this should be seen as a credit to the project management and team that they have turned the project around. This arguably was not the case for the NST because construction concepts were not realistic. 10. CONCLUSION To conclude, the following dot point summary are those matters, which require greater attention for the public sector when delivering major tunneling projects: Expect changes to occur on major projects. Accordingly, testing assumptions evaluating o ptions and considering them as contingencies in the event public pressure or latent conditions drive change. Always consider the impact of implementing contingencies on cost. Never under-estimate the need for adequate community relations activities to identify issues and use these issues for developing design and construction concepts. Never underestimate the pressure from communities pushing for change. Is it right to proceed with a crash or be crashed approach or should the issues raised by the community and stakeholders be used for making change? It is essential to have estimating and scheduling expertise. It is essential to recognise all the elements for delivering a major tunneling project and the equal importance of these disciplines.

11. REFERENCES Australian Financial Review, 24 August 2001, $1.6bn railway link goes under water to appease bridge opponents. Australian Financial Review, page 25, 29 March 2001, Rail Decision Sends Wrong Signals. Call for Alternative Transport Suggestions Assessment Report, 1998. Construction Policy Steering Committee, Code of Tendering for the Construction Industry. Manly Daily Advertisement placed by Sydney Water, Northside Storage Tunnel, 18 October 1997. Northside Storage Tunnel Environmental Impact Statement, 1997. Northside Storage Tunnel Review of Environmental Factors to Modify Tunks Park, May 1998. Parramatta Rail Link Environmental Impact Statement, 1999. Parramatta Rail Link Environmental Impact Statement Summary Document, 1999. Parramatta Rail Link Preferred Activity Report, August 2001. Public Accounts Committee, Parramatta Rail Link Pre-Tender Procurement, A Case Study, Report No. 126, January 2001. Public Call for Alternative Transport Suggestions, 5 September 1998. Report of the Select Committee on the proposed Duplication of the North Head Sewerage Tunnel, December 1997. Sydney Morning Herald, 26 January 2000, On track for a heritage disaster. Sydney Morning Herald, 31 January 2000, Parramatta Park: on track to heritage or progress?. Sydney Morning Herald, page 3, 23 March 2001 Rail Link Teeters After $800M Cost Blow-Out. Sydney Morning Herald, 10 February 2000 Sydney Water accused of deceit over sewage tunnel. Waterways Advisory Panel, Report to NSW Government on the Proposal by Sydney Water Corporation for Sewage Overflow Abatement in Sydney Harbour, 11 August 1997. Waterways Advisory Panel Second Report to the NSW Government on the Proposal by Sydney Water Corporation for Sewage Overflow Abatement in Sydney Harbour, March 2000.

12. ACKNOWLEDGMENTS The Author wishes to thank Mr Allan Henderson, Sydney Water Corporation and Mr Bill Grant, Parramatta Rail Link.