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ter Tunnelling Asia ’ 2017 - Design, Construction and Risk Management
1
Underground Construction : Issues & Challenges, 9-10 February
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2017, Mumba
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an CONTRACTUAL RISK MANAGEMENT

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ird. FORTUNNELING A CASE STUDY • 1i
m
s of
of a
OF VISHNUGAB PIPALKOTI HYDRO
use
and
ELECTRIC PROJECT
m
\V
i
ctors D.V. SINGH AND RAJEEV VISHNOI
table i THDC India Limited, Uttrakhand
' able |~
•r and INTRODUCTION
5 Underground works for hydro projects are being constantly planned
and executed based on the
nd do risk allocation model followed for other infrastructure projects. Howev
er, it has been unanimously
nation X agreed by allthe developers of such projects that risk allocation
model for underground works in i. siilffi
hydro projects cannot be the same as followed in other projects
, as there are considerable undefined
risks at the bidding stage and therefore allocation of all risks, defined or ms
undefined , to the contractor
by no means is an efficient approach for developing Hydro Electric . :\m
Projects. It leads to speculative
els and bidding by the contractors and result in to contractual disputes during 31
construction phase of the Ap
project.
i Space In order to evolve an efficient risk allocation method for Vishnugad
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Pipalkoti Hydro Electric Project,

Oil ). consisting of 65 m high Concrete Gravity Dam, 3 nos. 390 m long undergr Wm
ion and
.
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i and 444 MW’s underground Power House, following objectiv
ound De-silting Chambers
es were set out:
pmnr
1. Make optimum use of the respective skills of the various
parties involved in the implementation if IB
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of the contract;
2. Limit the risks that the contractor bears to those that he
has some control over and therefore
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enable him to quote a competitive price; ; t
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3. As far as practicable, delegate to the contractor the i
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tasks that are within his capabilities so as to
reduce interfaces between the Contractor and the Owner. t!
;

The paper discuss about the particular risks associated with I;

hydropower projects followed by a m
brief description of the Vishnugad Pipalkotti project which
\ I involves extensive underground works
and other elements making it particularly prone to ?;
8 risks from natural events. This is followed by 8

•1
a discussion of the overall contract strategy which
covers contract packaging, prequalification and
m
allocation of design responsibility, after which there is a detailed discuss
to manage risks both in advancement of investigation ion of the measures taken i i
and preliminary works and in the contract
I documentation. The principal elements of the contract documents pertaining to
risk are: the basic
-
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design of the project together with an associated bill of
quantities, the geotechnical baseline report; 8:
the risk register and the. general section of the technica |
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l specifications. All of these documents form
an integral parts of the contract documents. s
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 96 D . V Singh, et al .

1. PARTICULAR RISKS ASSOCIATED WITH HYDROPOWER PROJECTS • Sli

(TECHNICAL RISKS) of
There are many risks inherent in a hydropower project which are not present in other infrastructure. Po
These include environment and social risks, risks of opposition through activism, financial risks Risks c
through escalation and interest rate variation and financing difficulties due to short tenor of loans targets
available. The financing risks and difficulties largely arise due to the capital intensive nature of the
\A

?/: and sta

project band they typical longer construction time. But these risks are not the subject of this paper. excaval
i' • This paper focuses on technical risks which generally arise because hydropower projects are often s measur
located in remote areas, high rainfall and high seismicity. In other words, hydropower projects are T!
S
often subjected to the forces of nature in a way that few other infrastructure projects are. m 1.1.2 l
1
Such ri;
-
1 1 Geological / Geotechnical Risks
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probabl
;! In hydropower projects are very important primarily because of the substantial exposure of such
projects to the forces of nature throughout the construction and (to a lesser extent) operation phase.
m by an e
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Technical risks are therefore likely to be substantially larger than for example a thermal power plant
m ;•
where a large proportion of the plant is constructed in a factory or for a highway built over flat
m quite sn
excavat
terrain.
> : J support
; The risk tends to be more pronounced with small hydropower projects since they tend to be located per moi

si in upper areas of the catchment which have steeper topography, intense rainfall and rapidly rising 3
river levels. These risks, which are already significant for large projects, are magnified for small
projects, since potential damages constitute a much larger share of overall costs. Moreover, small m
inflows
require
! *; ' Of parti
projects are more likely to involve tunnels and underground works are generally much more risky | cavities
than civil works constructed at the surface. . undergr

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1 1.1 Slope Instability Risks
Many of the risks are in relation to slope instability. Typically, in steep terrain, there can be deep 1 f
With a c
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area. T1
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weathering of rock which gradually progresses with time such that many steep slopes are in marginal
equilibrium meaning that they may fail at any time under the influence of heavy rain, earthquake j
expect i:
conditio
or undercutting by construction activities. Slope failure in the following areas may considerably ^ake pj
m9
fi
influence construction schedule and costs: mm
. includin

• Access roads: Construction of access roads often involves undercutting of steep slopes resulting I pp taking i
ff
!H in failures particularly in the rainy season. Failures during the construction period can delay|
construction for weeks or even months. In operation, the consequences may be less but still|
It alleviate
several i
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significant.
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S inflows
• Slopes above project works: These may include slopes above dam, intake, headrace channel 1 ,
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penstock, powerhouse, tailrace and switchyard. Typically the site of the dam and power intake Jg r0ck M(
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is located in the narrowest section of a river, which usually means the steepest terrain. The Jg
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.
risk of a slide onto the dam and intake structure is often quite high and will be exacerbated by
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undercutting during construction. The impact of slope failures both during construction and
I operation can be serious both in terms of construction delays and lost production during the i m
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fclSOmesu
>s actual
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operating period. There are similar (although possibly lesser) risks associated with the other .vg g

*s structures. §i|
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• Penstocks on steep slopes: There are risks associated with locating a penstock bn a steep slope.
Even if the foundation is on rock, if the slope is in marginal equilibrium there can be a risk| I
JM pg Hy
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m:- of a large slope failure during the operating phase taking out a section of the penstock withgg j Ifgjstructure
potentially devastating consequences. Jgfjlg

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Contractual Risk Management forTunneling - A Case Study of Vtshnugad Pipalkoti HEP 97 i
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:sz Sliding into the reservoir: This will result in lost storage volume and may result in a large surge * :.• ; a
ECTS . ° : -*v;
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of silt laden water which can destroy project works (dams, intakes, and power stations) and
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potentially result in downstream damage including loss of life. l

icture. 5/ '
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1 risks ;• Risks can be alleviated to some extent in design and construction stages. During the design stage, : .: h

f loans t§ targeted investigations can identify problem areas, structures can be relocated where appropriate,
%pi and stabilization measures designed. During construction, risks can be lessened through proper
is ;
s of the i
; •

paper, excavation planning aimed at creating stable slopes, controlled blasting and slope stabilization «i

e often 1 measures. These measures will usually increase costs but on balance will usually be worthwhile.
are w :
;cts 1.1.2 Underground Excavation Risks :V

m
Such risks are generally considered to be much larger than for surface excavations, although this is 1
of such
m
probably an over-simplification. In favorable geological conditions, construction of small tunnels
by an experienced contractor is straightforward. For small hydropower projects, large caverns for
underground powerhouses, de-silting chambers etc are unlikely to be present and tunnels are usually
, i
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er plant
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quite small in diameter. Therefore, much depends on geological conditions. The rate at which tunnel
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)ver flat f excavation can be advanced is very much dependant on rock conditions and the type of temporary
f support required. Tunneling rates might vary from 200 meters per month down to say 10 meters \ f-
§
j located
:
per month in heavily faulted water laden ground. In addition, under certain conditions large water
ly rising v;
inflows may be encountered and occasionally very high temperatures. Both of these conditions
or small it* require special driving and support measures which substantially affect tunneling time and costs. •
Wi!
er, small Of particular concern are tunnels in karstic ground where large water inflows and very large solution
ore risky rm cavities may be encountered. Perhaps the main problem is geological uncertainty associated with •'
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underground excavations. ; •: I

' =13 With a dam, one can drill several exploratory holes and obtain quite a good coverage of the dam-site .; #

area. This can also apply for a surface powerhouse. However, for a tunnel the most that one could :
1 be deep m
m expect is a few holes along a tunnel alignment which are of little use except in very uniform geologic
if
marginal mm
’

irthquake conditions. Specialist geologists are able to project surface geology to the tunnel alignment and vi-
make predictions as to what conditions will be encountered along its length. The design team,
isiderably mm .
including experienced geotechnical and tunneling engineers, are then able to design the tunnel n
jresulting m m
taking into account the predicted geological conditions. Design measures that can be taken to 4
:

alleviate risks include: provision of intermediate access adits so that the tunnel can be drilled from
can delay m several faces concurrently (if these are constructed ahead of the main contract, they will also assist
>s but still in defining geology along the tunnel); drilling from downstream to upstream so that ground water
--
inflows will drain from the tunnel by gravity. Appropriate support designs for various classes of
e channel, rock can be specified including special support measures and construction techniques for very poor
wer intake M " rock. Measures that can be taken during construction include: (a) supporting the tunnel immediately
i
rrain. The jP
^erbated
VS
after excavation preventing relaxation of stresses which can cause failure; (b) drilling ahead of the
by 1 m
tunnel face to identify potential water inflows and grout these areas before excavation; (c) installing
uction and . .
some support ahead of the excavation (usually referred to as fore-poling) and where very poor rock
during the is actually encountered special measures must be employed to get through that zone.
h the other
Sfff|-
1
1 2 Hydrologic Risks
’

D2.1 Hydrological Risk during Construction

steep slope,

p^
in be a risk ill?? nttke most civil engineering construction, hydropower construction involves building important
nstock with - Ssi
\
® : structures adjacent to rivers and in the riverbed itself. Therefore the river needs to be diverted to
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 tf? :

D.V Singh, et al
undergn
i allow the construction to proceed. In designing diversion works, it is necessary to choose a design
powerhc
flood for design of diversion works. This implies taking a calculated risk balancing the cost of the
diversion works against potential loss if the design flood is exceeded. Often, it will be impractical 1 undergn
i «
m 2.2 Tl
to design the diversion works for a wet season flood; therefore a schedule must be derived which m
allows cofferdam overtopping during the wet season and sometimes restriction of construction in m 2.2.1 77
I
the river bed to dry seasons only.
m This wa
1.2.2 Hydrological Risk during Operation I prepared
There are two types of risk. Firstly the risk of overestimation of long term flows. With good records consulta
and rigorous design this risk can be minimized . Secondly, even if estimates of long term flow are and waU
reliable there can be substantial variation from year to year. Unless the project has a very large storage, conclusi
there is nothing that can be done to control this variation. However, with appropriate wholesale tariff marked!'
design, it is possible to reduce the magnitude of revenue fluctuations. Some storage, at least daily, 2.2.2 Th
will increase the value of the project to the system. The storage allows energy production in the dry
season to be concentrated into the peaking and shoulder period when prices for power and energy § The risk
» :
are highest. Therefore any shortfall in flow is likely to only affect the quantity of lower value off different
peak energy produced. While such measures will reduce the impact of flows lower than average, (a) to e
h :-
drought scenarios need to be investigated and input into risk management models. prof
1 m (b) whe
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;
1.3 Designer and Contractor Incompetence
r
m.
In both cases, there is a very substantial risk. Because of the risk profile and because designs are site
specific, design of hydropower plants requires well qualified designers with substantial experience
(c) to o
haze
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in the field. Similarly, while the construction risks identified above can be easily handled by a 4
i (d) havi
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contractor with adequate resources and experience, they can present insurmountable difficulties to S:
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deal
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an inexperienced contractor with inadequate resources.
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2. THE VISHNUGAD PIPALKOTI HYDROELECTRIC PROJECT ; £ that
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8: 2.1 Project Description beb
-
Vishnugad Pipalkoti Hydro Electric Project (VPHEP) is a 444 MW, under construction, run of the
mmft whe

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river project in District Chamoli of Uttrakhand, India. The project is on river Alaknanda, a major The ultij
. disputes,
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i tributary of river Ganga. V

the risks'

I The project is a run of river plant with diurnal storage capacity, the concrete dam is 65 m. high and
is subject to a substantial design flood of 6700 m3/s and a probable maximum flood (PMF) of 10,840 |
3
.

m /s. It is also subject to relatively high seismic loads since the dam is only about five km from the $ ;
*

*
2.2 3 MQ
There w
MA preparati
r- Main Boundaiy Thrust (MBT). The dam is equipped with four undershot radial gated spillways |
with sill levels 8.0 m. above river bed level. A 10.5 m diameter diversion tunnel is also used as a m m conditioi
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tunnel spillway ms Jf 2.2.4 Ge .

The power intake on the right bank leads directly into three underground de-silting chambers each | 8 While m
390 m long, 16 m wide and 21.25 m high in turn leading to a 13.4 km long headrace tunnel with gjj included
an internal diameter of 8.8 m, with 1.4 km to be constructed by drill and blast and 12.0 km to be componc
SK - : constructed by Tunnel Boring Machine (TBM). At the downstream end of the headrace tunnel there jgj | |
m
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.
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m is a restricted orifice surge shaft, a butterfly valve chamber and two pressure shafts each 5.2 m
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mi diameter and 135 m high leading into four pressure tunnels each 3.65 m. diameter and 37 m long. ; The trad:

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The underground powerhouse is 146 m long by 20.3 m width and 50 m high . It is significant to §
note that the cross sectional dimensions of the de-silting chambers are of the same order as the <tg
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Contractual Risk Management forTunneling - A Case Study of Vishnugad Pipalkoti HEP ;

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underground powerhouse and almost three times as long. Therefore, they equate roughly to six iiril
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powerhouses. There is also a downstream surge tank and a tailrace tunnel. By any measure, the
underground works are substantial. it a
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2.2 The Risk Management Package
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2.2 1 The Geotechnical Baseline Report
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i. This was based on the publication ‘Geotechnical Baseline Reports for Construction’. This was 4
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prepared by Dr. Laurie Richards who was the geotechnical member of the PRP and Dr. D. Sati, a mm !
consultant geologist to THDC, who reviewed all existing geologic and geotechnical information :
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ds
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riff
and walked over the full length of the power waterways and the underground powerhouse; their
conclusions on the likely conditions to be encountered in the underground excavations were
'

markedly different than had been presented in the Detailed Project Report.
til
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ay> 2.2.2 The Risk Register
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The risk register is now quite common in developed countries, but objectives and scope can be very
1
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different. For VPHEP, it was considered the main objective of such a document would be:
off * (a) to establish the main risk areas specific to carrying out a hydroelectric project with a high
ige, ixV ,

proportion of underground works in upland areas,

3
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(b) where possible indicate the probability of occurrence (to conform with the GBR); fa
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(c) to outline measures to be taken by the Contractor prior to actually encountering the potential
site m
hazard;
nee K I M
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>y a (d) having encountered the identified hazard detail the measures to be taken by the Contractor in
:S to dealing with the hazard; and mwm
(e) to establish allocation of any additional costs to the various parties. The principle adopted was
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that for geotechnical conditions better than or equal to those set out in the GBR all costs would
be borne by the Contactor. For worse conditions, additional costs would be borne by THDC and
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where possible these would be evaluated based on rates in the BOQ. m
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tajor
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The ultimate objective of the risk register was to clarify risk allocation and avoid contractual
disputes. However, the Contractor could use the document (with the addition of monetary values to
the risks) to assist in obtaining insurance against his risks.
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2.2 3 Basic Design and Bill of Quantities (BOQ) \\ i

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There were a total of 55 drawings associated with the basic design and these were the basis for ,ftfe

ways preparation of the Bill of Quantities and invitation for bids. The BOQ also closely reflected expected
R
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m&-i conditions as set out in the GBR.
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2.2.4 General Section of Technical Specifications
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While most sections of the technical specifications were conventional, a general section was
with IS included which among other things, explained the risk management philosophy and how the other
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to be
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components of the risk management package were interrelated.
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P- 2.3 Mechanical and Electrical Contract
:.
5.2 m §
long , . The traditional approach in hydroelectric powerhouse equipment was for the Employer ’s design ’ 1
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ant to consultant to carry out the detailed design and employ the main supply contractors ( turbines, -
ft

!0 y:: generators, transformers etc), numerous small equipment contractors and an erection contractor Mm
as the
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(for the 3300 MW Ertan project in China there were over 400 small equipment contractors). The iV capacity
consultant, along with the erection contractor was also responsible for coordination of equipment to time
7
installation. : excavat:
I
The trend in recent years has been to move towards a single responsibility contract for all powerhouse M • Risk ass
equipment The same has been considered for VPHEP. i
• Additio:
3. THE CONTRACT PROCESS docume
• Analysi
3.1 Prequalification I
i ’4
clause c
It was decided to prequalify both civil contractors and suppliers of equipment. An important aspect
of this prequalification was not to prequalify firms on the basis of qualification of affiliated firms i.e. The Tender
parents, subsidiaries or sister firms. If the qualification requirement was ‘design, supply and install’ hydro-mech;
then the firm had to, either have all experience, or associate with others to be able to demonstrate bidder. Acc(
full experience. Adequate time was given for firms to modify their submissions accordingly. The Mumbai in J
result was that all prequalified firms, joint ventures or specialized contractors were fully qualified. 4. PREL
The prequalification process was carried out in parallel with development of the bid documents so
One lesson
that time was not wasted .
reasons, pre
3.2 Calling for Bids from Civil Contactors can proceed
Bids were called in November 2009. Since the estimated contract value was $355 million, the was given tl
evaluation had to be cleared at the highest level within the World Bank (financier for the Project). • A wide
It was not an easy evaluation since prequalified contractors included those from abroad as well as Highwa
from India.
• A bridg
3.3 The Bidding Period • Establis
As is often the case the bidding period was longer than the originally allowed four months because surveys
of several requests for extensions of time from bidders, but there were also an unusual number of • A full c
requests for clarifications many relating to the risk management package. It seems that bidders house s
couldn’t really believe that an Owner was prepared to accept risk. Bids eventually were received
inMay 2011, and evaluated by the committee. • Constn
contrac
3.4 Negotiations and Award of Contract
• Constn
The prices quoted by the bidders were evaluated as per the bidding provisions. The discounted price the ade
-
of the lowest bidder (the L l bidder) was about 6% lower than the approved estimated cost. Based on live;
the evaluation of the bids, M/s Hindustan Construction Company Limited, Mumbai emerged as the
lowest evaluated responsive bidder. The tender committee on consideration of the evaluation of the • Establif
bids recommended the award of contract to the lowest evaluated responsive bidder M/s Hindustan ° Establi;
Construction Company Limited, Mumbai. However, in order to have better understanding, mutual • Establi;
appreciation of the commitments made during bidding stage and to avoid lack of clarity in the final
% 5. INIT1
contract, the following points were proposed to be discussed with the lowest evaluated responsive
bidder during pre-award stage: Project affe <
• Detailing of equipment deployment schedule and construction schedule. activities fr<
E makes ever
• Deployment of TBM personnel, Head Project Construction, their CVs and proposed project
r. felt necessa
organization structure. fi
ubiquitous i
• TBM related issues like Time cycle for change of mode of Tunnel Boring Machine (TBM)
from Double Shield (DS) mode to Earth Pressure Balance (EPB) mode and vice-versa; overcut • Employ

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i\ Contractual Risk Management forTunneling - A Case Study ofVishnugad Pipalkoti HEP V it
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The
i
capacity of TBM; Details of design for necessary overcut during boring operation with respect ! if
V- lif
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nent *
to time related radial deformation under each operation mode; Working cycle time including
excavation; lining installation and systematic probe drilling within TBM maintenance period.
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Risk associated with time cycle for change over & operation of DS-EPB TBM. .M
m
Additional risks indicated by the bidder but not covered in the Risk Register of the bidding
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documents. Deployment of Risk Management Officer and his responsibilities. 4}> l Lii
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Analysis of rates of BOQ items are required to be taken from the bidder in terms of relevant
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clause of ITB of the bidding document.

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is i.e.
The Tender Committee subsequently recommended to award the work of contract for civil and ; ?;-*
hydro-mechanical works ofVishnugad Hydro Electric Project to the lowest evaluated responsive
istalT r
strate bidder. Accordingly, the work was awarded to M/s Hindustan Construction Company Limited
,
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Mumbai in January 2014.

The
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4. PRELIMINARY WORKS •
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One lesson to be learned from VPHEP is that, although the main project is held up for various
reasons, preliminary works, land acquisition etc. hydraulic model testing, additional investigations :!
n
can proceed although constrained to some extent by negotiations on site. By the time the Contractor
n, the was given the notice to proceed, the following preliminary works had been carried out: If
Dject). V * A wide and stable approach road to dam site on left bank bifurcating from the nearest National
/ell as
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. up
Highway; !- Jii

ecause
iber of I
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» A bridge connecting the right bank and left bank at the dam site;
Establishment of permanent benchmarks in dam and power house areas for topographical
surveys and layout of structures;
A full capacity bridge and dedicated approach road connecting the National Highway to power
a '
ill
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in
udders i
house site on right bank;
ceived
•
1
- Construction of access roads and bridges envisaged in the ‘Contingency Plan’ embedded in the
M
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m
d price
* Construction of the electric sub-stations at dam and power house sites. Electric connections of
the adequate capacity obtained from the power utility and the sub-stations made electrically
ill
ased on m
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live;
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Establishment of permanent water supply arrangement for its immediate use by the contractor;
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a of the
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Establishment of communication facilities of all types well in advance;
mutual | Establishment of medical facilities at the dam and power house sites;
;. M

he final U
ponsive m
I 5 .
INITIAL EXPERIENCES WITH IMPLEMENTATION •
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Project affected villages and other population from surrounding areas are obstructin
m g the construction 3
§| jj activities from time to time for their unlawful Sc unrealistic demands. The THDCIL site personnel
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m|| |gg: makes every effort to resolve the issues with villagers through consultation meetings. Whenever
project 1 §|felt necessary, intervention of District Administration is solicited. Unfortunately, the demands are
f|
m|i g - ubiquitous are often fueled by outside parties. The Main demands raised are as under :
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(TBM)
overcut i?r
* Employment for all the affected families. YW
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D.V Singh, et al j

• M/s HCC to Sub Contract all the Works among affected villagers on their own Terms &
s Conditions. Tut
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• Demands towards community development works even there is a generous CSR funded benefit
i
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sharing policy in place.
• R&R Benefits beyond the provisions of R&R Policy and agreed RAP.
i
The underground Power House is proposed to be constructed on the forest land possession of |

which has been taken by THDCIL in accordance with the law of the land. The Land required for
establishment of TBM Platform, switchyard, muck disposal site, and other works in a close-by l
village ‘Haat’ has already been acquired by THDCIL. The village has been relocated at relocation
-
it :;
K
sites on a ‘self - relocation’ basis. THDCIL is providing rehabilitation and resettlement funds as per 5 D;
the R&R Policy and approved RAP. In addition, each resident household has been given a ‘Special ) LOi
Monetary Package’. Notwithstanding this, the villagers are periodically obstructing work. %
AI
However, the work has now firmly commenced at site due in no small part, to the infrastructural '

preparations made in advance by the THDCIL. The contractor has directly started the execution m
of main components such as excavation for dam, excavation of de-silting chambers, and approach ha:
tunnels etc. Me
am
6. CONCLUSION :
2
int
The traditional risk management strategy of allocating all the risk to the contractor cannot be adopted - Wi
for Hydro Electric Projects (i.e. for Dams and Underground Works) because of lot of undefined Gc
risksat the stage of bidding. Allocation of all the risks to the Contractor leads to speculative bidding s sig
and contractual disputes during the construction phase of the project. The efficient risk allocation §
%
for developing such project timely should be based on risk sharing. The risk should be shared 4 fi
\ a i
following the principal that the party who is in best position to access the risk and tackle it, should
A
be maderesponsible for the risk.
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1. INTI
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After 25 y«
suitable tim
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