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Energy Depar tment Note No. 61

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

ENERGY DEPARTMENT

ENERGY NOTES

GEOLOGICAL COMPLICATIONS AND COST OVERRUNS :

A SURVEY OF BANK-FINANCED HYDROELECTRIC PROJECTS

J u l y 1985

Energy P o l i c y and Adv i so ry D i v i s i o n Energy Department

T h i s p a p e r i s one of a s e r i e s i s s u e d by t h e Energy Department f o r t h e i n f o r m a t i o n and gu idance of Bank s t a f f and o t h e r s who may be conce rned w i t h p r o j e c t s and p r a c t i c e s of t h e World Bank i n t h e energy s e c t o r . I t i s n o t a n o f f i c i a l s t a t e m e n t of Bank p o l i c y and t h e r e f o r e may n o t be quo ted o r r e f e r e n c e d a s such.

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GEOLOGICAL COMPLICATIONS AND COST OVERRUNS:

A SURVEY OF BANK-FI NANCED HYDROELECTRIC PROJECTS

TABLE OF CONTENTS

Page No

Background........................... .............................. 1

Cost Estimates and Cost Overruns................................... 3

Geological Cons idera t ions i n Hydroe lec t r ic P r o j e c t P repa ra t ion .................................................... 4

Survey of Hydroe lec t r i c P r o j e c t s ................................. 5

A. Hydroe lec t r i c P r o j e c t s wi th Evaluat ion Reports ........ 6

B. Hydroelec t r ic P r o j e c t s without Evalua t ion Reports ..... 10

Conclusions and Recommendations .................................. 12

TABLES I N TEXT

Table 1: World Bank Group Lending f o r E l e c t r i c Power 1976-1984 ............................................ 2

Table 2: Audited P r o j e c t s wi th Geological Problems .............. 6

Table 3: Non-Audited P r o j e c t s wi th Geological Problems .......... 10

LIST OF ANNEXES

Annex I: Descr ip t ion of P r o j e c t s wi th Evalua t ion Reports

Annex T I : Descr ip t ion of P r o j e c t s without Evalua t ion Reports

Annex 111: Guidel ines f o r Est imating Cos ts of Tunnel Cons t ruc t ion , GAS 6

GEOLOGICAL COMPLICATIONS AND COST OVERRUNS :


This note reviews t h e s ign i f i cance of geologica l complications i n hydroe lec t r i c p r o j e c t s and proposes gu ide l ines f o r reducing t h e i r occurrence. It surveys 64 Bank-financed hydro p r o j e c t s and r evea l s t h a t over 35% of them have experienced unexpected geologica l d i f f i c u l t i e s r e s u l t i n g i n average c i v i l works c o s t overruns of over 65%, wi th tunnel ing t h e main component of c i v i l works a f f ec t ed . The paper a l s o r evea l s t h a t c i v i l works c o s t contingency allowances f o r hydro p r o j e c t s i n genera l , and those with geologica l problems i n p a r t i c u l a r , have been f a r below t h e a c t u a l values, warrant ing need f o r a change i n t h e Bank's approach t o c o s t cont ingencies f o r c i v i l works i n such p ro jec t s . The paper proposes development of a da t a base on hydro p r o j e c t parameters vs. c o s t overruns and f o r a review of a l t e r n a t i v e geo-science techniques f o r s i t e i n v e s t i g a t i o n and t h e i r use i n quant i fy ing cons t ruc t i on u n c e r t a i n t i e s .

GEOLOGICAL COMPLICATIONS AND COST OVERRUNS:


1. The ob jec t ives of t h i s paper a r e to: ( i ) e v a l u a t e t he e x t e n t of geologica l complicat ions i n hydroe lec t r i c p ro j ec t s f inanced by t h e Bank; ( i i ) e s t ima te t h e p ro j ec t c o s t overruns and completion delays due t o geo log ica l problems; ( i i i ) propose precaut ionary measures t o reduce geologica l s u r p r i s e s ; and ( i v ) propose d i r e c t i o n s f o r f u t u r e s tud ie s .

2. The survey covered 64 Bank-financed 1/ hydroe lec t r i c p ro j ec t s and concludes t h a t geologica l d i f f i c u l t i e s caused maj o r c o s t overruns and completion de lays i n 23 p r o j e c t s (36%); c i v i l works c o s t increased on average by over 65%.

3. P ro j ec t r i s k s a r i s i n g from unce r t a in geology must be t r e a t e d much more e x p l i c i t l y i n preparing and appra i s ing Bank p ro j ec t s s u b j e c t t o such u n c e r t a i n t i e s . P r o j e c t s incorpora t ing long tunnels (over 5 km), having l a rge undergound works, o r founded i n k a r s t i c ( so lub le ) l imestone a r e prima f a c i e candida tes f o r more r igorous t rea tment including:

( i ) a n a l y s i s t o determine t h e impact of r i s k on p r o j e c t j u s t i f i c a t i o n ;

( i i ) a requirement t h a t t h e engineering consu l t an t e s t a b l i s h a p r o b a b i l i t y d i s t r i b u t i o n f o r c o s t s of r i s k y components;

( i i i ) more involvement by panels of e x p e r t s i n reviewing r i s k a spec t s of p r o j e c t s , and

( i v ) use of more generous phys ica l contingency allowances f o r r i s k y p ro j ec t elements when formulat ing f inanc ing plans.

4. There i s a need t o c o l l e c t p ro j ec t information i n an eas i ly - a c c e s s i b l e da t a base t o be used by Bank s t a f f i n a s se s s ing p ro j ec t r i s k , and t o prepare gu ide l ines on s tate-of- the-ar t site i n v e s t i g a t i o n techniques.

Background

5. The impetus f o r t h i s s tudy came from an impression among Bank s t a f f t h a t geologica l complicat ions were l a r g e l y respons ib le f o r cos t overruns and

1 / - Inc ludes I D A .

completion de lays i n h y d r o e l e c t r i c p r o j e c t s . This impression has been r e in fo rced by some major geologica l problems i n cu r r en t Bank-financed hydro p r o j e c t s . For example, t h e 300-MW Chixoy Hydroe l ec t r i c p ro j ec t i n Guatemala, comprising a 108 m h igh r o c k f i l l dam and a 25.6 km long power t unne l , was t o be completed i n 1982 and c o s t $414 mi l l ion . However, a s of February 1985, t h e t o t a l c o s t e s t ima te has been r a i s e d t o $815.8 mi l l i on with expected completion, four years behind schedule , i n 1986. About 90% of t h e c o s t i n c r e a s e and t h e de lay i s a t t r i b u t e d t o numerous geo log ica l complicat ions encountered during cons t ruc t ion of t h e power t unne l and t h e dam.

6. Hydroe lec t r ic p r o j e c t s account f o r a l a r g e s h a r e of t h e power l o a n s provided by t h e Bank. Table 1 compares t h e number and t h e amount of Bank loans f o r t o t a l power and f o r hydropower p r o j e c t s between 1976 and 1984. A s shown i n t h i s t a b l e , 21% of power p r o j e c t s i n t h i s per iod a r e h y d r o e l e c t r i c , account ing f o r 30% of t o t a l power loans . Furthermore, hydro p r o j e c t s a r e a major c o n t r i b u t o r t o c o s t overruns i n t h e power s e c t o r . The survey of 105 power p r o j e c t s , audi ted by t h e Operat ions Evalua t ion Department, i n d i c a t e s t h a t h y d r o e l e c t r i c p r o j e c t s ' average c o s t overrun is over 40% compared t o 18% f o r non-hydro. The l a r g e s c a l e of h y d r o e l e c t r i c l ending plus a s s o c i a t e d h igh c o s t i nc reases j u s t i f y an at tempt t o understand u n c e r t a i n t i e s i n p r o j e c t c o s t s and a l s o t o improve t h e c o s t e s t ima t ing process .

Table 1: WORLD BANK GROUP LENDING FOR ELECTRIC POWER 1976-1984

No. of P r o j e c t s Bank Loans i n $ m i l l i o n P owe r Hydro Power Hydro

Tot a 1

Share

7. Cost overruns usua l ly lead t o immediate f i n a n c i a l d i f f i c u l t i e s f o r power agencies. For one t h i n g , t h e agency has t o f i n d a d d i t i o n a l c a p i t a l t o complete t h e p r o j e c t . I n such cases n e i t h e r t h e Bank nor o t h e r i n t e r n a t i o n a l o r o f f i c i a l lending agencies a r e eager t o provide supplementary loans. The World Bank, s p e c i f i c a l l y , has followed a r e s t r i c t i v e pol icy on g ran t ing supplementary loans and only i n a few s e l e c t i v e cases have supplementary funds been provided. So t h e power agency may be forced t o borrow from p r i v a t e sources a t whatever terms a r e ava i l ab l e . Completion de lays can a l s o have a more pene t r a t ing economic consequence by causing h igher economic opportuni ty c o s t s due t o e l e c t r i c i t y s h o r t ages o r supply u n r e l i a b i l i t y . This i s es t imated t o be one o rde r of magnitude h ighe r than the s a l e value of e l e c t r i c i t y .

8. I n genera l , power p r o j e c t s a r e s e l e c t e d from a s e t of a l t e r n a t i v e s based on convent ional l ea s t - cos t program planning. The s e l e c t i o n process is p a r t i a l l y handled through computational t o o l s where t h e ne t present c o s t of e l e c t r i c i t y genera t ion i s minimized over a planning period of up t o 30 years . Comparative c a l c u l a t i o n s i n t hese schemes a r e based on the o r i g i n a l c o s t and completion e s t ima te s a t t h e f e a s i b i l i t y o r a p p r a i s a l s tages . So, major c o s t overruns and completion delays could d i r e c t l y , o r i n d i r e c t l y through h igher opportuni ty c o s t s , make the i n i t i a l s e l e c t i o n process f o r the l e a s t expensive power supply a l t e r n a t i v e i n v a l i d . I n such cases , t h e borrower w i l l be forced t o l i v e wi th t h e expensive opt ion and due t o l imi t ed f i n a n c i a l resource a v a i l a b i l i t y , forego f u t u r e expansion plans.

Cost Estimates and Cost Overruns

9. The a p p r a i s a l c o s t e s t ima te f o r a p ro j ec t s e rves two purposes. The f i r s t is t o determine whether t h e p ro j ec t being considered i s a p a r t of t h e opt imal l e a s t cos t expansion program. The second is t o provide t h e b a s i s f o r t h e a n a l y s i s of t h e f i n a n c i a l f u t u r e of t h e agency and thus t o i n d i c a t e t h e amount of f inance t h a t needs t o be obtained. A s mentioned e a r l i e r , i f a p r o j e c t t u r n s out t o c o s t s u b s t a n t i a l l y more than expected, t he ques t ion of economic j u s t i f i c a t i o n may come up and c e r t a i n l y some kind of f inanc ing problems w i l l be present .

10. Due t o understandable unce r t a in ty i n c o s t e s t ima te s , u sua l ly some form of c o s t contingency i s allowed a t t h e a p p r a i s a l s t age . Cost cont ingencies a r e of two kinds :

( i ) p r i c e contingency, based on the expected l e v e l of i n f l a t i o n and p r i c e e s c a l a t i o n during cons t ruc t ion ; and

( i i ) phys ica l contingency, based on t h e a n t i c i p a t e d modi f ica t ions i n design, engineer ing and cons t ruc t ion work due t o unforeseen circumstances .

11. The comparison of a c t u a l versus a p p r a i s a l es t imated c o s t s r e q u i r e s s p e c i a l care . I n p r a c t i c e , i f a cos t overrun shows s igns of developing, t h e borrower may at tempt t o reduce the scope of t h e p ro j ec t i n some way t o conform t o t h e o r i g i n a l amount of funding est imated, un le s s a d d i t i o n a l f inanc ing is e a s i l y ava i l ab l e . On t h e o the r hand, if t h e r e is a cos t underrun, t h e

borrower w i l l usua l ly t r y t o expand t h e p ro jec t t o f u l l y u t i l i z e the a v a i l a b l e funds. The r e s u l t is t h a t t h e completed p ro jec t may be s i g n i f i c a n t l y d i f f e r e n t from t h e p ro jec t a s planned during the appra i sa l s t age , so a simple cos t comparison between them would be misleading. The problem becomes even more complicated when one t r i e s t o de f ine the l e v e l of cos t overrun due t o a s i n g l e a t t r i b u t e such a s unforeseen geological d i f f i c u l t i e s . I n p r a c t i c e , c o s t overruns, as wel l a s completion delays, may occur due t o a hos t of t e c h n i c a l , managerial, f i n a n c i a l and p o l i t i c a l f a c t o r s . These f a c t o r s o f t e n overlap, thus, e s t a b l i s h i n g t h e l e v e l of c o s t overrun based on one f a c t o r becomes almost impossible . 12. There is, however, a way t o quant i fy the r e l a t i v e impact of an unforeseen t echn ica l d i f f i c u l t y on t h e cos t of t he pro jec t . This can be done by iden t i fy ing t h e s i n g l e most important component of t h e p ro jec t a f f ec t ed by t h e t echn ica l problem, and comparing i ts est imated with i t s a c t u a l cos t s . For geologica l problems, t h i s component i s t h e c i v i l works. Usually, geologica l d i f f i c u l t i e s cause e x t r a excavation, add i t iona l s t e e l l i n i n g , and a d d i t i o n a l concre te and guni t ing requirements, a l l of which f a l l under c i v i l works. However, comparison of a c t u a l and est imated c i v i l works cos t s does n o t i n d i c a t e t h e e x t r a engineering and design work cos t s , n e i t h e r does i t show the e x t r a i n t e r e s t during cons t ruc t ion due t o completion delays.

Geological Considerations in Hydroelectric Project Preparation

13. Thorough i n v e s t i g a t i o n t o determine t h e most d e s i r a b l e and economic s i t e f o r a hydro p ro jec t precedes design and cons t ruc t ion s tages. Such i n v e s t i g a t i o n includes surveys, topographic mapping, geologic s t u d i e s and subsurface analyses. The geologica l work required t o e s t a b l i s h t h e f e a s i b i l i t y of a hydro s i t e can be separa ted i n t o t h r e e phases, described a s follows :

( i ) Reconnaissance surveys and hydrological studies. This work would inc lude map s t u d i e s , de l inea t ion of t h e water bas in , prel iminary es t imates of flow and f loods , and b r i e f s i t e v i s i t s .

( i i ) Pre-feasibility stadies. During t h i s s tage of i nves t iga t ion , t h e work on t h e se l ec t ed s i t e o r sites would include s i t e survey and geological i n v e s t i g a t i o n s , with d r i l l i n g confined t o a reas where foundation uncer ta in ty would have a major e f f e c t on c o s t s ; a reconnaissance f o r s u i t a b l e borrow a reas ; and production of i nd iv idua l r e p o r t s on each s i t e .

( i i i ) Feasibility stady. I n t h i s s t age , work would continue on t h e se l ec t ed s i t e wi th a major foundation i n v e s t i g a t i o n program; de l inea t ion and t e s t i n g of a l l borrow areas ; e s t ima t ion of d ivers ion , design and probable maximum floods; determination of t h e p ro jec t design earthquake and the maximum c red ib le earthquake and product i on of a comprehensive r e p o r t on t h e s i t e .

14. The f ind ings of t h e f e a s i b i l i t y s tudy w i l l be t h e b a s i s f o r t h e f i n a l design and engineer ing planning of t h e p ro j ec t . A change i n cond i t i ons a s s o c i a t e d wi th t h e geo-sciences i npu t , a f t e r t h e system planning and engineer ing s t a g e , can r e s u l t i n dramatic p r o j e c t c o s t i nc reases . The adv i sab le ex t en t of geo log ica l i n v e s t i g a t i o n s depends i n p a r t on t h e magnitude of t h e p ro j ec t and on how obvious the subsur face condi t ions a r e . For h y d r o e l e c t r i c p r o j e c t s t h i s would a l s o be dependent upon t h e a v a i l a b i l i t y and c o s t of a l t e r n a t i v e power resources.

15. The p a s t experience i n hydro-preparation c o s t s i n d i c a t e s t h a t on t h e average l e s s t han one percent of t h e t o t a l p ro j ec t cos t is spent on f e a s i b i l i t y , p r e - f e a s i b i l i t y , reconnaissance and hydro logica l s t u d i e s before t h e engineer ing design is undertaken. This i s a remarkably low number compared t o p o t e n t i a l c o s t overruns. Although more expenditure on p repa ra t ion s t u d i e s does not always t r a n s l a t e i n t o m r e accu ra t e p ro j ec t cos t e s t ima te s , obvf.ously a d d i t i o n a l work w i l l u sua l ly be requi red and j u s t i f i e d when the p r o j e c t conta ins r i s k y elements. The key f a c t o r i n making an accu ra t e "a p r i o r i " assessment of c o s t s a s soc i a t ed wi th t h e geo-sciences i s a good understanding of t h e unce r t a in ty involved with the d a t a , with t h e i n t e r p r e t a t i o n of t h e d a t a , and t h e ana lyses i n e s t a b l i s h i n g u n c e r t a i n t i e s and p o t e n t i a l overruns i n cos t s . There a r e t h ree main elements involved:

( i ) The r e s o l u t i o n c a p a b i l i t y of t h e d a t a i n r e l a t i o n t o t he degree of complexity of t h e s i t e ' s geo log ica l , se i smologica l and geotechnica l condi t ions ;

( i i ) The v a r i a t i o n s wi th respec t t o t he i n t e r p r e t a t i o n of the d a t a and the degree of unce r t a in ty a s soc i a t ed with the e x p e r t ' s judgement based on the da ta ; and

( i i i ) The unce r t a in ty a s soc i a t ed with t h e ana lyses , ( i n the geo- s c i ences , many of t h e ana lyses a r e based on empir ica l d a t a and t h e r e i s a p o t e n t i a l i nc rease i n unce r t a in ty because a c t u a l s i t e d a t a may d i f f e r from the d a t a i n the empi r i ca l r e l a t i o n s h i p s ) .

These mat te rs a r e d iscussed l a t e r i n t h i s paper a f t e r t he r e s u l t s of t h e survey a r e presented.

Survey of Hydroe lec t r i c P r s i e c t a

16. The purpose of t h i s survey i s t o eva lua t e t he ex t en t of geo log ica l complicat ions i n h y d r o e l e c t r i c p r o j e c t s f inanced by t h e Bank and completed, o r w e l l under cons t ruc t ion , i n t he period 1974-1984. This w i l l inc lude i d e n t i f y i n g p r o j e c t s with geologica l problems, a s s e s s i n g t h e i r t o t a l and c i v i l works cos t overruns, t h e i r completion de lays and t h e na tu re of d i f f i c u l t i e s encountered. The p r o j e c t s a r e divided i n t o two ca t egor i e s : (i) those wfth P r o j e c t Performance Audit Reports; and ( i i ) t hose without . For t h e pas t t a n years t h e Operations Evaluat ion Department has evaluated completed Bank p r o j e c t s . The annual eva lua t ion r e p o r t s (1975-1984) a r e t he major source of in format ion f o r t h e p r o j e c t s i n t he f i r s t category. The p r o j e c t s i n t h e

second category a r e e i t h e r not completed, o r completed but not y e t audi ted by OED. The information on these p r o j e c t s a r e c o l l e c t e d from var ious a p p r a i s a l and p r e s i d e n t ' s r e p o r t s , and a l s o from p e r i o d i c supe rv i s ion r epo r t s . The s tudy covers on ly p r o j e c t s with loans approved before t h e end of 1982. The more recent ones have not proceeded f a r enough t o a l low a meaningful a n a l y s i s . It should be noted t h a t t h e d i s t i n c t i o n between t h e two c a t e g o r i e s i s neces s i t a t ed only by the degree of a v a i l a b i l i t y of da ta . T h i s w i l l enable us t o make m r e e x p l i c i t c o s t comparisons between p r o j e c t s with and without geo log ica l problems i n t h e f i r s t category, and w i l l h e lp i n d e r i v i n g conclusions.

17. For t h e purpose of t h i s survey, f i r s t , a l l Bank-financed h y d r o e l e c t r i c p r o j e c t s were b r i e f l y reviewed and t h e ones with any kind of geo log ica l d i f f i c u l t y during cons t ruc t ion were i d e n t i f i e d . For t h e s e p r o j e c t s t h e eva lua t ion o r supe rv i s ion r e p o r t s were c a r e f u l l y s tud i ed t o s p e c i f y t h e n a t u r e of t h e complicat ion a s w e l l a s i t s impact on c o s t overrun and completion schedule of t h e p ro j ec t . Since t h e c i v i l works component of p r o j e c t c o s t is d i r e c t l y r e l a t e d t o t h e geo log ica l condi t ions of t h e s i te , t h e s tudy a l s o reviews t h i s item. The comparison of o t h e r r e l e v a n t c o s t components i s done only i n cases where t h e information was a v a i l a b l e . Annexes I and I1 give t h e l is t of t h e eva lua ted p r o j e c t s a long with a b r i e f d e s c r i p t i o n of t h e i r geo log ica l complicat ions, c o s t overruns and completion delays. The fol lowing two s e c t i o n s summarize t h e r e s u l t s of t h e survey.

A. Eydroelect ric P r o j e c t s ui t h Eva lua t ion Repor t s

The t e n Annual Reviews of P r o j e c t Performance Audit R e s u l t s (1975- 1984) i nc lude 41 h y d r o e l e c t r i c p r o j e c t s among which 13, 32%, had geo log ica l complicat ions during cons t ruc t ion . Table 2 l is ts these p ro j ec t s .

Table 2: AUDITlCl E'NNEZCS WITH CEmICAL PEMBLEMS

b a n Cmt C i v i l Works Canpletion Projects h t r y Pgprovdl k r n m X Cost Overnm X Delay % Roblens

Jam== Hydroelectric Brazil 1966 28 130 - 1/ dam site

Fifth P w r mi l e 1%6 31 n.a. 100 t m e l i n g

Third P m r b&as 1968 12 30 18 m u % , resemir

!3econd ENIE Bolivia 1%9 13 30 74 t m e l i n g P m r

Volta Grade Hydro Brazil 1969 130 174 - 1 / dem site

'Ihird P w r Costa Rica 1969 84 131 44 tmeliq, reservoir

Loan Cast C i v i l Works Campletion Projects Cumtry Pgproval Overrun% C o s t o v e m % &lay% Roblens

fin^ Hydro- electric Ethiopia 1969 23 36 23 mm%

PMlped storage Power Irelard 1969 79 143 24 reservoir

~UaOrKlo P a e r Brazil 1970 53.6 51 - dam s i t e

Kidatu Hydro- electric I Euzania 19 70 32 68 - -%

Kimlbd Hydro- electric I@v 19 71 9 34 19 m a %

Sixth Power E l Salvador 1973 70 64 - 1/ tumellng

Sigalda Hydro- electric Iceland 19 73 37 43 18 reservoir

1/ See h e x I for details. - Among t h e 13 , e i g h t p r o j e c t s encountered s e r i o u s geo log ica l

d i f f i c u l t i e s during t h e cons t ruc t ion of one o r more of t h e i r t unne l s , con t r ibu t ing t o cos t overruns of up t o 84%. These p r o j e c t s were i n Bo l iv i a , Chi le , Costa Rica, E l Salvador and Honduras i n La t in America, and i n E th iop ia , Kenya and Tanzania i n East Afr ica .

19 . The ex ten t and n a t u r e of problems a r e d i f f e r e n t f o r each case. The common denominator, however, i s t h a t t h e a c t u a l geologica l and hydro logica l condi t ions were very d i f f e r e n t from t h e o r i g i n a l l y a n t i c i p a t e d ones. The p ro j ec t i n Bol iv ia encountered decomposed and broken rock i n var ious s e c t i o n s of t h e tunnel and a l s o heavy i n f i l t e r a t i o n of water i n t h e inc l ined p re s su re s h a f t . I n Ch i l e , geologica l d i f f i c u l t i e s i n Vega Larga-Lane Laja t unne l were much g r e a t e r than expected. In Costa Rica, presence of igneous rocks and t h e i r water condi t ions i n t h e 14 .5 km Rio Macho tunnel caused ex tens ive cons t ruc t ion complications. In E l Salvador t h e design of t h e 6 0 km Ahuachapan d ischarge tunnel was o r i g i n a l l y based on small-scale ( 1 /100,000) a e r i a l photogrammetric maps which proved t o be d rama t i ca l ly inadequate. The scheme was found imprac t i ca l and new design was r equ i r ed with four years completion delay. This p a r t of t h e p ro j ec t cos t $23.24 m i l l i o n in s t ead of t h e est imated $2 .6 mil l ion . I n Honduras, presence of c l a y and f r ac tu red rock zones i n t h e upstream tunnel caused g r e a t cons t ruc t ion d i f f i c u l t i e s . In E th iop ia , poor rock condi t ions were encountered i n both t h e power tunnel and the road tunnel . In Kenya, a geologica l f a u l t was encountered during t h e cons t ruc t ion of t h e t a i l r a c e tunnel . F i n a l l y , i n Tanzania, poor rock condi t ions i n t h e

headrace tunnel not only caused cons t ruc t ion d i f f i c u l t i e s and subsequent changes i n the design of t h e tunne l , but a l s o caused changes i n the design of t he dam. The dam was o r i g i n a l l y designed a s a r o c k f i l l dam wi th rocks supplied from the t a i l r a c e tunnel excavation; however, due t o the poor rock condit ions, i t was redesigned a s an e a r t h - f i l l dam. The p r o j e c t s i n Costa Rica and Honduras a l s o encountered some geologica l problems during t h e cons t ruc t ion of t h e i r reservoi rs .

2 0. Among the remaining f i v e p ro jec t s , t h r e e had geologica l d i f f i c u l t i e s i n t h e dam s i t e and two faced problems i n t h e r e se rvo i r . I n t e r e s t i n g l y enough, t he th ree p ro jec t s wi th s i t e problems a r e i n Brazil--Jaguara Hydro, Volta Grande Hydro, and Marilnbondo Power -a l l on Rio Grande, where t h e discovery of poor geologica l foundat ion condit ions required extens ive e x t r a c i v i l works. I n t h e Jaguara p r o j e c t , during t h e cons t ruc t ion of t he dam, a weak s c h i s t l aye r was uncovered and the layout had t o be revised. The engineering cos t was increased by 284% and the c i v i l works cos t by 130%. I n Volta Grande, the foundation a t t he l e f t embankment was found t o be too weak. It was a l s o discovered t h a t t he concrete s t r u c t u r e s were designed on top of a contact between flows which was not wa te r t igh t . There were a l s o problems with ex is tence of a f a u l t j o i n t around the penstocks and the sp i l lway foundation. The above problems caused a c i v i l works cos t overrun of 174% and engineering cos t overrun of 474X. I n t h e Marimbondo Power p ro jec t , t h e discovery of poor geologica l condit ions i n the spi l lway and t a i l r a c e a reas requi red s u b s t a n t i a l increase i n excavation and conc.rete work. The c i v i l works cost increased by 51%.

21. The l a s t two pro jec t s i n t h i s category, one i n I r e l a n d and t h e o t h e r i n Ice land , encountered r e s e r v o i r problems. The d i f f i c u l . t i e s i n t h e Sigalda Hydro p ro jec t i n Ice land arose out of heav ie r than -an t i c ipa ted leakage of water through s ink holes and o the r porous a reas of t he r e se rvo i r . I n t h e case of t he p ro jec t i n I r e l and , unforeseen rock condi t ions necess i t a t ed redesign of t h e upper r e se rvo i r . The c i v i l works cos t overruns f o r these two p ro jec t s a r e 43X and 143% respective1.y.

22. Figure 1 compares c a s t overruns of p r o j e c t s wi th and without geologica l complications i n t h i s category. The cos t overrun f o r each year i s t h e weighted average f o r a l l p r o j e c t s evaluated during t h a t year. A s shown i n t h i s f i g u r e , t h e 13 pro jec t s with geologica l problems have s u b s t a n t i a l l y h igher cos t overruns than the remaining 28. The only exception is i n 1977 (S ix th Annual Evaluat ion Report) where c o s t overruns f o r two groups a r e very c lose . It should be mentioned t h a t t h e not ion of years i n t h i s f i g u r e only r e f e r s t o the time of eva lua t ion and does not r e f l e c t t h e a c t u a l cons t ruc t ion time . 2 3 I f t h e weighted average cos t overrun over a l l audited hydro p r o j e c t s with and without geological problems i s ca l cu la t ed , t h e comparison i s even more expressive. I n t h i s case t h e 13 p r o j e c t s wi th geologica l d i f f i c u l t i e s show an average cos t i nc rease of 52% compared t o 33% f o r t h e remaining 28. The same exe rc i se f o r c i v i l works cos t overruns i n d i c a t e s a weighted average inc rease of 76% f o r p ro jec t s with geological problems compared with 39% f o r p r o j e c t s without.

Cost Overrun,

Percent

Projects w/ Geological Problems - - --- Projects w/a Geological Problems

Evaluation Year

Figure 1 : Weighted average cos t overruns for hydroelectric projects with and without geological problems

B. Hvdroelec t r ic P r o i e c t s without Evalua t ion R e ~ o r t s

24. I n t h i s category t h e r e a r e 23 p r o j e c t s with loans approved before t h e end of 1982. These p r o j e c t s a r e i n d i f f e r e n t s t a g e s of cons t ruc t ion and some a r e a l ready completed. But, a s of t h e end of 1984, eva lua t ion r e p o r t s have not been completed f o r any of t h e 23 (43%) which have encountered geologica l d i f f i c u l t i e s . I n t h i s group t h e r e a r e two p ro j ec t s i n Colombia, two i n Guatemala, and one i n each of t h e following s i x count r ies : Honduras, Panama, Romania, Swaziland, Indonesia , and Nepal. Appendix I1 gives a summary of each p r o j e c t ' s c o s t , completion schedule and cons t ruc t ion complications. Every p ro j ec t i n t h i s group has experienced some kind of geologica l problem dur ing cons t ruc t ion of one o r more of i ts tunnels . This inc ludes l a n d s l i d e s , undetected f a u l t s , weak rock formations, s o f t and watery zones, etc. Three projects--one i n Indonesia , one i n Guatemala, and one i n Panama--also encountered geologica l d i f f i c u l t i e s i n o the r components.

25. Table 3 summarizes t h e r e s u l t s of t h e survey of p r o j e c t s i n t h i s category. A s i nd i ca t ed i n t h i s t a b l e , four p ro j ec t s--Kulekhani Hydro i n Nepal, Aguacapa Hydro i n Guatemala, Fortuna Hydro i n Panama, and Nispero Hydro i n Honduras--are a l ready i n commission. A l l four encountered geologica l d i f f i c u l t i e s during tunnel ing. The Fortuna p ro j ec t i n Panama a l s o faced geologica l complicat ions i n t h e underground powerhouse, and t h e s i t e of t h e r i g h t abutment which required a d d i t i o n a l design work and m r e excavat ion than expected. The c o s t overruns f o r t hese p ro j ec t s a r e 80%, 76%, 95% and 22% respec t ive ly with c i v i l works c o s t overruns between 76% and 90%. For Nispero hydro p ro j ec t t h e c i v i l works c o s t increased by 82% compared with 22% inc rease i n t o t a l cos t . This i n d i c a t e s t h e l a r g e s c a l e of geologica l problems.

Table 3: ~N-AJDlTlD PROJEQS WITH (333LGICAL P R O J U S

Project

R i d MareRetezat Hydro

Kul* Hydrcr electric - 11

Forhma Hydro 4th Power

Chlxay Hydro

Nispero Hydro 1/

Nepal 1976

Gmtemala 1977

Panan?~ 1977

Estimated Estimated Estimated Ccst C i v i l krks Canpletion

Overrun% CcstOverrunX Delay(yr)

m a % & a h e r

m a % & a h e r

E s t h t e d Estimated Est b t ed Iaan Cost (;Yvil Works hipletion

Project -try Approval krm % Cast k r n m % Delay (yr) Problem

Mesitas Hydro Colanbia 1979 56 n.a. 3 mM%

Tenth P w r Idmesia 1981 4 31 2 tumellng & other

1/ Project is canpleted - 26. For uncompleted p ro jec t s , cos t comparisons a r e not a s r ead i ly poss ib le but t h e following examples i n d i c a t e t h a t geological d i f f i c u l t i e s a r e a l s o present i n on-going p ro jec t s .

( i ) The Riul-Mare hydro projec t i n Romania with extensive tunneling d i f f i c u l t i e s has so f a r had a cos t overrun of 16% and the re is no re-estimate of i t s c i v i l works cost . The boring of the headrace tunnel is t h e main problem a f f e c t i n g t h e pro jec t . In 1983, p a r t s of the pressure tunnel were blocked by c lay- l ike mater ia l from a f a u l t . This p ro jec t s o f a r is four years behind schedule although p a r t l y f o r reasons unrelated t o c i v i l works problems.

( i i ) The Chixoy p ro jec t i n Guatemala, probably the most troublesome of a l l p ro jec t s reviewed here , has so f a r experienced t o t a l and c i v i l works cos t overruns of 120% and 134% respect ive ly . This p ro jec t , too, is already four years behind schedule. It should be noted t h a t because of the expected geologica l complications i n t h i s p ro jec t , a c i v i l works cos t contingency of 24% was allowed during the appra i sa l . This i s the h ighes t phys ica l c o s t contingency allowed among the p ro jec t s s tud ied i n t h i s repor t . The problems i n t h i s pro jec t a r e due t o very complex rock composition i n t h e long (25 km) power tunne l , and t h e dam s i t e . During cons t ruc t ion , ex tens ive ka r s t i c limestone was found a t the dam s i t e and along the tunnel . It was a l s o discovered t h a t rock a t the spi l lway was highly- f i s su red . In addi t ion , s eve ra l l ands l ides occurred along t h e access roads, and the power tunnel caved i n a t a few places a f t e r showing an unacceptable l e v e l of water lo s s .

( i i i ) The Mesitas pro jec t i n Colombia, with t h r e e years delay, so f a r has had a 56% cos t overrun. There i s no es t imate of c i v i l works c o s t increases f o r t h i s pro jec t . Since t h i s p ro jec t encountered major managerial and t echn ica l problems, i t is not

poss ib l e t o pinpoint t h e ex ten t of c o s t overruns due t o geologica l d i f f i c u l t i e s .

( i v ) The Tenth Power p ro jec t i n Indonesia , so f a r has a t o t a l cos t overrun of 4% and a c i v i l works cos t overrun of 31%. The geologl.ca1 problems i n t h i s p ro jec t a r e numerous and widespread and inc lude l a n d s l i d e s , geologica l weaknesses, poor rock condit ions and rockfa l l s . The physical contingency allowed f o r t h i s p ro jec t i s 15%.

(v ) The p ro jec t i n Swaziland, wi th a six-month delay, has had a c o s t overrun of 18%. There i s no e s t ima te of c i v i l works inc reases but t h e quant i ty of tunnel ing has increased by 40% so f a r . The geologica l problems f o r t h i s p ro jec t include: presence of l a rge boulders mixed wi th s o f t mater ia l , presence of f a u l t zones, lower bedrock than expected and mud-rush.

( v i ) The Guavio hydro p ro jec t i n Colombia, t he l a s t one i n t h i s group, has had numerous underground and above ground geologica l problems which inc ludes massive l ands l ides , poor rock condi t ions and s o f t zones. However, t h e supervis ion r e p o r t s i n d i c a t e an est imated cos t overrun of 11% and a c i v i l works c o s t underrun of 3%. The p ro jec t i s cu r ren t ly scheduled f o r completion i n 1989 wi th two years delay. The c i v i l works cos t underrun i n t h i s case i s misleading s i n c e t h e quan t i ty of c i v i l works due t o geologica l d i f f i c u l t i e s has g r e a t l y increased. There a r e two reasons f o r t h i s inconsis tency:

( a ) S ince the p ro jec t was i n i t i a t e d during a high i n f l a t i o n period, a p r i c e cos t contingency of 40% was allowed. The phys ica l c o s t contingency was 15%. However, s i n c e t h e s t a r t of t h e p ro jec t i n f l a t i o n has subsided and a s a r e s u l t p a r t of t h e allowance f o r p r i c e e s c a l a t i o n paid f o r e x t r a q u a n t i t i e s of c i v i l works.

(b ) It was o r i g i n a l l y envisioned t h a t about two-thirds of th.e c i v i l works would be done by fo re ign con t rac to r s paid wi th US d o l l a r s . It turned out t h a t most of t h e work was cont rac ted t o l o c a l f i rms and t h e high value of t h e US d o l l a r helped keep the t o t a l c i v i l works cos t down.

The est imated weighted average t o t a l and c i v i l works cos t overruns f o r p ro jec t s with geological problems i n t h i s category a r e 33% and 63% respec t ive ly .

Conclusions and Recor~enda tione

27. The survey of 64 Bank-financed hydroe lec t r i c p r o j e c t s i n d i c a t e s t h a t geologica l d i f f i c u l t i e s have caused major cos t overruns and completion de lays f o r 23 p r o j e c t s (36% of t o t a l ) . Among 41 p r o j e c t s wi th eva lua t ion r e p o r t s 13, 32%, encountered geologica l complications during cons t ruc t ion causing weighted average t o t a l and c i v i l works cos t overruns of 52% and 76% respec t ive ly ;

compared t o 33% and 39% f o r the 28 p ro jec t s without geological problems. Amng 23 projec ts without evaluation r e p o r t s 10, 43%, faced geological problems causing an average increase of 35% i n t o t a l cos t and 63% i n c i v i l works cost . Completion delays of one t o four years were observed frequently. Tunneling was the s ing le mst recurring component of c i v i l works af fec ted by geological problems. Among 23 projec ts with geological d i f f i c u l t i e s 18 encountered tunneling problems. This number represents 28% of a l l hydroelec t r ic projects . Problems included landsl ides , undetected f a u l t s , weak rock conditions , s o f t and watery zones, presence of clay formations, e t c . Leakage from rese rvo i r s and poor dam-site condit ions caused problems f o r e igh t projec ts .

28. Remedying the s i t u a t i o n requires taking measures to: ( i ) reduce the occurrence of geological su rp r i ses , and ( i i ) recognize the extent of uncer ta in ty involved and planning f o r it. It should be acknowledged t h a t the Bank has been aware of the s i t u a t i o n . Some evaluation repor t s , a s e a r l y a s 1975, pointed out the recurrence of geological problems and suggested more ca re fu l s i t e inves t iga t ion during appra isa l . The Bank, i n 1974, a l s o developed a set of guidelines (GAS 6, at tached a s Annex 111) with s p e c i f i c considerat ion f o r geological problems. But the re i s no ind ica t ion of any systematic a t t e n t i o n t o the guidelines, n e i t h e r i s there any ind ica t ion of improvement i n reducing the occurrence of geological problems o r the adequacy of cost-estimating procedures f o r hydro p ro jec t s over time. A s the r e s u l t s of t h i s study show, t h e projec ts i n t h e second category, with loans approved between 1975-1982, do not ind ica te a b e t t e r t rack record than t h e f i r s t group, with loans approved between 1966-1974.

29. This experience ind ica tes t h a t projec t r i s k s a r i s i n g from uncertain geology rmst be t r ea ted much more e x p l i c i t l y i n appraising projec ts having such uncer ta in t i e s . However, given the current s t a t e of the a r t i n evaluating geological condit ions, i t i s impossible t o prescribe s p e c i f i c approaches o r minimum parameters such as t o t a l length of core d r i l l i n g , number of a d i t s required e tc . which should be required fo r any given project because t h i s aspect of engineering is s t i l l a s much a r t a s science. Given the current s t a t e of t h e a r t , Bank engineers should t r e a t with skepticism a l l cos t es t imates which a r e based o n , e x t r a p o l a t i o n of s i t e geology and, i n e f f e c t , assume t h a t cos t s of r i sky projec t components a r e unknowable within a broad range, say 50-300% of the estimate.

30. This suggests an approach f o r dealing wi th such uncer ta in t i e s i n projec t appra i sa l , involving establishing t h e robustness of projec t j u s t i f i c a t i o n by t e s t i n g the s e n s i t i v i t y of the j u s t i f i c a t i o n t o changes i n cos t s of the c i v i l works components of the project . The procedures out l ined i n OPN 2.02 - 1/ can be used provided the equalizing discount r a t e i s known ( t h e

1 / Operations Policy Note No. 2.02 ( issued as Central P ro jec t s Note 2.02, - 12/77, 7/80), "Risk and S e n s i t i v i t y Analysis i n t h e Economic Analysis of Projects".

r a t e a t which the presen t value of p r o j e c t c o s t s equa ls t h e c o s t of t he a l t e r n a t i v e development program). A l t e r n a t i v e l y , s e v e r a l runs of s imu la t i on models such a s WASP may be requi red t o e s t a b l i s h maximum permissable l e v e l s of c o s t s and cons t ruc t ion time f o r t h e unce r t a in components, beyond which t h e p r o j e c t would no longer be p a r t of t h e l ea s t - cos t program. I f t h e p r o b a b i l i t y of exceeding these c o s t s o r de lay ing t h e p r o j e c t i s h igh ( i . e . above 30%) then a d d i t i o n a l s i t e i n v e s t i g a t i o n s should be requi red t o reduce t h e unce r t a in ty o r t h e p ro j ec t should be dropped. The r e s u l t s of t he se s t u d i e s should always be discussed i n t he P r o j e c t Risks s e c t i o n of a p p r a i s a l r epo r t s .

31. P r o b a b i l i s t i c planning models a r e a v a i l a b l e which t r e a t u n c e r t a i n t y r i go rous ly ; however, a s y e t none have been i d e n t i f i e d which a r e f u l l y s a t i s f a c t o r y f o r power development program planning, i n genera l because t h e in format ion requirements a r e l a rge . Nonetheless, t o a n t i c i p a t e t h e a v a i l a b i l i t y of such techniques i t i s d e s i r a b l e t h a t terms of r e f e r ence f o r p r o j e c t s t u d i e s r equ i r e t h a t t h e engineer use p r o b a b i l i s t i c methods f o r developing e s t ima te s of p ro j ec t c o s t and cons t ruc t ion time, e s p e c i a l l y f o r t hose components which a r e l i k e l y t o be r i sky .

32. I n t h i s r e s p e c t , i t is poss ib l e t o i d e n t i f y c e r t a i n p r o j e c t c h a r a c t e r i s t i c s which a r e pr ima f a c i e r i sky . Chief among these is tunne ls . The survey showed t h a t 1111 p r o j e c t s with long t u n n e l s (more t han 5 km) faced s e r i o u s geologica l complicat ions, w i th c i v i l works cos t overruns of over 60%. Defining what c o n s t i t u t e s a "long" tunne l is s u b j e c t i v e and depends p r imar i l y on the ex t en t and q u a l i t y of t h e s i t e i n v e s t i g a t i o n s . The geo log ica l condi t ions i n a r e l a t i v e l y long tunne l may s t i l l be reasonably w e l l known i f f requent t e s t bores a r e available--say not l e s s than every 1 km--or i f t h e t unne l pene t r a t e s rock of known c h a r a c t e r ( t h i s e x t r a p o l a t i o n i t s e l f is r i sky! ) . On t h e o t h e r hand, even i f f requent borings a r e a v a i l a b l e , ex t ens ive underground works such a s powerhouse caverns a r e i n h e r e n t l y r i s k y because of t h e l a rge dimensions. For example, an undetected f a u l t i n t h e power cavern of a p r o j e c t i n Af r i ca l e d t o l a r g e time and cos t overruns and was a t l e a s t p a r t l y r e spons ib l e f o r bankrupting t h e con t r ac to r .

3 3. Other obvious a r e a s of r i s k i nc lude p r o j e c t s b u i l t i n k a r s t i c l imestone. Here u n c e r t a i n t i e s inc lude not only t h e c o s t and d i f f i c u l t y of completing underground works, but a l s o pe r iphe ra l problems such a s r e s e r v o i r l e aks . The q u a l i t y and ex t en t of s i te i n v e s t i g a t i o n s is e s p e c i a l l y important i n k a r s t i c a r e a s and i n such cases Bank engineers should t a k e p a r t i c u l a r c a r e t o s a t i s f y themselves t h a t those undertaking t h e a c t u a l s i t e i n v e s t i g a t i o n s understand t h e n a t u r e of t h e p o t e n t i a l problems. For example, i t was discovered during cons t ruc t ion of a l a r g e hydro p r o j e c t l oca t ed i n k a r s t i c formations t h a t some of t h e s i t e borings had gone completely through k a r s t i c caverns, y e t t he caverns had not been noted i n t h e boring logs.

34. Dam foundat ions a r e a l s o s u b j e c t t o l a r g e u n c e r t a i n t i e s i n c o s t due t o l a r g e v a r i a t i o n s i n t he amount and type of excava t ion requi red . For t h i s reason, foundat ion excavat ion and t rea tment should always be cos ted s e p a r a t e l y from the dam i t s e l f . Not s u r p r i s i n g l y , u n i t c o s t s f o r dams proper a r e r e l a t i v e l y p red i c t ab l e and i n genera l t he v a r i a t i o n s a r e smal l un less t h e r e a r e l a r g e changes i n t h e volume of t he dam, o r i n t h e dam type (e.g. s h i f t

from r o c k f i l l t o e a r t h f i l l ) because of unfor tuna te d i scove r i e s during cons t ruc t ion . However, even changes of t h i s magnitude can usua l ly be accommodated w i t h i n t h e usua l ranges of contingency allowances. I n p a r t , t h i s s i t u a t i o n exists because consu l t an t s a r e ab l e t o c a l c u l a t e dam volumes and s i m i l a r f e a t u r e s ( sp i l lways ) q u i t e prec ise ly . This i s important because these f e a t u r e s account f o r a l a r g e sha re of t h e p r o j e c t ' s c o s t , but emphasis on t h i s work a t t he expense of focus on t h e l e s s c e r t a i n p ro j ec t components i s a common problem during p ro j ec t prepara t ion .

3 5. The range of problems i d e n t i f i e d during t h i s s tudy imply t h a t t he r o l e of t h e board of expe r t s c o n s t i t u t e d t o review t h e s a f e t y a spec t s of t h e p r o j e c t , i n accordance wi th OMS 3.80, might u s e f u l l y be expanded t o cover an assessment of t he geologica l r i s k s a s soc i a t ed with t h e p r o j e c t , and t h e r e s u l t i n g p r o b a b i l i t y rnatrix f o r c o s t and time overruns. I f t h i s assessment i s not a l r eady included i n t h e terms of re ference of t h e engineer ing consu l t an t s , Rank s t a f f should r e q u i r e t h e borrower t o inc lude such an assessment i n t h e t a sks assigned t o t h e panel of exper t s . I n f a c t , a review of t h i s aspect of t he p r o j e c t by t h e panel of expe r t s may be d e s i r a b l e even i f a l ready included i n t h e des ign consu l t an t s ' terms of re ference .

36. P a r t of t h e s o l u t i o n a l s o has t o do w i t h t h e a v a i l a b i l i t y of means f o r understanding and reducing t h e l e v e l of unce r t a in ty i n geo-engineering a n a l y s i s and c o s t es t imat ion . There a r e two s p e c i f i c s t e p s t o be taken i n t h i s regard:

( i ) The information on geologica l problems and cos t overruns a v a i l a b l e from Bank p ro j ec t s should be c o l l e c t e d i n an e a s i l y a c c e s s i b l e database where a p p r a i s a l s t a f f can compare s i m i l a r p a r a m t e r s f o r d i f f e r e n t p ro j ec t s . For example, a database could be cons t ruc ted t o show h i s t o r i c a l cos t overruns wi th r e spec t t o t unne l length , rock type , geologica l formations, regions, e t c . I n p r a c t i c e , a p ro j ec t o f f i c e r i n t u i t i v e l y uses t h e database a v a i l a b l e i n h i s own memory. This sys t ema t i c approach expands the memory and s t r u c t u r e s i t m r e c l ea r ly . Such an e f f o r t r e q u i r e s c a r e f u l s e l e c t i o n of parameters and c l e a r d e f i n i t i o n of dependencies among them. The survey shows, f o r example, t h a t - a l l p r o j e c t s wi th long tunnels faced s e r i o u s geo log ica l complicat ions, w i th c i v i l works c o s t overruns of over 60%, a f a c t t o be remembered f o r f u t u r e p ro j ec t s . This r e p o r t , along wi th GAS 6 should be used i n t h e meantime t o i nc rease awareness of t h e ex ten t and the unce r t a in ty due t o geo log ica l problems i n hydro p ro j ec t s .

( i i ) There i s a need f o r a review of geo-science techniques i n eva lua t ing underground geologica l condi t ions f o r hydroe lec t r i c p ro j ec t s . This review should inc lude comparison of d i f f e r e n t

11 Opera t iona l Manual Statement No. 3.80, "Safety of Dams". -

s i t e inves t iga t ion techniques and t h e i r a b i l i t y t o quantify uncer ta in t ies . This i n addi t ion t o t h e above-mentioned database w i l l enable t h e project o f f i c e r s t o b e t t e r judge the accuracy o r r e l a t i v e uncertainty associated with s i t e c h a r a c t e r i s t i c s and cost est imates.

Both of these t a sks w i l l be incorporated i n f u t u r e research programs . 37. For purposes of developing the f inancing plan f o r t h e project the re i s a l so need f o r a change i n policy with regard t o physical contingency allowances. This study reveals t h a t among t h e 64 hydroelec t r ic p ro jec t s surveyed only four had c i v i l works cost overruns of under 17%, and yet t h e maximum contingency allowance was 15% (with t h e exception of Chixoy project with 24% allowance). A s s t a t e d e a r l i e r the average c i v i l works cos t overruns f o r p ro jec t s with d i f f i c u l t geology was over 60% and f o r those without, over 40%. This contras t c a l l s fo r a more r e a l i s t i c approach t o project cos t est imates.

3 8. In cases where the re w i l l be considerable uncertainty about underground conditions and re la ted c i v i l works c o s t s , more l i b e r a l contingency allowances should be made f o r those p a r t i c u l a r components. This can be done within the guidelines f o r physical contingencies s e t out i n OMS 2.28, paragraph 7, provided t h e contingency allowances f o r t h e e n t i r e projec t can be brought within t h e limits speci f ied there in . Again the important determination is whether the probabi l i ty of cos t o r t i m e overruns i s s u f f i c i e n t l y high t h a t t h e project would.no longer be a pa r t of t h e least-cost development program. No project should be allowed t o go forward i f t h i s r i s k i s high. Alternatively, i f t h e project j u s t i f i c a t i o n is robust , contingency allowances used f o r determining the required financing may be somewhat more generous than prescribed i n OMS 2.28. - 11

39. In any case, where project cos t s a r e uncertain, t h e impact of p o t e n t i a l cos t and time overruns on t h e borrower's f i n a n c i a l pos i t ion should be evaluated , and po ten t i a l sources of f inance under these circums tances should be iden t i f i ed . The r e s u l t s of these analyses should be indicated i n t h e s t a f f appra isa l report . I f la rge cos t overruns could be po ten t i a l ly d isas t rous t o t h e borrower, then f u r t h e r site inves t igat ions , o r o ther

Operational Manual Statement No. 2 -28, "Sta te of Projec t Preparat ion Necessary f o r Loan Approval". It should be noted t h a t r ece ip t of bids p r i o r t o Board presentat ion, a s suggested i n paragraph 3 of OMS 2.28, is not i n i t s e l f an assurance t h a t the re w i l l not be cos t overruns on r i sky p ro jec t s because contrac ts f o r complex works a r e almost always awarded on t h e bas is of un i t cos t s , with provisions f o r p r i ce esca la t ion and changes i n quan t i t i e s . In only a few of the p ro jec t s covered by the survey were the o r i g i n a l contrac t pr ices s i g n i f i c a n t l y out of l i n e with the base c o s t estimate.

measures t o m i t i g a t e t h e impact of p o t e n t i a l c o s t overruns, must be undertaken before t h e p r o j e c t proceeds. However, t h e s e o the r measures must not i nc lude onerous provis ions such as f ixed-pr ice c o n t r a c t s f o r r i s k y elements, o r o t h e r schemes t o t r a n s f e r t h e r i s k t o t h e p ro j ec t con t r ac to r s . High r i s k s do n o t j u s t i f y a depa r tu re from t h e genera l con t r ac t i ng p r i n c i p l e t h a t r i s k s should be borne l a r g e l y by t h e p r o j e c t sponsor , a l though c o n t r a c t i n c e n t i v e s t o s h a r e w i th c o n t r a c t o r s t h e b e n e f i t s of r i s k reduc t i on a r e c e r t a i n l y encouraged.

ANNEX I: Description of Projects with Evaluation Reports

ANNEX I Page 1 of 13

Project: Third Power

Country: Costa Rica

Loan No.: 631-CR Date: J u l y 10, 1969

Project P e r f o r m a n c e Audit R e p o r t No.: 760 D a t e : May 29, 1975

Project D e s c r i p t i o n : The p r i n c i p a l component of t h e p ro jec t was t h e Topanti scheme, extension of t he e x i s t i n g Rio Macho p lant . A n in take on t h e Reventazon River and a 14.5 km tunnel were t o be constructed t o d e l i v e r a d d i t i o n a l water t o the Rio Macho p l a n t , where 2 x 30 MW generat ing u n i t s were t o be i n s t a l l e d . The p ro jec t a l s o included t h e i n s t a l l a t i o n of sp i l lway ga te s wi th assoc ia ted c i v i l works t o r a i s e t h e r e s e r v o i r l e v e l a t Cachi by 20 meters.

E s t i m a t e Actual Change %

T o t a l C o s t ($HI C i v i l wo*s C a s t ($MI C o n s t r u c t i o n T i r e (Months)

Remarks: The p ro jec t faced major geologica l complications during t h e cons t ruc t ion . The progress was on schedule f o r t he f i r s t 3.4 km of t h e Rio Macho tunnel . However, t h e p i c t u r e d r a s t i c a l l y changed f o r t h e worse once t h e tunnels reached t h e igneous rocks and t h e i r assoc ia ted water condit ions where average excavation program reached only 8 meters per week. The c o s t i nc rease on t h e Topanti scheme (excluding i n t e r e s t during cons t ruc t ion) accounted f o r 76% of t h e t o t a l p ro jec t c o s t increase .

The c o s t i nc rease on Cachi Reservoir accounted f o r 14% of t o t a l p ro jec t cos t increase . This pa r t of t h e p ro jec t was completed eleven m n t h s behind schedule. The de lay , a s we l l a s t h e inc rease i n c o s t , was mainly due t o t h e permeabil i ty of t he rock on t h e l e f t abutment which proved t o be much h igher than expected. A s a r e s u l t add i t iona l grout ing work was required.

Some 60% of the t ransmission l i n e s and sub-s ta t ions o r i g i n a l l y included i n t h i s p ro jec t were postponed so t h a t funds could be a v a i l a b l e t o cover p a r t of t h e cos t overruns of t h e Topani and Cachi pro jec ts .


Project: Third Power

Country: Honduras

Loan No.: 541-HO/Credit 116-HO Date: June, 1968

Project Performance Audit Report No.: 763 Date: May 30, 1975

Project Description: The p r i n c i p a l component of t he p ro j ec t was the Rio Lindo h y d r o e l e c t r l c scheme. Water discharged from t h e Canaveral p l an t would be conducted through a steel p ipe l ine , about 1350 m long , then through a 900 m tunnel t o a r egu la t ing r e s e r v o i r c rea ted by a 25 m high e a r t h and r o c k - f i l l dam. A 350 m power tunnel and a l ong 5200 m s teel penstock would br ing t h e water t o t h e power s t a t i o n . The p ro j ec t a l s o included t h r e e t ransmission developments.

Estirate Actual Change X

Total Cost ($'MI 17.7 Civil Worits Cost ($HI 11.6 Construction Time (Honths) 39

Remarks: The cos t overrun and completion delay were pr imar i ly caused by the geo log ica l problems encountered during cons t ruc t ion. In t h e upstream tunnel , i n i t i a l excavat ion was slowed by c lay and f r ac tu red rock zones of 25 t o 50 meters near both p o r t a l s and some shear zones wi th e i t h e r c lay seams o r c a v i t i e s i n t h e c e n t r a l por t ion ; tunnel s e c t i o n s i n t hese zones had t o be re inforced . Second s t r i p p i n g of t h e dam foundat ion revealed s inkholes ranging from 2 t o 5 m i n depth and widening beneath t h e s u r f a c e , i n much l a r g e r number than expected. A s many a s 92 were then encountered i n t h e f l o o r of t h e r e g u l a t i n g r e s e r v o i r , and a l l of t h e s e too had t o be f i l l e d .

The Rank has taken t h e view t h a t t hese geologica l problems should have been foreseen.

The 138 KV t ransmiss ion l i n e t o San Pedro Sula was dropped from t h e p ro j ec t . This p a r t accounted f o r 4% of o r i g i n a l l y est imated cos t s .

* The cons t ruc t ion delay f o r t h e Rio Lindo scheme was 25%.


P r o j e c t : Pumped Storage Power

C o u n t r y : I re land

L o a n No.: 591-IRE D a t e : March, 1969

P r o j e c t P e r f o r m a n c e A u d i t R e p o r t No.: 1085 D a t e : March 16, 1976

Project D e s c r i p t i o n : The p ro j ec t c o n s i s t s of: 1 ) an underground power cavern w i t h four 73-MW r e v e r s i b l e pump-turbine u n i t s , penstock connection t o an a r t i f i c i a l asphal t - l ined r e s e r v o i r and improvements t o a n a t u r a l l ake , Lough Nahanagan, s e rv ing as t h e lower r e se rvo i r ; 2) a 220-KV switchyard, c o n t r o l equipment and t ransmission l i n e s .

E s t i m a t e Actual Change X

T o t a l C o s t (a) C i v i l wo*s C o s t (9) C o n s t r u c t ion Time (Months)

Remarks: During t h e p ro j ec t cons t ruc t ion unforeseen rock condi t . ions neces- s i t a t e d redesign of t h e upper r e s e r v o i r and a d d i t i o n a l excavat ion and a more e l a b o r a t e system of compaction of t he embarkment.


Project: Finchaa Hydroe lec t r ic

Country: Ethiopia

Loan No. : 596-ET Date: May, 1969

Project Performance Andit Report No.: 1102 Date: March 23, 1976

Project Description: The p ro j ec t comprises t h e cons t ruc t ion of t h e 100 MW Finchaa h y d r o e l e c t r i c power s t a t i o n toge ther wi th t h e a s soc i a t ed t ransmission l i n e and te rmina l subs t a t ion . C i v i l works inc lude : ( i ) a low e a r t h f i l l dam w i t h a he ight of about 20 meters and a l eng th of about 340 meters; ( i i ) a 3 meter diameter pressure t unne l 4200 meters long leading t o t h e penstock; ( i i i ) a power s t a t i o n bui ld ing and an access road, p a r t l y i n tunnel , from t h e dam s i te a t t h e t o p of t h e scarplnent t o t h e power s t a t i o n , approximately 7 km i n length.

Estimate Actual Qlaqge X

' Total Cost ($If) Civil works Coe t (Sn) Construct ion Time (Months)

Remarks: There was a delay of n ine months i n comissioning t h e f i r s t un i t . The delay was mainly due t o t h e poor rock formation whih w a s encountered when excavat ing t h e road tunnel . This requi red t h e i n s t a l l a t i o n of a r ch suppor t s and gunni t ing throughout t he e n t i r e l eng th of t h e tunnel . S imi l a r t roub le was encountered i n t h e cons t ruc t ion of t h e power tunnel which n e c e s s i t a t e d many s t e e l supports . These problems were a l s o the main causes of t h e cos t overrun.


Project: Kamburu Hydroelectric Power /

Ccmntry: Kenya

Loan 100. : 7 4 5-KE Date: June, 1971

Project Performance Audit Report No.: 1230 Date: July 14, 1976

Project Description: The project comprises the construction of the Kamburu hydroelect r ic power s t a t i o n together with the associated transmission l i n e s and substat ions. The c i v i l works include: (i) a r o c k f i l l dam with a height of 52 m and a c r e s t of 730 m; ( i i ) . a reinforced concrete spillway upstream from the dam with a headgate control l ing the flow i n t o the concrete l ined in take shaf t , ( i i i ) a surge chamber; ( i v ) an underground powerhouse; (v) a t a i l r a c e tunnel 3040 m long leading i n 9 a shor t (70 m) open cut t o the r ive r .

Estimate Actual Change X

Total Coat ($MI Civil Works Coat (Sn) Construction Time (Months)

Beulrks: An area of f a u l t was encountered during excavation of the t a i l r a c e tunnel. This slowed down progress and was the pr incipal reason f o r the delay of f i v e months i n commissioning the power plant .


Project: Second ENDE Power

Cauntry: Bolivia

Loan No.: Cred i t 148-BO Date: Apri l 28, 1969

Project Performance Audit Report No.: 1496 Date: March 7, 1977

Project Description: ( a ) Construct ion of t h e Santa I s a b e l Hydroelec t r ic p l an t of 36 MW including a small compensating r e s e r v o i r between Corani and Santa I s a b e l p l an t s ; ( b ) a 8 km long transmission l i n e ; ( c ) engineering se rv ices f o r design and supervis ion of t h e p ro jec t ; (d ) consu l t an t serv ices .

Estlmate Actual Change X

Total C o s t ($M) Civil Works Caet (Sn) Cone truction Time (Months)

Remarks: Construct ion of t h e compensating r e s e r v o i r was deferred (est imated c o s t of $450,000). The completion delay and cos t overrun E r e mainly because of d i f f i c u l t geologica l condi t ions encountered i n tunnel ing and t h e rupture of t h e penstock. The geologica l complications cons is ted of: ( a ) presence of decomposed and broken rock i n various p a r t s of t h e tunnel and t h e surge chamber; ( b ) heavy inf i l t e r a t i o n of water i n t h e inc l ined pressure sha f t .

ANNEX I Page 7 of 1 3

Project: F i f t h Power

Country: Chile

Loan No.: 479-CH, 478A-CH Date: March, 1966; Apr i l 1974

Project Performance Audit Report No.: 1603 h t e : May 23, 1977

Project Description: ( a ) The 400 MW E l Toro hydroe lec t r i c s t a t i o n , almost e n t i r e l y underground using water conveyed through a 9 km tunnel from a deep in t ake i n Lake Laya; ( b ) an a n c i l l a r y schelne known a s Alto Polcura Diversion, t o y i e l d add i t iona l 400 GWM, by d i v e r t i n g waters from Polcura r i v e r and two small streams i n t o Lake Lega by m a n s of some 13 km of tunnels and two small dams; ( c ) t ransmiss ion systems; ( d ) d i s t r i b u t i o n systems.

Estimate Actual

Total Cost ($MI Civil wo*s Cost (9) Construction Tire (Months)

Remarbe: The E l Toro s t a t i o n was b u i l t with no c o s t overrun a s planned wi th one year delay. Al to Polcura Diversion scheme faced major c o s t overruns and delays. This pa r t of t h e p ro jec t was t o take f i v e years from mid-1967 t o mid-1972, but a t t h e t i m e of eva lua t ion r epor t was not completed y e t (1977). The es t imated c o s t w a s $21.3 mil l ion. By 1977 $50.9 mi l l i on was spent . The major f a c t o r i n the c o s t overrun was t h e much g r e a t e r than expected geologica l d i f f i c u l t i e s encountered i n cons t ruc t ion of t h e Vega Larga - Lake Laja tunnel .

Apparently, ex tens ive geologica l s t u d i e s , inc luding use of seismic mthods , were c a r r i e d out before cons t ruc t ion s t a r t e d . The Bank a l s o h i r ed its own geo log i s t consul tan t t o v is i t t h e site. He concluded t h a t most of t he rock f o r tunnel ing appears good, t h a t t h e need f o r s t e e l supports and l i n i n g w i l l be l imi ted . It i s bel ieved t h a t i n t h i s case, too, l i t t l e a t t e n t i o n was given t o t h e tunne l s a s compared with t h e dam s i t e .

I n 1974, t he Bank approved a $6.7 m i l l i o n supplementary loan f o r t h i s pro jec t .


Project : Jaguara Hydroelectric

Country: Brazi l

Loan No. : 442-BR

Project Performance Audit Beport No.: 1852

Date: 1966 +'

Date: January 13, 1978

Project Description: The project consisted of: ( a ) a r o c k f i l l dam, 40 m i n height on the Rio Grande; (b) a powerhouse with 4 generating u n i t s of 100 MW each and provisions f o r 2 fu tu re u n i t s ; ( c ) a concrete spillway with t a i n t e r ga tes ; (d) a substat ion; ( e ) a sec t ion bay a t the E s t r e i t o plant .


Total Cost ($If) Civil Works coat (Qn) Construction T i r e (Months)

Bemarks: During the construction of the dam a weak s c h i s t l aye r was uncovered. The layout had t o be revised. This caused a s i g n i f i c a n t increase i n engineering and c i v i l works c o s t s , 284% and 130% respect ively , primari ly f o r spec ia l excavation and addi t ional concrete f i l l i n g . The construction was delayed by seven months.

1/ The major p a r t s of t h e project were completed with 7 months delay. The - transmission l i n e was expanded and t h e f i n a l project closing date happened with 3 1/2 years delay.


Project: Volta Grande Hydroelectric

Camtry: Brazil

Iacm No. : 566-BR Date: 1969

Project Performance bPdit Beport Bo.: 1852 Date: January 13, 1978

Project Description: The project consisted of: ( a ) an e a r t h f i l l dam of about 30 m i n height on the Rio Grande; (b) a powerhouse with 4 generators with ra ted capacity of 100,000 KVA; ( c ) a concrete spillway with t a i n t e r gates; (d) transmission l ines ; ( e ) substat ions.

Tota l C a s t ($If) C i v i l W o r k s cast ($HI Construct ion Time (Months)

Remarks: The concrete s t r uc tu r e and the l e f t embarkment foundation is par t ly rock and par t ly sapro l i te. During the design s tage , invest igat ions were ca r r i ed out t o decide i f t he s ap ro l i t e was a su i t ab l e foundation f o r the e a r t h dam. The tests showed i t had l o w s t reng th and high compressibility and par t of t he s ap ro l i t e was removed. Measurements of the set t lements have shown t h a t t he actual compressibil i ty of t he foundations is less than ant ic ipated.

Some t i m e a f t e r t h e excavation of the foundations fo r the concrete s t ruc tu res , same problems ocarred i n spillway and powerhouse areas. The foundation of the spil lway was r i g h t above a contact between flows. This contact was thought t o be closed and water t ight , but four months a f t e r excavation, the contact was found t o be somewhat open, possibly t r iggered by nearby detonations.

I n the excavation of t he power house, some 12 m high promontories of rock = re l e f t between penstocks i n order t o save concrete. There was a "fault- joint" about 1 m above the base of t he promontories; r i g h t a f t e r cleaning the excavation debr is it was found t h a t the rock of the promontories above t h e j o i n t had moved outwards up t o 15 a. It was concluded t h a t the movement was caused mainly by the b las t ing procedure. The spillway foundation had t o be re-excavated and the promontories removed.

The above problems and some price increases caused a cost overrun of 130%. C iv i l works coat increased by 174%, engineering costs by 474%.

The project was delayed fo r about one year.

1/ The de ta i l ed construction schedule had not been worked out a t t he time of - appraisa l , but award of major contracts was expected t o take place i n 1969 and t he e n t i r e p lant completed by 1974. The ac tua l completion date was August 1975.


Project: Marimbondo Power P ro j ec t

Country: B r a z i l

Loan No.: 677-BR Date: May, 1970

Project Perfoxmance Audit Report No.: 2768 Date: Dec. 21, 1979

Project Description: ( a ) The 1400 MU Marimbondo h y d r o e l e c t r i c p l an t on Rio Grande cons i s t i ng of : ( i ) an e a r t h embankmen 3000 m long w i t h a maximum he igh t of 65 m with a volume of 20 mi l l i on m'l ( i i ) a gated concre te chute sp i l lway, 150 m wide; and ( i i i ) ( a ) a powerhouse in t ake s t r u c t u r e , connected by s h o r t s t e e l penstocks t o an enclosed, above ground powerhouse 220 m long; (b) t ransmiss ion l i n e s ; ( c ) a d d i t i o n a l genera tor ; (d) engineer ing , t r a i n i n g , e t c .


Total Cost ($MI Civil Wo*s Cost (a) Construction Tire (Nonths)

Remarks: The discovery of poor geologica l foundat ion condi t ions i n t he sp i l lway and t a i l r a c e a reas required a s u b s t a n t i a l i nc rease i n excavat ion and concre te work, p a r t i a l l y o f f s e t by reduced volume of ea r th f ill due t o s lope and cofferdam volume reduct ion. This was t h e main cause of t h e c o s t overrun. The Marimbondo p l an t c o s t increased from es t imated $126.20 m i l l i o n t o $249.92 mi l l i on . The PCR s t a t e s t h a t geologica l condi t ions a t t h i s dam s i t e should have been inves t iga t ed m r e ex tens ive ly during p ro j ec t prepara t ion . I n t h i s connection, i t is i n t e r e s t i n g and r e l evan t t o compare t h e experience of t h e Marimbondo p ro j ec t with t h a t of Jaguara and Volta Grande Hydroe lec t r ic P r o j e c t s a l s o i n Braz i l . These h y d r o e l e c t r i c p l a n t s a r e a l s o on Rio Grande. Vol ta Grande is about 60 km and Jaguara about 200 km from Marimbondo.


Project: Kidatu Hydroe lec t r ic P ro j ec t I

Country: Tanzania

Loan No.: 715-TA, 715-2TA Date: Dec. 1970; June, 1974

Project Performance Audit Report No.: 2765 Date: Dec. 19, 1979

Project Description: ( a ) Cons t ruc t ion of t h e f i r s t s t age (2 x 50 MW) of a h y d r o e l e c t r i c development a t Kidatu on t h e Great Ruaha River; t h e p r i n c i p a l elements of t h e d e v e l o p ~ n t included a r e g u l a t i n g dam with a s t o r a g e capac i ty of about 125 m i l l i o n m , a 10 km long headrace and a t a i l r a c e tunnel , and an underground genera t ing s t a t i o n ; ( b ) a 15-MW extension of t h e e x i s t i n g Ubungo d i e s e l s t a t i o n ; ( c ) t ransmiss ion l i n e and d i s t r i b u t i o n s t a t i o n ; ( d l consu l t i ng s e r v i c e s .


Total Cost ($I41 Civil Worts Cost (Sn) Construction T i r e (~onths)

Bevlds : The i n i t i a l phase of cons t ruc t ion proceeded s a t i s f a c t o r i l y . The rea f t e r , during underground excavat ions, t h e con t r ac to r encountered unfavorable rock condi t ions . Apparently, during t h e f e a s i b i l i t y s t a g e , t h e true ex ten t of t h e bedrock was not discovered. Consequently, t h e length of t h e headrace tunne l was l a t e r extended by about 50 m due t o realignment and about 800 m (about 7%) of t h e t o t a l of 11 km headrace tunnel was concre te l i n e d and more than 2,000 m (about 20%) were heav i ly gunnited and bol ted.

Kidatu was o r i g i n a l l y designed a s an e a r t h and rock-f i l led dam. R o c k f i l l would have been obta ined from t h e excavat ion of t h e headrace tunnel . Due t o t h e u n s u i t a b i l i t y of rocks obtained from t h e excavat ion of t h e headrace tunne l , t h e o r i g i n a l dam design was changed and t h e dam was cons t ruc ted a s an earth-f ill dam w i t h extended semi-impervious f i l l . Thirty-f i ve (35) percent of t h e o v e r a l l cos t i nc rease i s a t t r i b u t e d t o t h e unforeseeri bad rock condi t ions . P r i c e e s c a l a t i o n and currency f l u c t u a t i o n s account f o r 55% of cos t overruns.

The geo log ica l condi t ions encountered during excavat ion were very d i f f e r e n t from those a n t i c i p a t e d by consul tan ts . It was known t h a t t h e r e was a deep l a t e r i t i c s o i l and deeply weathered rock, bu t t h e excavat ion problems during cons t ruc t ion were not foreseen.

The p ro j ec t was completed on schedule, but t h e geo log ica l problems caused a delay i n t h e cons t ruc t ion s t a g e (2-6 months). The t a i l r a c e tunne l took 1 112 yea r s longer t o complete.

I n 1974, t h e Bank approved a $5.0 m i l l i o n supplementary loan f o r t h i s p ro j ec t .


Project : Sixth Power Project

Country: E l Salvador

ban Uo.: 889-ES Date: April , 1973

Project Performance Audit Bepart Uo.: 3053 Jhte: June 27, 1980

Project Description: a ) t h e 135 MW Cerron Grande hydroelectr ic plant on Lempa River, consis t ing of an earth-and-rock f i l l dam, surf ace powerhouse, and switchyard; (b) the f i r s t un i t (30 MW) a t t h e Ahuachapan geothermalplant, plus switchyard, and a 60 km grav i ty - f lw canal t o discharge waste water i n to the Paci f ic ; c ) transmission f a c i l i t i e s and l ines ; d) telemetering center; e ) preparation s tudies ; f ) t ra in ing.

Estimate Actual mange 2

Total Cost ($HI civil works cost ($HI colletruction 'rime (Ibntbs)

Remarks: It was found Impractical t o build the discharge tunnels (Ahuachapan) o r i g ina l l y planned f o r crossing mountain t e r r a in , the consultants redesigned t he canal with syphon gorge crossings, which led t o a new route and an extension of the length of the canal from 60 km t o 76 km. So, instead of cost ing about $2.6 mill ion and being operational i n Dec. 1974, the canal and d i f fu se r pipe cost $23.24 mil l ion and was not f u l l y operational u n t i l O c t . 1978. The o r ig ina l plan was based on small-scale (1/100,000) a e r i a l photogrammetric maps.


Project: Sigalda Hydroelectr ic Projec t

Camtxy: Iceland

Loan No.: 951-IC Ilate: December 1973

Project P e r f o r u m w A d i t -port No.: 3519 Ilate: June 30, 1981

Project D e s c r i p t i o n : Construction of a hydropower s t a t i o n having two 5O-MW generat ing u n i t s with provieions f o r an addi t ional 50-MW uni t ; and a double c i r c u i t transmission l ine .

T o t a l C o s t (Sn) Civil works Cost ($XI C o n s t r u c t i o n T h e (26ntbs)

Berarks: D i f f i c u l t i e s of the c i v i l contrac tor arose out of heavier than an t i c ipa ted leakage of water through the porous t e r r a i n i n t o the powerhouse excavation. Problem of leakage through s ink holes and other porous areas of t h e rese rvo i r were handled by repeated p a r t i a l , and progressively g r e a t e r f i l l i n g of t h e rese rvo i r , in terspersed with cainplete drainage and appl ica t ion of impervious mater ia l over the areas i d e n t i f i e d a s porous. The cos t overrun was due t o worse than an t i c ipa ted geological condit ions and domestic i n f l a t i o n .

ANNEX 11: Description of Projects Without Evaluation Reports

ANNEX I1 Page 1 of 10

Roject: Fortuna Hyro, 4 t h Power

Country: Panama

Laan No.: 1470-PAN Date: Ju ly 1, 1977

Roject Description: The p ro jec t c o n s i s t s of : (1) The Portuna 255-MW h y d r o e l e c t r i c power p l an t cons i s t ing of : ( a ) d ive r s ion works; ( b ) rockf ill dam; ( c ) power tunnel (about 6,000 m long) , surge tank and penstock (about 1,400 m long); ( d l underground powerhouse; ( e l t a i l r a c e tunnel about 8,300 m long) ; and ( f ) access roads; ( 2 ) t ransmission system; ( 3 ) o rgan iza t iona l improvement.

Total Cost ($PI) Civil Works Cost <*I Completion Time

-*s: The delay and c o s t overruns i n t h i s p ro jec t were mainly due t o geo log ica l complications i n t h e underground powerhouse, power tunnel , and a t t h e s i te of t h e r i g h t abutment which required add i t iona l design work and more excavat ion than expected.

I n 1983, t h e Bank approved a supplementary loan of $31.3 m i l l i o n f o r t h i s p ro jec t .

Actual

ANNEX 11 Page 2 of 10

Project: Aguacapa Hydro

Country: Guatemala

Loan No.: 1426-GU Date: June 10, 1977

Project Description: The p ro jec t comprises the cons t ruc t ion of: ( a ) dam i n 3 t h e Aguacapa r i v e r and a r e s e r v o i r of 300,000 m f o r d a l l y regula t ion; ( b ) a

12 km power tunnel ; ( c ) a 3,700 km s t e e l penstock; ( d ) a power s t a t i o n wi th t h r e e 30MW generat ing un i t s ; ( e ) t ransformation f a c i l i t i e s ; ( f ) a switching s t a t i o n ; (g ) t ransmission l i n e s .

Appraisal Estiaate

Total Cost ($MI civil worts cast ($HI Completion Time

Latest fitinurte -9

Remarks: The p ro jec t faced some problems during t h e power tunnel cons t ruc t ion which caused a delay of 29 months. The r e p a i r on the tunnel c o n s i s t s of 4400 m s t e e l l i n i n g (37% of t o t a l tunnel l eng th ) , 810 m re inforced gun i t e (7%) and 5400 m (45%) of chemical t reatment (Thorospan and Sinadur) of longi tudina l cracks.

Tota l pro jec t cos t was $171.5 mi l l i on , 71% over appra i sa l est imate. 51% of c o s t overrun was f o r tunnel r epa i r s .

1 - Actual

- 39 -

Project: Riul Mare-Retezat Hydro


Country: Romania

Loan No.: 1242-R0 Date: April 28, 1976

Project Description: The p ro jec t ' s main components include: ( a ) a r e se rvo i r t o be formed by a 173 m high.-clay-cored r o c k f i l l dam across t h e va l ley of the R iu l Mare r i v e r wi th 25 secondary in t akes and an 18.4 km long pressure tunnel t o convey the water t o the power s t a t i o n ; (b ) a two u n i t underground p lan t of 335 (MW) and a 14 MW above ground powerhouse; ( c ) t ransmission system; ( d l roads.

Total Cost ($MI Civil Worts Cost ($MI Completion Time

Appraisal Estimate

Latest 1 Estinate -/

Remarks: As of 1985 t h i s pro jec t i s s t i l l f a r from being complete. The boring of the headrace tunnel is the main problem a f f e c t i n g the pro jec t . In 1983 unexpected geological condit ions were encountered r e s u l t i n g i n t h e blocking of p a r t of tunnel by clay-like mater ia l i ssu ing from a f a u l t . Pa r t of the delay is a t t r i b u t e d t o causes o the r than s i t e condit ions.

-9 A s of November 2, 1983


Pro jec t : Chixoy Hydroelec t r ic Power

Country: Guatemala

Loan No.: 1605-GU Date: J u l y 21, 1978

Project Descript ion: $a) generat ion: ( i ) r o c k f i l l dam 108 m high with a volume of 2.8 m i l l i o n m , t he dam w i l l be loca ted about 58 km upstream of t h e confluence of t h e Chixoy and Quixal r i v e r s ; ( i i ) power tunnel 25.6 km long, concre te l i n e d , 4.8 m i n diameter, t o develop a g ross head of 550 m; ( i i i ) su r face powerhouse with 5 x 60 MW generat ing u n i t s dr iven by v e r t i c a l l y mounted turb ines ; (b ) t ransmission subs t a t ion and l i n e s ; ( c ) consul t ing .

Appraisal L a t e s t E s t i r a t e E s t i n a t e 9

T o t a l Cost ($MI Civil Works Cost (Sn) C a p l e t i o n T i r e

Remarks: It was acknowledged, during t h e appra i sa l , t h a t a s p e c i a l r i s k of t h e p ro jec t is t h a t i t involves cons t ruc t ion of a 25.6 km tunnel i n an a r e a conta in ing heterogeneous geologica l and k a r s t i c formations. A c o s t contingency of 24% f o r c i v i l works was allowed.

As of January 1985, t h e t o t a l pro jec t cos t was est imated a t $815.8 m i l l i o n wi th completion scheduled f o r 1986 wi th four years delay.

As e a r l y a s 1980, major d i f f i c u l t i e s were experienced i n t h e cons t ruc t ion of c i v i l works under t h e p ro jec t . The composition of rock i n t h e r e s e r v o i r and power tunnel a reas was found t o be much more complex than predicted. Extensive k a r s t i c l imestone formations were found a t the dam foundation and along t h e tunnel ; rock a t t h e spi l lway was h ighly f i s s u r e d ; s e v e r a l l ands l ides along t h e access roads occurred during cons t ruc t ion , and the power tunnel caved i n a t a few places a f t e r showing an unacceptable l e v e l of water l o s s .

A t p resent , t h e seismic r i s k a t t h e site has been reca lcula ted and a more s t r i n g e n t design adopted, r e s u l t i n g i n t h e r e loca t ion of t h e powerhouse, a t h r e e meter increase i n the dam's he ight , lower dam s lopes , and reinforcement of hydraul ic s t r u c t u r e s . These changes required a s ix- fo ld inc rease of t h e grout ing c u r t a i n a rea , a ten-fold increase i n d r i l l i n g works f o r t h e grout ing c u r t a i n , a f ive- fo ld increase i n cement required f o r such grout ing , l a r g e r re inforced concrete sec t ions a t t he sp i l lway, increased grouting and s t e e l l i n i n g of 1400 meters of t h e tunnel , and cons t ruc t ion of an add i t iona l bottom discharge tunnel.

The c i v i l works cos t of t h e power tunnel is present ly est imated a t $130 mi l l i on a s compared with t h e appra i sa l es t imate of $169.5 mil l ion.

The Bank apprwed a $37.3 m i l l i o n supplementary loan f o r t h i s p ro jec t i n 1985.

_1/ As of January 9 , 1985 I I


Project: Kulekhani Hydroelec t r ic

Country: Nepal

Loan No.: 600-NEP (Cred i t ) Date: January 9, 1976

Project Description: The p r o j e c t , loca ted about 30 km southwest of Kathmandu, would e n t a i l t h e cons t ruc t ion of : ( a ) a 107 m high r o c k f i l l dam; (b ) an open channel sp i l lway con t ro l l ed by two r a d i a l ga tes ; ( c ) an in t ake s t r u c t u r e connected t o a headrace o r tunnel of about 2.5 m i n diameter and 5.8 km long; ( d l a surge tank; ( e l a penstock 1.6 m i n diameter and 1340 m long; ( f ) underground powerhouse containing 2 x 30 MW turbo-generating u n i t s ; (g ) a t a i l r a c e tunnel of 1 km long; ( h ) others .

Total Cost ($HI Civil Works Cost (Sn) Completion Time

Appraisal Estimate

Latest mtinate 9

Remarks: This p r o j e c t faced numerous t echn ica l , managerial, and labor d i f f i c u l t i e s , mostly during t h e cons t ruc t ion of t h e tunnel. In 1981 t h e r e were major f a i l u r e s a t d i f f e r e n t l oca t ions i n t h e head race tunnel where t h e r e were voids between the tunnel l i n i n g and t h e rock. It was concluded t h a t t h e problems were due t o inadequate cons t ruc t ion techniques. The major geologica l complication i n this p ro jec t cons i s t of a number of l ands l ides which happened a f t e r t h e cons t ruc t ion had s t a r t e d and a l s o a f t e r t he completion i n 1983. These r e su l t ed i n some design changes. The p ro jec t c o s t over $1 20 mi l l i on and was completed about 2 years behind t h e appra i sa l es t imate .

I n 1979 a supplementary c r e d i t of $14.8 m i l l i o n was granted t o Nepal on t h i s p ro jec t .

1 - Actual


Roject: Nispero Power

Country: Honduras

Loan No.: 1629-HO Date: November, 1978

Roject Description: The p ro j ec t comprises: ( i ) t h e Nispero hydro p l a n t (22.5 MW) and i ts connection t o t he na t iona l t ransmiss ion network; ( i i ) d i e s e l u n i t s a t Puer to Cortes; ( i i i ) consul tan t s e r v i c e s ; ( i v ) t r a i n i n g ; (v) d i s t r i b u t i o n expansion program.

Total Cost ($PI) Civil Works Cost ($PI) Completion Time

Appraisal Estimate

Latest Estimate L/

Bevrrks: Construct ion of t h e genera t ion component of t h i s p ro j ec t was completed i n 1982, about 18 months l a t e r than expected mainly because of cons t ruc t ion delays r e s u l t i n g from d i f f i c u l t geologica l condi t ions . The f a u l t i n g , s o l u t i o n voids, c a v i t i e s , and f i n e l y crushed rock i n t h e v i c i n i t y of t h e tunne l were a major source of de lay , a s e x t r a time was needed t o i n s t a l l e x t r a r e in fo rc ing mater ia l s . Fur ther , t he tunnel was twice flooded (March and June 1981 1, r e s u l t i n g i n some damage and cons t ruc t ion delay.

1! Actual

Project: Mesitas Hydroe l ec t r i c Power


Country: Colombia

Loan No.: 1628-CO Date: A p r i l 9 , 1979

Project Description: The p r o j e c t c o n s i s t s o f : ( a ) c o n s t r u c t i o n of t h e Mes i tas Hydro c o n s i s t i n g of two s u r f a c e powerhouses, each w i th t h r e e gene ra t i ng u n i t s t o t a l l i n g 600 MU, and t u n n e l s and penstocks, as w e l l as a pumping s t a t i o n f o r a n e x i s t i n g head pond and t h r e e 230 kv t r ansmis s ion l i n e s ; ( b ) s t r eng then ing of t h e Sequ i t e dam; ( c ) an a s s e t eva lua t i on s tudy ; and (d ) t e c h n i c a l a s s i s t a n c e .

Appraisal EstiPate

Latest Estimate 1/

Total Cost ($MI Civil works Cog t ($HI Capletion Time

Remarks: Thi s p r o j e c t ' s de lay and c o s t overrun were p a r t i a l l y due t o g e o l o g i c a l d i f f i c u l t i e s i n a number of tunne ls . During t h e c o n s t r u c t i o n some s o f t and watery s p o t s i n t h e main t u n n e l (Granada 11 ) were discovered. The s o f t s p o t s had t o be by-passed. This r equ i r ed new des ign and more excavat ion.

I n November 1983, p a r t of Chingaza t u n n e l co l lapsed . This t u n n e l was t o d i v e r t t h e in f low f o r Mesitas' g e n e r a t i o n and f o r water supply.

This p r o j e c t i s expected t o be completed by mid-1985.

1 - A s of March 7 , 1984


Projec t : Third Power

Country: Swaziland

Loan No.: 2009 SW Date: September 21, 1981

P r o j e c t Descript ion: The pro jec t c o n s i s t s of: ( a ) a r o c k f i l l dam a t Lupoho, about 40 m i n height and 400 m and length , t o provide an e f f e c t i v e r e s e r v o i r capac i ty of a b o ~ t 20 mi l l i on m3 on t h e L i t t l e Usuto r i v e r ; ( b ) a tunnel and penstock system cons is t ing of an unlined low-pressure power tunnel 4.4 km long; a 6 0 0 3 long s t ee l - l i ned tunnel and a su r face penstock system; ( c ) a powerhouse wi th two 10-MW tu rb ine genera tors , wi th a s h o r t t a i l r a c e channel; ( d l consul tan t serv ices .

T o t a l Cost ($!I) C i v i l Works Cost ($!I) Completion Tiae

Appraisal Est imate

L a t e s t 1 Est imate -/

Remarks: The p ro jec t experienced s u b s t a n t i a l cos t overruns and a s of 1984 was about s i x months behind t h e cons t ruc t ion schedule. The inc reases a r e a t t r i b u t e d l a rge ly t o changes i n t h e main c i v i l works con t rac t . Due t o unforeseen geological and geophysical condit ions, t h e amount of excavat ion f o r tunnel ing works has been s u b s t a n t i a l l y increased and made more d i f f i c u l t by presence of l a rge boulders mixed with s o f t mater ia l . Other geologica l problems inc lude : t he presence of f a u l t zones, lower bedrock than expected and mud-rush (inundated t h e high pressure tunnel) . To overcome these problems t h e con t rac to r had t o r e a l i g n t h e tunne l ax is . The q u a n t i t y of tunnel ing works was increased about 40% over t h a t o r i g i n a l l y expected.

I n 1984, t h e Bank approved a $5.6 mi l l ion supplementary loan f o r t h i s p r o j e c t .

1/ A s of May 4 , 1984

Project: Tenth Power

ANNEX 11

Page 9 of 10

Country: Indonesia

Loan No.: 1950-IND Date: March 6, 1981

Project Description: The p ro jec t c o n s i s t s of : ( a ) t h e 700 MW Saguling hydroe lec t r i c power f a c i l i t y ; including cons t ruc t ion of a 97.5 m high r o c k f i l l s to rage dam on the Citram r i v e r ; a 6.5 km long water conductor system comprising tunnels , surge tanks, and penstocks; and a power s t a t i o n with an a s soc ia t ed 500 KV s tep-up subs ta t ion ; ( b ) equipment; ( c ) engineering serv ices ; (d) consul t ing serv ices .

Appraisal Estimate

Latest Estiaate 9

Total C a s t ($PI) Civil Wo*s Cost (SH) Ccmpletion Time

Remarks: Major d i f f i c u l t i e s were experienced i n the cons t ruc t ion of c i v i l works under the pro jec t i n 1982 and 1983. During t h i s period extraordinary geologica l and geotechnical problems were encountered. The p r inc ipa l problems were the following: ( a ) Heavy r a i n s i n l a t e Apr i l 1982 caused severe l ands l ides , which disrupted access roads t o t h e penstock and t h e midpoint and i n t a k e a d i t s of the main tunnel , and delayed t h e s t a r t of underground tunnel work a t various poin ts by s i x t o twelve months. (b ) Unexpected land movements a t t he powerhouse s i t e occurred from June t o October 1982. These land movements necess i t a t ed remedial work t o c lean away l ands l ides and consol ida te s lopes a t the powerhouse s i t e , which delayed work a t t he s i t e by twelve months. ( c ) Geological weaknesses revealed a f t e r excavation commenced i n t h e sp i l lway penstock s lope a reas required f a r more extensive s lope s t a b i l i z a t i o n measures than had been provided f o r i n t h e o r i g i n a l designs. Excavation requirements increased two-f o ld i n a number of a reas , which required i d e n t i f i c a t i o n of new s p o i l a reas and add i t iona l access roads. ( d ) The incidence of extremely poor q u a l i t y rock i n some c r i t i c a l sec t ionsof the main tunnel caused r o c k f a l l s i n 1983 which delayed work by s e v e r a l months. ( e ) The discovery of poor q u a l i t y rock i n a primary quarry intended t o supply rock f o r works i n t h e powerhouse a rea required abandonment of t h a t quarry i n favor of a more d i s t a n t s i t e ; involving g r e a t e r t r anspor t , t i m e and cos t and increased excavation. ( f ) Landslips and r o c k f a l l s a t t h e dam s i t e , combined with foundation d i f f i c u l t i e s observed a f t e r excavation began, caused delays and requi red deepening of the dam foundation.

The Bank approved a supplementary loan of $50 m i l l i o n f o r t h i s p ro jec t i n 1984.

A s of January 30, 1985

Projec t : Guavio Hydro Power ANNEX 11 Page 10 of 1 0

Country : Colombia

Loan 190.: 2008-CO Date: May 13, 1981

P r o j e c t Descr ip t ion : The p ro j ec t comprises : ( 1 ) t h e Guavio h y d r o e l e c t r i c p l a n t on the Guavio r i v e r including: ( a ) r i v e r d ivers ion , r o c k f i l l dam and sp i l lway tunne l s ; (b) i n t a k e and d ivers ion tunne l s (about 4 km) t o conduct waters of the Chi ror and Ba ta t a s River i n t o the r e se rvo i r ; ( c ) p re s su re tunnel (about 15 km) , underground powerhouse and t ransformer with access t u n n e l (about 2 km), and t a i l r a c e (about 5 km); (2 ) o t h e r s inc luding equipment and se rv i ces .

Appra isa l Es t imate

T o t a l Cas t ($HI C i v i l Wo*s Cost (Sn) Completion Time

L a t e s t 1 Es t imate -/

Remarks: In t h e e a r l y s t ages of cons t ruc t ion i n t h i s p ro j ec t f requent l a n d s l i d e s occurred during t h e excavat ions f o r permanent works and access roads. A c r i t i c a l zone was t h e Rocatoma a r e a where four workers were k i l l e d i n Sept . 1982. On J u l y 28, 1983 a l a r g e l a n d s l i d e swept over t he platform a r e a near t he p o r t a l s of t h e power and d ive r s ion tunne l s where tunnel ing crews were a t t h e end of t h e day s h i f t and bu . r r ied about 120 workers.

Addi t iona l bad geologica l condi t ions a t an access t o t h e discharge tunnel have caused f u r t h e r delays.

As of October 1984, t h e completion time i s est imated t o be 1989.

/ A s of October 3 , 1984

ANNEX I11

GAS 6

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

. . . . . . . . . . . . . . . . . . . . . . . . . . . INTERNATIONAL DEVELOPMENT ASSOCIATION

PUBLIC UTILITIES DEPARTMENT

GUIDELINES SERIES

GUIDELINES FOR ESTIMATING COSTS OF TUNNEL CONSTRUCTION

January 17, 1974

Cen t ra l P ro jec t s S ta f f Pub l i c U t i l i t i e s Department

This paper is one of a s e r i e s i ssued by t h e Publ ic U t i l i t i e s Department f o r t h e information and guid- ance of Bank s t a f f working i n the power, water and

wastes, and telecommunications sec tors . It may not be published o r quoted a s represent ing the views of t h e Bank Group, and the Bank Group does not accept

r e s p o n s i b i l i t y f o r i ts accuracy o r completeness.

ANNEX 111 --- Page 2 of 6

GUIDELINES FOR

ESTIMATING COSTS OF TUNNEL CONSTRUCTION

A B S T R A C T - - - - - - - - -

This paper deals with the problems of estimating costs to execute underground works where uncertainties may be great. It suggests areas to which special attention should be given, and advocates the routine collection of data on costs as experience is gained so that the basis for judging estimates may be broad- ened.

Prepared by: Ralph Bloor (Consultant and F.H. Howell

January 17, 1974 -


GUIDELINES FOR

ESTIMATING COSTS OF TUNNEL CONSTRUCTION

Int roduct ion

1. The Bank f r equen t ly f inances p r o j e c t s i n the a g r i c u l t u r e , pub l i c u t i l i t y , and t r a n s p o r t a t i o n s e c t o r s which include tunnels o r s i m i l a r underground works c a r r i e d out under condi t ions of unce r t a in ty . From time t o time execution of t hese s t r u c t u r e s has proven t o be much more c o s t l y than a n t i c i p a t e d , g iv ing r i s e t o f i n a n c i a l problems on t h e p a r t of t h e owner e n t e r p r i s e , and c a s t i n g doubt over t h e economic m e r i t s of having embarked upon t h e p r o j e c t i n t h e f i r s t i n s t ance . The Bank has ready-to-hand r e l i - a b l e cos t information on only a r e l a t i v e l y few tunnels because tunnels a r e usua l ly on1 elements of p r o j e c t s and c o s t s a r e gene ra l ly not repor ted on separa te ly .1 ' These d a t a , while spa r se , do tend t o show t h a t t unne l l ing c o s t s a r e l i k e l y t o be underestimated.

2. The purpose of these Guidel ines is t o r e i t e r a t e the need f o r s p e c i a l c a r e i n e s t ima t ing c o s t s (paragraph 4 ) ; t o remind Bank s t a f f t h a t s p e c i a l s k i l l s may be requi red (paragraph 5 ) ; and t o sugges t t h a t generous allowances f o r cont ingencies be provided i n l i n e with the degree of uncer- t a i n t y involved (paragraph 6 ) . The need f o r s e n s i t i v i t y ana lyses (paragraph 7 ) and broadening the Bank's d a t a base (paragraph 9) a r e mentioned.

3. A t unne l , a s considered i n t h i s paper , is i n p r a c t i c e any l a r g e underground s t r u c t u r e . The fol lowing l i s t is t y p i c a l , bu t no t n e c e s s a r i l y a l l - i n c l u s i v e :

( i ) Conveyance tunnels f o r i r r i g a t i o n , hydroe lec t r i c , and water supply p r o j e c t s ;

( i i ) underground powerhouses wi th penstocks and t a i l r a c e t unne 1s ;

( i i i ) rai lway and highway tunne l s ; and

( i v ) d ive r s ion tunnels f o r va r ious r i v e r p r o j e c t s .

The Magnitude of t h e Problem and Need f o r Spec ia l S k i l l s

4. A s i s t h e case wi th a l l heavy c i v i l works cons t ruc t ion , t he prob- l e m of cos t e s t imat ing f o r tunnels i s p ropor t iona l t o the degree of ignor- ance of the n a t u r a l condi t ions t o be encountered; and tunnels , by t h e i r n a t u r e a r e the most d i f f i c u l t s t r u c t u r e s f o r which an accura t e p r e d i c t i o n of t hese cond i t ions can be made. The comparative l e v e l of d i f f i c u l t y of making c o s t e s t i m a t e s f o r t h e va r ious kinds of s t r u c t u r e s covered by the

1' For example, where the d ive r s ion scheme f o r a h y d r o e l e c t r i c development inc ludes a tunne l , a l though i t may be a major cons t ruc t ion a c t i v i t y , i t may neve r the le s s be executed under a genera l c i v i l works c o n t r a c t as regards r epor t ing of cos t s .

m x I11 Page 4 of 6

above d e f i n i t i o n of " t w ~ n e l s " cannot be c a t e g o r i c a l l y s t a t e d , bu t i n g e n e r a l t h e more ex t ens ive t h e s t r u c t u r e is and t h e deeper i t l ies underground, t he h ighe r t h e l e v e l of d i f f i c u l t y . The d i f f i c u l t y is in f luenced by t h e n a t u r e of t h e rock being p e n e t r a t e d , t h e ground wa te r cond i t i ons , t h e presence o f g a s , and i n v o l c a n i c a r e a s by hea t . The b a s i c problem of c o s t e s t i m a t i n g i s f ind ing out what t h e s e cond i t i ons a r e . Thus, d i v e r s i o n tunne l s , some s h o r t highway and rai lway tunne l s , and underground powerhouses a r e among t h e l e a s t d i f f i c u l t underground s t r u c t u r e s t o estimate s i n c e a reasonable number of bor ings and a d i t s can be c a r r i e d ou t economically and which can g ive f a i r l y a c c u r a t e in format ion of t h e n a t u r a l condi t ions . It may, t he re - f o r e , be concluded t h a t long (over a few k i lometers ) t unne l s under deep cover (more than 150 meters ) o f f e r t h e g r e a t e s t e s t i m a t i n g problems because thorough d i r e c t examination of t h e n a t u r a l cond i t i ons by bor ings and a d i t s becomes i m p r a c t i c a l due t o t h e exces s ive c o s t s involved. Conveyance tunne l s make up the ma jo r i t y of t he p r o j e c t s i n t h i s ca tegory , bu t t h e r e may be some rai lway and highway t u n n e l s , and occas iona l ly some o t h e r types . I n all cases t he degree of u n c e r t a i n t y is in f luenced by the complexity of t he geo- l o g i c a l cond i t i ons and t h e amount of f a c t u a l m a t e r i a l which may be a v a i l a b l e From previous ope ra t i ons i n t h e v i c i n i t y .

5. The two most important c l a s s e s of personnel needed f o r adequate t unne l e s t i m a t i n g a r e engineer ing g e o l o g i s t s and eng inee r s wi th ex t ens ive exper ience i n a c t u a l t unne l cons t ruc t ion . The Bank cus tomar i ly r e q u i r e s t h e employment of consu l t i ng f i rms w i t h t he se c l a s s e s of personnel on t h e i r r o s t e r s . Grea t e r pa in s should be taken t o a s su re t h a t t h e personnel is t h e b e s t a v a i l a b l e , and i f n o t , t o r e q u i r e t h e firm t o employ o t h e r , more q u a l i f i e d i n d i v i d u a l s . Furthermore, i f a v a i l a b l e , t h e r e should be some personnel involved wi th exper ience i n t he a r e a i n which t h e p r o j e c t i s l o c a t e d , who can provide more i n t i m a t e ki~owledge of l o c a l cond i t i ons .

( i ) The b a s i c duty of the engineer ing g e o l o g i s t is t o examine t h e underground cond i t i ons by t h e most d i r e c t means which a r e p r a c t i c a l t o employ and t o e s t i m a t e t h e s e cond i t i ons on the b a s i s of gene ra l geo log ic knowledge when d i r e c t means cannot be used. The engineer ing g e o l o g i s t ( o r g e o l o g i s t s ) should v i s i t t he s i t e of t h e p r o j e c t , explore t he ground s u r f a c e f o r rock outc rops and s i g n s of f a u l t s , examine a l l r e l evan t e x i s t i n g d a t a , and s p e c i f y a d d i t i o n a l d a t a t o be ob ta ined inc lud ing a e r i a l photography where d r i l l i n g o r a d i t s a r e n c t p r a c t i c a l . On the b a s i s of a l l in format ion a v a i l a b l e he should prepare g e o l o g i c a l s e c t i o n s along t h e p r i n c i p a l axis (axes) of t h e s t r u c t u r e and pre- d i c t t h e type , q u a l i t y , and probable behavior of t he v a r i - ous types of rock involved based on h i s p rev ious knowledge and the examination of t h e n e a r e s t l o c a l exposures of t h e types involved. Espec i a l l y i f high h e a t o r gas may be expected t o be p r e s e n t , a few deep d r i l l h o l e s may have t o be pu t down t o check. Ground wa te r l e v e l s should be


e s t a b l i s h e d by examining s p r i n g s , w e l l s , o r by d r i l l i n g i f t h e type of rock promises t o have s e r i o u s w a t e r problems. I ts b e h a v i o r w i t h w a t e r f lowing o u t of i t must be p r e d i c t e d .

( i i ) The b a s i c du ty of t h e e n g i n e e r i s t o deve lop a c o n s t r u c t i o n p l a n which meets t h e underground c o n d i t i o n s p r e d i c t e d by t h e g e o l o g i s t , and t o e s t i m a t e t h e c o s t of t h e work. The e n g i n e e r shou ld c o n s i d e r t h e s c h e d u l e of o p e r a t i o n s i n c l u d - i n g d r i l l i n g , s h o o t i n g , mucking, and h a u l i n g o u t depending on t h e l e n g t h of t u n n e l , number of p o i n t s of a c c e s s , and a p p l i c a b l e hau lage equipment ; o r a l t e r n a t i v e l y , t h e use of mining machines o r moles . ( S i n c e t h e l a t t e r type of equ ip - ment is s c a r c e , d i f f i c u l t t o b r i n g t o a s i t e , n o t s u i t e d t o a l l t y p e s of r o c k , and i s n o t l a b o r - i n t e n s i v e , i t shou ld n o t a lways be s p e c i f i e d a s an a l t e r n a t i v e which c o n t r a c t o r s must c o n s i d e r i n f o r m u l a t i n g o f f e r s . ) Upon t h e a d v i c e of t h e g e o l o g i s t , t h e e n g i n e e r s h o u l d c o n s i d e r t h e need and s i z e of pumps, v e n t i l a t i n g equipment , and gas s u r v e i l l a n c e a r r a n g e m e n t s , and t h e p r a c t i c a b i l i t y of t h e u s e of s h o t - C r e t e , w i r e mesh, and rock b o l t i n g t o s t a b i l i z e t h e t u n n e l , a s w e l l a s of t h e more e x p e n s i v e r i n g beams, s t e e l p l a t e s and d r y p a c k i n g i n some p a r t s of t h e s t r u c t u r e . He w i l l need t o judge t h e a b i l i t y of l o c a l l a b o r t o a c q u i r e t h e n e c e s s a r y s k i l l s and e s p e c i a l l y t o pe r fo rm a s p a r t s of a h i g h l y o r g a n i z e d and c a r e f u l l y t imed o p e r a t i o n . The e n g i - n e e r s h o u l d have t h e a b i l i t y t o judge t h e p r o b a b l e c o s t based on h i s c o n c l u s i o n s of t h e above-mentioned c o n s i d e r a - t i o n s a s compared w i t h h i s e x p e r i e n c e e l s e w h e r e .

A p p r o p r i a t e Contingency Allowances

6 . I n s p i t e of e v e r y r e a s o n a b l e p r e c a u t i o n t h e r e w i l l be c a s e s , e x p e c i a l l y i n c o n n e c t i o n w i t h l o n g , deep t u n n e l s i n compl ica ted geo logy w i t h d o u b t f u l r o c k q u a l i t y , where t h e r e w i l l be c o n s i d e r a b l e u n c e r t a i n t y abou t underground c o n d i t i o n s and where a c o s t e s t i m a t e cannot be e x p e c t e d t o be a c c u r a t e w i t h i n customary l i m i t s . I n s u c h c a s e s t h e b e s t p r o c e d u r e a p p e a r s t o be t o add l i b e r a l con t ingency a l l o w a n c e s t o t h e e s t i m a t e d d i r e c t c o s t s . S p e c i f i c t u n n e l c o n t i n g e n c i e s s h o u l d be added t o t h e c o s t of t h e t u n n e l i t s e l f . The Bank 's e x p e r i e n c e s u g g e s t s t h a t such p r o v i s i o n s s h o u l d b e n o t l e s s than 25% of t h e d i r e c t e s t i m a t e d c o s t , and where u n c e r t a i n t i e s a r e u n u s u a l l y l a r g e , i t is p o s s i b l e t h a t t h e y may have t o be a s h i g h a s 50%. Normal c o n t i n g e n c i e s would be used on o t h e r p a r t s of t h e p r o j e c t . Where such p r o v i s i o n s would have a s u b s t a n t i a l impact on t h e o v e r a l l p r o j e c t c o s t -- and hence t h e p roposed Bank Group f i n a n c i n g -- t h e s i t u a t i o n shou ld be d i s c u s s e d i n d e t a i l w i t h t h e p roposed borrower . E x c e s s i v e con t ingency a l lowances have a c o s t i n terms of commitment c h a r g e s , b u t i t i s g e n e r a l l y more d e s i r a b l e t o i n c u r t h e s e than a c c e p t a l a r g e r i s k t h a t fund ing w i l l p rove i n a d e q u a t e .


7. I n p r o j e c t s where h igh contingency allowances a r e deemed necessary because of unce r t a in ty , s e n s i t i v i t y ana lyses should. a l s o be made sys temat i - c a l l y . In t h e event t h e ana lys i s i n d i c a t e s i n c l u s i o n of generous allowances under condi t ions of unce r t a in ty would throw doubt on the p r o j e c t ' s j u s t i f i - c a t i o n , i t probably should be redesigned o r t h e a l t e r n a t i v e schemes reexam- ined t o s e l e c t t he most acceptable.

Col lec t ion of Data

8. I t would be d e s i r a b l e t o broaden the Bank's d a t a base wi th r e s p e c t t o tunnel c o s t s . Over time, i t might then be p o s s i b l e t o suggest more pre- c i s e l y what l e v e l s of contingency allowances would be appropr ia te under d i f f e r e n t circumstances. Moreover, i d e n t i f i c a t i o n of f a c t o r s tending t o produce inaccura t e e s t ima tes might be p o s s i b l e , and means of tak ing them i n t o account developed.

9. Where i t can conveniently be done, superv is ion and a p p r a i s a l m i s - s i ons should c o l l e c t r e l evan t d a t a on tunne l l ing cos t s . It would be p a r t i c - u l a r l y h e l p f u l i n cases where a c t u a l c o s t s i ncu r red have subs t a n t i a l l y exceeded e s t ima tes t o know t h e cause (i. e . , inadequate subsurf ace explora- t i o n , unusual ly bad geologic condi t ions , poorly prepared e s t i m a t e s , e t c . ) . In add i t ion t o whatever use i s made of t h i s i n f o r h a t i a n i n p r o j e c t monitor- i n g , i t should be made a v a i l a b l e a s wel l t o the Pub l i c U t i l i t i e s Department. It w i l l be c o l l e c t e d on a g loba l b a s i s a s experience is gained wi th a view towards improving these Guidelines.

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