Civil Engineering Reference
In-Depth Information
the quantities are not known at the outset. A milestone payment system is
better in these circumstances, and it also requires less administrative effort
in determining the value of interim payments. However, there are many
types of milestone payment mechanisms. Unless there is an initial mobiliza-
tion payment, the fewer the number of interim milestones, the greater the
need for contractors to fund their costs from their own resources. For an
immersed tunnel contract, there may be a greater need for early payments
as the cost of initial temporary works can be high, for constructing casting
basins, for example, or completing large-scale temporary earthworks at the
tunnel approaches. Payment milestones should consider the large tempo-
rary works items as well as the permanent works construction.
From the client's perspective, they need to ensure that payments are con-
sistent with the value of the work completed, so that if the work is halted for
some reason they have not paid out more than the value of construction to
date. A simplified set of milestones related to the major items of the work,
probably some 40-50 in number, is usually sufficient. Generally, milestone
payments are “all or nothing,” that is, if a milestone has not been reached
then the contractor receives no payment for that milestone. However, this
does have the disadvantage that the contractor may be unduly penalized for
just missing a milestone. Some contracts include valuing the percentage com-
pletion of milestones on a monthly basis and paying the contractor accord-
ingly. This procedure is not overly onerous on administration as it is relatively
quick and simple to agree on the percentage completion of, say, 35 milestones
based on monthly progress. Others would argue that the all-or-nothing mile-
stone system concentrates the mind of the contractor better.
PRIVATELY FINANCED CONSTRUCTION
Immersed tunnels are often part of privately financed schemes. The conces-
sion contract will usually contain a design-and-construct contract for the
tunnel, with the base specification having been developed by the client.
There will be the addition of operation and maintenance requirements over
the lifetime of the concession, which will impose obligations to maintain
equipment and renew life expired items. The requirements for the condition
of the tunnel when it is handed back to the client at the end of the conces-
sion will also be defined.
The tunnel is not expected to be new when it is handed back, but equally, it
should not be life expired. The handback conditions must be set out explicitly.
Phrases like “in good condition” should not be used. The required residual
life of each item is normally set out in a schedule. A detailed inspection of
the structure and equipment should be carried out to determine compliance.
Table 17.1 sets out some typical residual lives that might be expected for vari-
ous parts of the tunnel, based on an initial 100-year design life.
