Thursday 5 November 2009

Risks In The Construction Of Hydropower Tunnels In Vietnam

The landscape and topography of Vietnam is characterized by high mountains and deep valleys. There are thousand of rivers across the country, out of which, about ten rivers has potential for hydropower development. As a result of economic deregulation over the pass two decades, Vietnam economy is growing rapidly, causing a great demand of electricity. At the end of 2004, Electricity of Vietnam (EVN) was forced to sign a deal to import electricity from China because of impending shortages and it is also expected to sign up for imports from Laos from 2008.

Tunnel in hydropower project is very important for the development of electricity in Vietnam. However, tunnel construction is very risky. Firstly, the geologic condition of underground rock is unforeseeable; the risk of tunnel collapse due to unstable of rock mass or excessive of underground water may cause accidents resulting in losing of human, damage to equipment, and time extension and extra money are needed to overcome it. Secondly, the equipment for tunneling are unique, sophisticated and very expensive, the cost for replacing the main equipment is very high and some time it is not available in the market so that contractors need time to order it from the manufacturers. Moreover, as specified by Charoenngam and Yeh (1999) the projects are capital intensive and have long duration so that financial risk is very high.
Vietnam’s hydropower project it is now suffering from cost overrun, failing to meet time targets and specifications due to lack of systematic risk management. Some major risks may not be identified and appropriate allocated so that risks may not be controlled properly. As a result, many projects were not successful completed as planed in view of economic efficiency, technical requirements and production.

Given that the construction of hydropower tunnels in Vietnam is experiencing many problems, Mr. Dau Xuan Thuy made a research with three main objectives such as follows: (1) to identify the unique or critical risks associated with hydropower tunnel construction projects in Vietnam; (2) to investigate perceptions of the parties about risk allocation in hydropower tunnel construction and whether the risks have really been allocated efficiently or not; and (3) to propose recommendations for the government agencies, the contractors, the consultants in developing human resources in order to build proper risk allocation strategies, leading to manage risks in future hydropower tunnel constructions more effectively.

His study revealed that in construction projects, cost over run and schedule delay can be prevented, work quality can be increased and disputes can be reduced if risks are identified and allocated properly. Tunneling is a special type of constructions but also have to face general risks like other type of constructions but also have to face some critical, unique risks that specific to underground works.
Mr. Thuy’s Risks first objective has been obtained. Risks in tunnel construction have been identified and ranked for significant at two case studies. In the order to determine the major risks, total weighting score, which is product of frequency of occurrence and degree of impact, has been calculated. The top-ten risks and its ranks were identified (see table below) at Buon Kuop project and Dai Ninh project.

The results showed that some risks are ranked somewhat differently between the two projects and this is because the two projects used different methods of tunnel excavation. About half of Dai Ninh tunnel were excavated by TBM, which are more mechanised than excavated by D&B method. The TBM itself is a unique and very complicated machine which is very sensitive to the risk of breakdown which explains why the risk ‘Productivity of equipment’ in Dai Ninh project ranked sixth and is significantly higher than in the Buon Kuop project which ranked ninth. Tunneling by TBM will produce fewer overbreaks than tunneling by D&B method. This explained why the risk ‘Overbreak’ in Dai Ninh ranked lower than in Buon Kuop project. On the contrary, the risk ‘Underground water’ in Dai Ninh project ranked higher in Buon Kuop project because the TBM, which are very heavy and run by electricity, is very sensitive to the ingress of water in rock mass cavities into tunnel.
Mr. Thuy’s study also identified and listed 15 risks that unique to tunnel projects (see table below). Some of these risks are also listed in the top-ten most important risks.

Mr. Thuy’s second objective was also obtained which are the results of the surveys about risk allocation opinion of respondents at the two projects. The risk allocation opinion is based on the percentages of total counts of participant responses such as risk should be allocated to the owner, to the contractor, to the consultant, shared between the owner and the contractor, or shared between the owner and the consultant.
Risk allocation is an important stage of risk management. The purpose of risk management is to reduce the cost of the owner and maximize the benefit of the contractor. As we know that contractors charge a higher price on projects when the risk is high than when it is low. Therefore, owners can reduce the cost on their projects by reducing the risks the contractors are required to bear. This potential is greatest for those forms of risk which the owner is in a better position to control than the contractor.

Hypothesis testing also revealed that risks allocation attitude of the owner and the contractor in tunnel project in Vietnam is not different. This indicates that owners and contractors in Vietnam have the same opinion about who should be responsible for a certain risk. This is an important advantage that could reduce deputes in project procurement process and making important contribution to the success of projects.

The investigation into risk allocation practices at the two projects also have been done and the results show that although there are conflicts about policy perception for risk allocation between participants in the projects, majority of participants are satisfied with the current risk allocation arrangement in their projects. Risks are allocated more properly at Dai Ninh project than at Buon Kuop project, and respondents from Dai Ninh project are more optimistic about successfulness of risk control than the respondents at Buon Kuop Project. These differences between the two projects may be explained by the fact that Dai Ninh is an international project using FIDIC condition of contracts and most risks are allocated by contract clauses. Meanwhile, Buon Kuop is a local project and has not followed any standard contract form; consequently, many risks are not allocated properly.

Mr. Thuy’s recommendations

In recent years, the construction industry in Vietnam is having a good reputation of rapid development. However, many large scale projects invested by the government are still facing cost overrun and schedule delay. The main reason for these problems is that risks are not identified and allocated properly before project start. Owners and contractors don’t have official risk management systems for their projects. Through this study, the author would like to recommend some measures as follows:
Firstly, education and training policies should be established by the government to bring out the best of current human resources in the field of project management in which risk management is a major.

Secondly, corporations also had better have periodic risk training programs for its employees. Therefore, they can recognize the benefits of risk management and also know how to handle risks in their projects. It must help encourage responsibility, knowledge sharing, continuous improvement in coping with risks in tunnel construction projects.

Finally, a standard contract form should be developed and applied in all hydropower tunnel projects in Vietnam in which all major or known risks are allocated by contract clauses. So that risks can be managed by responsible party in order to reduce cost for the owner and maximize benefit to the contractor, preventing of conflicts, claims or litigations between the owner and the contractor.
His thesis abstract is copied and posted.

ABSTRACT

This research focuses on the identification of major risk factors faced by parties involved in hydropower tunnel construction in Vietnam and investigates into the risk allocation opinion among the involved parties. The data collections were carried out by structured interviews at two hydropower tunnel construction projects in Vietnam. Beside, the research also investigated into the risk allocation practices at the two projects to find out whether the risks in these projects are allocated properly or not.

The results of risk identification obtained at the two tunnel projects indicated that, in general, the two tunnel project facing the same risks; however, some of the risks are somewhat different in rank between these tunnel projects because they used different methods of construction. Tunneling by TBM, which is more mechanized than tunneling by drill and blast method (D&B method), faces more risk about equipment productivity and ingress of ground water but less risk about overbreak. Opinions on risk allocation were also obtained at the two projects. Hypothesis tests pointed out that there is no conflict of opinion about risk allocation between the owner and the contractor in tunnel construction in Vietnam. Furthermore, risk allocation practices at the two projects have been investigated. Although there are some conflicts about policy perception for risk allocation between participants in the projects, majority of participants are satisfied with the current risk allocation arrangement in their projects.

5 comments:

Portable Storage said...

Thanks for the information and if there is some problem in the tunnel construction so the problem should be sort out.If the problem is so major that it can't be solved than the construction of tunnel should be aborted.

Thanks,
Portable Storage,
www.moveablecubicle.com

Vaishnaviconsultants said...

Hydro Power Consultant is successful completed as planed in view of economic efficiency, technical requirements and production.

Anonymous said...

Thanks,for the insightful information on tunnelling project management.
Edmond,Kenya.

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