47837 E n e r g y D e p a r t m e n t N o t e 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 Advisory 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 E n e r g y D e p a r t m e n t f o r t h e i n f o r m a t i o n and g u i d a n c e of Bank s t a f f and o t h e r s who may b e c o n c e r n e d 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 e n e r g y s e c t o r . I t is not an 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 b e q u o t e d o r r e f e r e n c e d a s such. 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 Considerations i n Hydroelectric P r o j e c t Preparation .................................................... 4 Survey of H y d r o e l e c t r i c P r o j e c t s ................................. 5 A. H y d r o e l e c t r i c P r o j e c t s w i t h E v a l u a t i o n Reports ........ 6 B. H y d r o e l e c t r i c P r o j e c t s without E v a l u a t i o n R e p o r t s ..... 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 T a b l e 2: Audited P r o j e c t s w i t h G e o l o g i c a l Problems .............. 6 Table 3: Non-Audited P r o j e c t s w i t h Geological Problems .......... 10 LIST OF ANNEXES Annex I: D e s c r i p t i o n of P r o j e c t s w i t h E v a l u a t i o n Reports Annex T I : D e s c r i p t i o n of P r o j e c t s w i t h o u t E v a l u a t i o n Reports Annex 111: G u i d e l i n e s f o r E s t i m a t i n g C o s t s of Tunnel Construction, G A S 6 GEOLOGICAL COMPLICATIONS AND COST OVERRUNS : A SURVEY OF BANK-FINANCED HYDROELECTRIC PROJECTS T h i s n o t e reviews t h e s i g n i f i c a n c e of g e o l o g i c a l complications i n hydroelectric projects and proposes guidelines for reducing their occurrence. It surveys 64 Bank-financed hydro p r o j e c t s and r e v e a l s t h a t over 35% of them have experienced unexpected g e o l o g i c a 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 o v e r 65%, w i t h t u n n e l i n g t h e main component of c i v i l works a f f e c t e d . The paper a l s o r e v e a 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 g e n e r a l , and t h o s e w i t h g e o l o g i c a 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 v a l u e s , w a r r a n t i n g need f o r a change i n t h e Bank's approach t o c o s t c o n t i n g e n c i e s f o r c i v i l works i n such p r o j e c t s . The paper proposes development of a d a 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 t e c h n i q u e s 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 q u a n t i f y i n g construct ion uncertainties. GEOLOGICAL COMPLICATIONS AND COST OVERRUNS: A SURVEY OF BANK-FINANCED HYDROELECTRIC PROJECTS 1. The o b j e c t i v e s of t h i s paper a r e t o : ( i ) e v a l u a t e t h e e x t e n t of geological complications i n h y d r o e l e c t r i c p r o j e c t s f i n a n c e d by t h e Bank; ( i i ) e s t i m a t e t h e p r o j e c t c o s t overruns and completion d e l a y s due t o g e o l o g i c a l problems; ( i i i ) propose p r e c a u t i o n a r y measures t o reduce g e o l o g i c a 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 t u d i e s . 2. The s u r v e y covered 64 Bank-financed 1/ h y d r o e l e c t r i c p r o j e c t s and concludes t h a t g e o l o g i c a l d i f f i c u l t i e s caused maj o r c o s t overruns and completion d e l a y s i n 23 p r o j e c t s (36%); c i v i l works c o s t i n c r e a s e d on average by o v e r 65%. 3. P r o j e c t r i s k s a r i s i n g from u n c e r t a i n geology must be t r e a t e d much more e x p l i c i t l y i n p r e p a r i n g and a p p r a i s i n g Bank p r o j e c t s s u b j e c t t o such uncertainties. P r o j e c t s i n c o r p o r a t i n g long t u n n e l s ( o v e r 5 km), having large undergound works, o r founded i n k a r s t i c ( s o l u b l e ) l i m e s t o n e a r e prima facie c a n d i d a t e s f o r more r i g o r o u s t r e a t m e n t i n c l u d i n g : (i) a n a l y s i s t o determine the impact of risk on project justification; (ii) a requirement t h a t t h e e n g i n e e r i n g c o n s u l t a n 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; (iii) more involvement by panels of experts in reviewing risk a s p e c t s of p r o j e c t s , and (iv) use of more generous p h y s i c a l contingency allowances f o r r i s k y p r o j e c t elements when f o r m u l a t i n g f i n a n c i n g plans. 4. There i s a need t o c o l l e c t p r o j e c t i n f o r m a t i o n i n an e a s i l y - a c c e s s i b l e d a t a base t o be used by Bank s t a f f i n a s s e s s i n g p r o j e c t r i s k , and t o p r e p a r e g u i d e l i n e s on s t a t e - o f - t h e - a r t s i t e 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 t u d y came from a n impression among Bank s t a f f t h a t g e o l o g i c a l c o m p l i c a t i o n s were l a r g e l y r e s p o n s i b l e f o r c o s t overruns and - 1/ Includes IDA. completion d e l a y s i n 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 i m p r e s s i o n has been r e i n f o r c e d by some major g e o l o g i c a l problems i n c u r r e n t Bank-financed hydro projects. For example, t h e 300-MW Chixoy H y d r o e l e c t r i c p r o j e c t i n Guatemala, comprising a 108 m h i g h r o c k f i l l dam and a 25.6 k m l o n g power t u n n e l , was t o b e completed i n 1982 and c o s t $414 m i l l i o n . However, a s of February 1985, t h e t o t a l c o s t e s t i m a t e h a s been r a i s e d t o $815.8 m i l l i o n w i t h expected completion, f o u r y e a r s behind s c h e d u l e , 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 d e l a y i s a t t r i b u t e d t o numerous g e o l o g i c a l c o m p l i c a t i o n s encountered d u r i n g c o n s t r u c t i o n of t h e power t u n n e l and t h e dam. 6. H y d r o e l e c t r i c 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 l o a n s 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 p e r i o d a r e h y d r o e l e c t r i c , a c c o u n t i n g f o r 30% of t o t a l power l o a n s . 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 o v e r r u n s 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 , a u d i t e d by t h e O p e r a t i o n s E v a l u a t i o n 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 ' a v e r a g e c o s t overrun i s 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 e n d i n g p l u s a s s o c i a t e d h i g h c o s t i n c r e a s e s j u s t i f y an a t t e m p t 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 i m a t i n g p r o c e s s . 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 u s u a l l y l e a d 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 h a s 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 c a s e s 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 l e n d i n g agencies a r e e a g e r t o provide supplementary l o a n s . The World Bank, s p e c i f i c a l l y , h a s followed a r e s t r i c t i v e p o l i c y on g r a n t i n g supplementary l o a n s and o n l y i n a few s e l e c t i v e c a s e s have supplementary f u n d s been provided. So t h e power agency may be f o r c e d t o borrow from p r i v a t e s o u r c e s a t whatever terms a r e a v a i l a b l e . Completion d e l a y s can a l s o have a more p e n e t r a t i n g economic consequence by causing h i g h e r economic o p p o r t u n i t y 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 s u p p l y u n r e l i a b i l i t y . This i s e s t i m a t e d t o be one o r d e r of magnitude h i g h e r than t h e s a l e v a l u e of e l e c t r i c i t y . 8. I n g e n e r a 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 c o n v e n t i o n a l l e a s t - c o s t program planning. The s e l e c t i o n p r o c e s s i s p a r t i a l l y handled through computational t o o l s where t h e n e t p r e s e n t c o s t of e l e c t r i c i t y g e n e r a t i o n i s minimized over a planning p e r i o d of up t o 30 years. Comparative c a l c u l a t i o n s i n t h e s e schemes a r e based on t h e o r i g i n a l c o s t and completion e s t i m a t e 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 t a g e s . So, major c o s t overruns and completion d e l a y s could d i r e c t l y , o r i n d i r e c t l y through h i g h e r o p p o r t u n i t y c o s t s , make t h e i n i t i a l s e l e c t i o n p r o c e s s f o r t h e l e a s t expensive power s u p p l y a l t e r n a t i v e i n v a l i d . I n such c a s e s , t h e borrower w i l l be f o r c e d t o l i v e w i t h t h e expensive o p t i o n and due t o l i m i t e d f i n a n c i a l r e s o u r c e a v a i l a b i l i t y , f o r e g o f u t u r e expansion p l a n s . Cost Estimates and Cost Overruns 9. The a p p r a i s a l c o s t e s t i m a t e f o r a p r o j e c t s e r v e s two purposes. The f i r s t i s t o determine whether t h e p r o j e c t b e i n g c o n s i d e r e d i s a p a r t of t h e o p t i m a l l e a s t c o s t expansion program. The second i s 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 t h u s t o i n d i c a t e t h e amount of f i n a n c e 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 t h a n expected, t h e q u e s t i o n 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 i n a n c i n g problems w i l l be p r e s e n t . 10. Due t o u n d e r s t a n d a b l e u n c e r t a i n t y i n c o s t e s t i m a t e s , u s u a l l y 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 a g e . Cost c o n t i n g e n c i e s a r e of two kinds : (i) p r i c e contingency, based on t h e 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 d u r i n g c o n s t r u c t i o n ; and (ii) p h y s i c a l contingency, based on t h e a n t i c i p a t e d m o d i f i c a t i o n s i n d e s i g n , e n g i n e e r i n g and c o n s t r u c t i o n work due t o unforeseen circumstances . 11. The comparison of a c t u a l v e r s u s a p p r a i s a l e s t i m a t e d 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 c o s t overrun shows s i g n s of developing, t h e borrower may a t t e m p t t o reduce t h e scope of t h e p r o j e c t i n some way t o conform t o t h e o r i g i n a l amount of funding e s t i m a t e d , u n l e s s a d d i t i o n a l f i n a n c i n g i s e a s i l y available. O n t h e o t h e r hand, if t h e r e i s a c o s t underrun, t h e borrower w i l l u s u a l l y t r y t o expand t h e p r o j e c t t o f u l l y u t i l i z e t h e a v a i l a b l e funds. The r e s u l t i s t h a t t h e completed p r o j e c 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 r o j e c t a s planned during t h e a p p r a i s a l s t a g e , s o a simple c o s t comparison between them would be misleading. The problem becomes even more complicated when one t r i e s t o d e f i n e t h e l e v e l of c o s 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 g e o l o g i c a l d i f f i c u l t i e s . In practice, c o s t overruns, a s w e l l a s completion d e l a y s , may occur due t o a h o s 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 o v e r l a p , t h u s , 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 q u a n t i f y t h e r e l a t i v e impact of an unforeseen t e c h n i c a l d i f f i c u l t y on t h e c o s t of t h e p r o j e c t . This can be done by i d e n t i f y i n g t h e s i n g l e most important component of t h e p r o j e c t a f f e c t e d by t h e t e c h n i c a l problem, and comparing i t s e s t i m a t e d with i t s a c t u a l c o s t s . For g e o l o g i c a l problems, t h i s component i s t h e c i v i l works. Usually, g e o l o g i c a l d i f f i c u l t i e s cause e x t r a excavation, a d d i t i o n a l s t e e l l i n i n g , and a d d i t i o n a l c o n c r e t e and g u n i t i n g 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 e s t i m a t e d c i v i l works c o s t s does n o t i n d i c a t e t h e e x t r a e n g i n e e r i n g and d e s i g n work c o s t s , n e i t h e r does i t show t h e e x t r a i n t e r e s t during c o n s t r u c t i o n due t o completion d e l a y s . Geological Considerations i n 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 r o j e c t precedes design and c o n s t r u c t i o n s t a g e s . Such i n v e s t i g a t i o n i n c l u d e s s u r v e y s , topographic mapping, g e o l o g i c s t u d i e s and s u b s u r f a c e analyses. The g e o l o g i c a l work r e q u i r e d 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 s e p a r a t e d i n t o t h r e e phases, d e s c r i b e d a s follows : (i) Reconnaissance surveys and hydrological studies. T h i s work would i n c l u d e map s t u d i e s , d e l i n e a t i o n of t h e water b a s i n , p r e l i m i n a r y e s t i m a t e s of flow and f l o o d s , and b r i e f s i t e visits. (ii) Pre-feasibility stadies. During t h i s s t a g e of i n v e s t i g a t i o n , t h e work on t h e s e l e c t e d s i t e o r sites would i n c l u d e s i t e survey and g e o l o g i c a l 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 r e a s where foundation u n c e r t a i n t y 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 r e a s ; and production of i n d i v i d u a l r e p o r t s on each s i t e . (iii) Feasibility stady. I n t h i s s t a g e , work would continue on t h e s e l e c t e d s i t e w i t h a major foundation i n v e s t i g a t i o n program; d e l i n e a t i o n and t e s t i n g of a l l borrow a r e a s ; e s t i m a t i o n of d i v e r s i o n , d e s i g n and probable maximum f l o o d s ; determination of t h e p r o j e c t design earthquake and t h e maximum c r e d i b l e earthquake and product i o n of a comprehensive r e p o r t on t h e s i t e . 14. The f i n d i n g s of t h e f e a s i b i l i t y s t u d y w i l l be t h e b a s i s f o r t h e f i n a l d e s i g n and e n g i n e e r i n g planning of t h e p r o j e c t . A change i n c o n d i t i o n s a s s o c i a t e d w i t h t h e geo-sciences i n p u t , a f t e r t h e system planning and e n g i n e e r i n g s t a g e , can r e s u l t i n d r a m a t i c p r o j e c t c o s t i n c r e a s e s . The a d v i s a b l e e x t e n t of g e o l o g i c a 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 r o j e c t and on how obvious t h e s u b s u r f a c e c o n d i t i o n s 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 r e s o u r c e s . 15. The p a s t e x p e r i e n c e 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 h a n one p e r c e n t of t h e t o t a l p r o j e c t c o s t i s s p e n t 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 h y d r o l o g i c a l s t u d i e s b e f o r e t h e e n g i n e e r i n g d e s i g n i s 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 e x p e n d i t u r e on p r e p a r a t i o n s t u d i e s does n o t always t r a n s l a t e i n t o m r e a c c u r a t e p r o j e c t c o s t e s t i m a t e s , obvf.ously a d d i t i o n a l work w i l l u s u a l l y be r e q u i r e d and j u s t i f i e d when t h e p r o j e c t c o n t a i n s r i s k y elements. The key f a c t o r i n making a n a c c u r a t e "a p r i o r i " assessment of c o s t s a s s o c i a t e d w i t h t h e geo-sciences i s a good u n d e r s t a n d i n g of the uncertainty i n v o l v e d with t h e d a t a , w i t h 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 a n a l y s e s 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 c o s t s . There a r e t h r e e main elements i n v o l v e d : (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 h e degree of complexity of t h e s i t e ' s g e o l o g i c a l , s e i s m o l o g i c a l and g e o t e c h n i c a l c o n d i t i o n s ; (ii) The v a r i a t i o n s w i t h r e s p e c t t o 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 degree of u n c e r t a i n t y a s s o c i a t e d with t h e e x p e r t ' s judgement based on t h e d a t a ; and (iii) The u n c e r t a i n t y a s s o c i a t e d w i t h t h e a n a l y s e s , ( i n t h e geo- s c i e n c e s , many of t h e a n a l y s e s a r e based on e m p i r i c a l d a t a and t h e r e i s a p o t e n t i a l i n c r e a s e i n u n c e r t a i n t y because a c t u a l s i t e d a t a may d i f f e r from t h e d a t a i n t h e e m p i r i c a l relationships). These m a t t e r s a r e d i s c u s s e d l a t e r i n t h i s paper a f t e r t h e r e s u l t s of t h e survey a r e presented. Survey of H y d r o e l e c 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 e v a l u a t e t h e e x t e n t of g e o l o g i c a l c o m p l i c a t i o n s i n h y d r o e l e c t r i c p r o j e c t s f i n a n c e d by t h e Bank and completed, o r w e l l under c o n s t r u c t i o n , i n t h e p e r i o d 1974-1984. This w i l l include i d e n t i f y i n g p r o j e c t s w i t h g e o l o g i c a 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 c o s t o v e r r u n s , t h e i r completion d e l a y s and t h e n a t u r e 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 d i v i d e d i n t o two c a t e g o r i e s : (i) t h o s e w f t h P r o j e c t Performance Audit Reports; and ( i i ) t h o s e w i t h o u t . For t h e p a s t t a n y e a r s t h e Operations E v a l u a t i o n Department h a s e v a l u a t e d completed Bank projects. The annual e v a l u a t i o n r e p o r t s (1975-1984) a r e t h e major s o u r c e of information f o r t h e p r o j e c t s i n the f i r s t category. The p r o j e c t s i n t h e second c a t e g o r y a r e e i t h e r not completed, o r completed b u t n o t y e t a u d i t e d by OED. The i n f o r m a t i o n on t h e s e p r o j e c t s a r e c o l l e c t e d from v a r i o u s 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 s u p e r v i s i o n r e p o r t s . The s t u d y c o v e r s o n l y p r o j e c t s w i t h l o a n s approved b e f o r e t h e end of 1982. The more r e c e n t ones have not proceeded f a r enough t o a l l o w a meaningful analysis. 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 n e c e s s i t a t e d o n l y by t h e d e g r e e of a v a i l a b i l i t y of d a t a . T h i s w i l l e n a b l e u s 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 w i t h and w i t h o u t g e o l o g i c a l problems i n t h e f i r s t c a t e g o r y , and w i l l h e l p i n d e r i v i n g conclusions. 17. For the purpose of this survey, first, all 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 w i t h any kind of g e o l o g i c a l d i f f i c u l t y d u r i n g c o n s t r u c t i o n 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 e v a l u a t i o n o r s u p e r v i s i o n r e p o r t s were c a r e f u l l y s t u d i e d t o s p e c i f y t h e n a t u r e of t h e c o m p l i c a t i o n 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 r o j e c t . S i n c e t h e c i v i l works component of p r o j e c t c o s t i s d i r e c t l y r e l a t e d t o t h e g e o l o g i c a l c o n d i t i o n s of t h e s i t e , t h e s t u d y 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 c a s e s where t h e i n f o r m a t i o n was a v a i l a b l e . Annexes I and I1 g i v e t h e l i s t of t h e e v a l u a t e d p r o j e c t s a l o n g w i t h a b r i e f d e s c r i p t i o n of t h e i r g e o l o g i c a l c o m p l i c a t i o n s , c o s t overruns and completion d e l a y s . The f o l l o w i n g two s e c t i o n s summarize t h e r e s u l t s of t h e s u r v e y . A . E y d r o e l e c t ric P r o j e c t s ui t h E v a l u a t i o n R e p o r 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 n c l u d e 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 g e o l o g i c a l complications during construction. Table 2 lists these projects. Table 2: AUDITlCl E'NNEZCS WITH C EmC IAL PEMBLEMS ban Cmt C i v i l Works Canpletion Projects h t r y Pgprovdl krnmX Cost Overnm X Delay % Roblens Jam== Hydroelectric Brazil 1966 28 130 - 1/ dam site Fifth P w r mile 1%6 31 n.a. 100 tmeling Third P m r b&as 1968 12 30 18 m u % , resemir !3econd ENIE Bolivia 1%9 13 30 74 tmeling Pmr 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 Paer Brazil 1970 53.6 51 - dam s i t e Kidatu Hydro- electric I Euzania 1970 32 68 - % - Kimlbd Hydro- electric I@v 1971 9 34 19 ma% Sixth Power E l Salvador 1973 70 64 - 1/ tumellng Sigalda Hydro- electric Iceland 1973 37 43 18 reservoir - 1/ See h e x I for details. Among t h e 1 3 , e i g h t p r o j e c t s encountered s e r i o u s g e o l o g i c a l d i f f i c u l t i e s during t h e c o n s t r u c t i o n of one o r more of t h e i r t u n n e l s , contributing t o cost overruns of up t o 84%. These p r o j e c t s were i n B o l i v i a , C h i l e , Costa Rica, E l Salvador and Honduras i n L a t i n America, and i n E t h i o p i a , Kenya and Tanzania i n East Africa. 19. The e x t e n 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 g e o l o g i c a l and h y d r o l o g i c a l c o n d i t i o n s 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 r o j e c t i n B o l i v i a encountered decomposed and broken rock i n v a r i o u s s e c t i o n s of t h e t u n n e l and a l s o heavy i n f i l t e r a t i o n of w a t e r i n t h e i n c l i n e d p r e s s u r e shaft. I n C h i l e , g e o l o g i c a l d i f f i c u l t i e s i n Vega Larga-Lane L a j a t u n n e l were much g r e a t e r than expected. I n Costa R i c a , p r e s e n c e of igneous rocks and t h e i r w a t e r c o n d i t i o n s i n t h e 1 4 . 5 km Rio Macho t u n n e l caused e x t e n s i v e c o n s t r u c t i o n complications. I n E l S a l v a d o r t h e d e s i g n of t h e 6 0 km Ahuachapan d i s c h a r g e t u n n e l was o r i g i n a l l y based on s m a l l - s c a l e ( 1 /100,000) a e r i a l photogrammetric maps which proved t o be d r a m a t i c a l l y inadequate. The scheme was found i m p r a c t i c a l and new d e s i g n was r e q u i r e d with f o u r y e a r s completion delay. T h i s p a r t of t h e p r o j e c t c o s t $23.24 m i l l i o n i n s t e a d of t h e e s t i m a t e d $2.6 million. I n Honduras, presence of c l a y and f r a c t u r e d rock zones i n t h e upstream t u n n e l caused g r e a t c o n s t r u c t i o n d i f f i c u l t i e s . I n E t h i o p i a , poor rock c o n d i t i o n s were encountered i n both t h e power t u n n e l and t h e road tunnel. I n Kenya, a g e o l o g i c a l f a u l t was encountered d u r i n g t h e c o n s t r u c t i o n of t h e t a i l r a c e t u n n e l . F i n a l l y , i n Tanzania, poor rock c o n d i t i o n s i n t h e headrace tunnel not only caused c o n s t r u c t i o n d i f f i c u l t i e s and subsequent changes i n t h e d e s i g n of t h e t u n n e l , but a l s o caused changes i n t h e d e s i g n of t h e 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 w i t h rocks s u p p l i e d from t h e t a i l r a c e t u n n e l excavation; however, due t o t h e poor rock c o n d i t i o n s , i t was redesigned a s a n 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 g e o l o g i c a l problems d u r i n g t h e c o n s t r u c t i o n of t h e i r r e s e r v o i r s . 2 0. Among t h e remaining f i v e p r o j e c t s , t h r e e had g e o l o g i c a 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 s e r v o i r . Interestingly enough, t h e t h r e e p r o j e c t s w i t h s i t e problems a r e i n Brazil--Jaguara Hydro, V o l t a Grande Hydro, and Marilnbondo P o w e r - a l l on Rio Grande, where t h e discovery of poor g e o l o g i c a l f o u n d a t i o n c o n d i t i o n s r e q u i r e d e x t e n s i v e 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 c o n s t r u c t i o n of t h e dam, a weak s c h i s t l a y e r was uncovered and t h e l a y o u t had t o be r e v i s e d . The e n g i n e e r i n g c o s t was i n c r e a s e d by 284% and t h e c i v i l works c o s t by 130%. I n V o l t a Grande, t h e foundation a t t h e l e f t embankment was found t o be t o o weak. It was a l s o discovered t h a t t h e c o n c r e t e s t r u c t u r e s were designed on t o p of a c o n t a c t between flows which was not w a t e r t i g h t . There were a l s o problems w i t h e x i s t e n c e of a f a u l t j o i n t around t h e penstocks and t h e s p i l l w a y foundation. The above problems caused a c i v i l works c o s t overrun of 174% and e n g i n e e r i n g c o s t overrun of 474X. I n t h e Marimbondo Power p r o j e c t , t h e discovery of poor g e o l o g i c a l c o n d i t i o n s i n t h e s p i l l w a y and t a i l r a c e a r e a s r e q u i r e d s u b s t a n t i a l i n c r e a s e i n excavation and conc.rete work. The c i v i l works c o s t i n c r e a s e d by 51%. 21. The l a s t t w o p r o j e c 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 I c e l a n d , 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 S i g a l d a Hydro p r o j e c t i n I c e l a n d a r o s e out of h e a v i e r t h a n - a n t i c i p a t e d leakage of water through s i n k h o l e s and o t h e r porous a r e a s of t h e r e s e r v o i r . I n t h e c a s e of t h e p r o j e c t i n I r e l a n d , unforeseen rock c o n d i t i o n s n e c e s s i t a t e d redesign of t h e upper r e s e r v o i r . The c i v i l works c o s t overruns f o r t h e s e two p r o j e c 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 w i t h and without g e o l o g i c a l complications i n t h i s category. The c o s t overrun f o r each y e a r i s t h e weighted average f o r a l l p r o j e c t s e v a l u a t e d during t h a t year. A s shown i n t h i s f i g u r e , t h e 1 3 p r o j e c t s w i t h g e o l o g i c a l problems have s u b s t a n t i a l l y h i g h e r c o s t overruns t h a n t h e remaining 28. The only e x c e p t i o n i s i n 1977 ( S i x t h Annual E v a l u a t i o n Report) where c o s t overruns f o r two groups a r e very close. It should be mentioned t h a t t h e n o t i o n of y e a r s i n t h i s f i g u r e only r e f e r s t o t h e time of e v a l u a t i o n and does n o t r e f l e c t t h e a c t u a l c o n s t r u c t i o n time . 23 I f t h e weighted average c o s t overrun o v e r a l l a u d i t e d hydro p r o j e c t s w i t h and without g e o l o g i c a l problems i s c a l c u l a t e d , t h e comparison i s even more e x p r e s s i v e . I n t h i s case t h e 13 p r o j e c t s w i t h g e o l o g i c a l d i f f i c u l t i e s show an average c o s t i n c r e a s e of 52% compared t o 33% f o r t h e remaining 28. The same e x e r c i s e f o r c i v i l works c o s t overruns i n d i c a t e s a weighted average i n c r e a s e of 76% f o r p r o j e c t s w i t h g e o l o g i c a l problems compared with 39% f o r p r o j e c t s without. - - --- P r o j e c t s w/ Geological Problems P r o j e c t s w/a Geological Problems Cost Overrun, Percent Evaluation Year Figure 1 : Weighted average c o s t overruns f o r hydroelectric projects with and without g e o l o g i c a l problems . B Hvdroelectric P r o i e c t s without Evaluation R e ~ o r t s 24. I n t h i s c a t e g o r y t h e r e a r e 23 p r o j e c t s with l o a n s approved b e f o r e 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 c o n s t r u c t i o n and some a r e a l r e a d y completed. But, a s of t h e end of 1984, e v a l u a t i o n r e p o r t s have n o t been completed f o r any of t h e 23 (43%) which have encountered geological 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 r o j e c t s i n Colombia, two i n Guatemala, and one i n each of t h e following s i x c o u n t r i e s : Honduras, Panama, Romania, Swaziland, I n d o n e s i a , and Nepal. Appendix I1 g i v e s a summary of each p r o j e c t ' s c o s t , completion schedule and c o n s t r u c t i o n complications. Every p r o j e c t i n t h i s group has experienced some kind of g e o l o g i c a l problem d u r i n g c o n s t r u c t i o n of one o r more of i t s t u n n e l s . This includes l a n d s l i d e s , undetected f a u l t s , weak rock f o r m a t i o n s , s o f t and watery zones, etc. Three projects--one i n I n d o n e s i a , one i n Guatemala, and one i n Panama--also encountered g e o l o g i c a l d i f f i c u l t i e s i n o t h e 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 n d i c a t e d i n t h i s t a b l e , f o u r p r o j e c 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 r e a d y i n commission. A l l f o u r encountered g e o l o g i c a l d i f f i c u l t i e s during tunneling. The Fortuna p r o j e c t i n Panama a l s o faced g e o l o g i c a l c o m p l i c a t i o n s 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 r e q u i r e d a d d i t i o n a l design work and m r e e x c a v a t i o n t h a n expected. The c o s t overruns f o r t h e s e p r o j e c t s a r e 80%, 76%, 95% and 22% r e s p e c t i v e l y w i t h c i v i l works c o s t overruns between 76% and 90%. For Nispero hydro p r o j e c t t h e c i v i l works c o s t i n c r e a s e d by 82% compared w i t h 22% i n c r e a s e i n t o t a l c o s 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 g e o l o g i c a l problems. Table 3: ~N-AJDlTlD PROJEQS WITH (333LGICAL P R O J U S Estimated Estimated Estimated Ccst C i v i l krks Canpletion Project Overrun% CcstOverrunX Delay(yr) R i d MareRetezat Hydro Kl u* Hydrcr electric -11 Nepal 1976 Gmtemala 1977 Forhma Hydro Panan?~ 1977 ma% 4th Power & aher Chlxay Hydro ma% & aher Nispero Hydro 1/ Esthted Estimated Est b t ed Iaan Cost (;YvilWorks 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 r o j e c t s , c o s t comparisons a r e not a s r e a d i l y p o s s i b l e but t h e following examples i n d i c a t e t h a t g e o l o g i c a l d i f f i c u l t i e s a r e a l s o p r e s e n t i n on-going p r o j e c t s . (i) The Riul-Mare hydro p r o j e c t i n Romania w i t h e x t e n s i v e t u n n e l i n g d i f f i c u l t i e s has s o f a r had a c o s t overrun of 16% and t h e r e i s no re-estimate of i t s c i v i l works c o s t . The boring of t h e headrace t u n n e l i s t h e main problem a f f e c t i n g the project. I n 1983, p a r t s of t h e p r e s s u r e t u n n e l were blocked by c l a y - l i k e m a t e r i a l from a f a u l t . This p r o j e c t s o f a r i s f o u r y e a r s behind schedule although p a r t l y f o r reasons u n r e l a t e d t o c i v i l works problems. (ii) The Chixoy p r o j e c t i n Guatemala, probably t h e most troublesome of a l l p r o j e c t s reviewed h e r e , has so f a r experienced t o t a l and c i v i l works c o s t overruns of 120% and 134% r e s p e c t i v e l y . This p r o j e c t , t o o , i s a l r e a d y f o u r y e a r s behind schedule. It should be noted t h a t because of t h e expected g e o l o g i c a l complications i n t h i s p r o j e c t , a c i v i l works c o s t contingency of 24% was allowed during t h e a p p r a i s a l . This i s t h e h i g h e s t p h y s i c a l c o s t contingency allowed among t h e p r o j e c t s s t u d i e d i n t h i s report. The problems i n t h i s p r o j e c t a r e due t o very complex rock composition i n t h e long (25 km) power t u n n e l , and t h e dam s i t e . During c o n s t r u c t i o n , e x t e n s i v e k a r s t i c limestone was found a t t h e dam s i t e and along t h e t u n n e l . I t was a l s o discovered t h a t rock a t t h e s p i l l w a y was highly- fissured. I n a d d i t i o n , s e v e r a l l a n d s l i d e s occurred along t h e a c c e s s roads, and t h e power t u n n e l caved i n a t a few p l a c e s a f t e r showing an unacceptable l e v e l of water l o s s . ( i i i ) The Mesitas p r o j e c t i n Colombia, with t h r e e years delay, so f a r has had a 56% c o s t overrun. There i s no e s t i m a t e of c i v i l works c o s t increases f o r t h i s project. Since t h i s p r o j e c t encountered major managerial and t e c h n i c a l problems, i t i s n o t possible t o pinpoint t h e extent of cost overruns due to geological d i f f i c u l t i e s . (iv) The Tenth Power p r o j e c t i n I n d o n e s i a , so f a r has a t o t a l c o s t overrun of 4% and a c i v i l works c o s t overrun of 31%. The geologl.ca1 problems i n t h i s p r o j e c t a r e numerous and widespread and i n c l u d e l a n d s l i d e s , g e o l o g i c a l weaknesses, poor rock c o n d i t i o n s and r o c k f a l l s . The p h y s i c a l contingency allowed f o r t h i s p r o j e c t i s 15%. (v) The p r o j e c t i n Swaziland, w i t h a six-month d e l a y , has had a c o s t overrun of 18%. There i s no e s t i m a t e of c i v i l works i n c r e a s e s but t h e q u a n t i t y of t u n n e l i n g has i n c r e a s e d by 40% s o far. The g e o l o g i c a l problems f o r t h i s p r o j e c t i n c l u d e : presence of l a r g e boulders mixed w i t h s o f t m a t e r i a l , p r e s e n c e of f a u l t zones, lower bedrock t h a n expected and mud-rush. ( v i ) The Guavio hydro p r o j e c t i n Colombia, t h e l a s t one i n t h i s group, has had numerous underground and above ground g e o l o g i c a l problems which includes massive landslides, poor rock c o n d i t i o n s and s o f t zones. However, t h e s u p e r v i s i o n r e p o r t s i n d i c a t e an e s t i m a t e d c o s t overrun of 11% and a c i v i l works c o s t underrun of 3%. The p r o j e c t i s c u r r e n t l y scheduled f o r completion i n 1989 w i t h two y e a r s delay. The c i v i l works c o s t underrun i n t h i s case i s misleading s i n c e t h e q u a n t i t y of c i v i l works 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 has g r e a t l y i n c r e a s e d . There a r e two reasons f o r t h i s i n c o n s i s t e n c y : (a) S i n c e t h e p r o j e c t was i n i t i a t e d during a high i n f l a t i o n p e r i o d , a p r i c e c o s t contingency of 40% was allowed. The p h y s i c a 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 r o j e c 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 f o r e i g n c o n t r a c t o r s paid w i t h US d o l l a r s . It turned out t h a t most of t h e work was c o n t r a c t e d t o l o c a l f i r m s and t h e high value of t h e U S d o l l a r helped keep t h e t o t a l c i v i l works c o s t down. The e s t i m a t e d weighted average t o t a l and c i v i l works c o s t overruns f o r p r o j e c t s with g e o l o g i c a l problems i n t h i s c a t e g o r y a r e 33% and 63% respectively. Conclusions and Recor~enda tione 27. The survey of 64 Bank-financed h y d r o e l e c 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 g e o l o g i c a l d i f f i c u l t i e s have caused major c o s t overruns and completion d e l a y s 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 w i t h e v a l u a t i o n r e p o r t s 13, 32%, encountered g e o l o g i c a l complications during c o n s t r u c t i o n c a u s i n g weighted average t o t a l and c i v i l works c o s t overruns of 52% and 76% r e s p e c t i v e l y ; compared t o 33% and 39% f o r t h e 28 p r o j e c t s without geological problems. Amng 23 p r o j e c t s without evaluation r e p o r t s 10, 43%, faced geological problems causing an average i n c r e a s e of 35% i n t o t a l c o s 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 t h e s i n g l e mst recurring component of c i v i l works a f f e c t e d by geological problems. Among 23 p r o j e c t s 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 h y d r o e l e c t r i c projects. Problems included l a n d s l i d e s , 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 r e s e r v o i r s and poor dam-site conditions caused problems f o r e i g h t projects. 28. Remedying t h e s i t u a t i o n r e q u i r e s taking measures to: ( i ) reduce t h e occurrence of geological s u r p r i s e s , and ( i i ) recognize t h e e x t e n t of u n c e r t a i n t y involved and planning f o r it. It should be acknowledged t h a t t h e Bank has been aware of t h e s i t u a t i o n . Some evaluation r e p o r t s , a s e a r l y a s 1975, pointed out t h e recurrence of geological problems and suggested more c a r e f u l s i t e i n v e s t i g a t i o n during a p p r a i s a l . The Bank, i n 1974, a l s o developed a set of guidelines (GAS 6, attached a s Annex 111) with s p e c i f i c consideration f o r geological problems. But t h e r e i s no i n d i c a t i o n of any systematic a t t e n t i o n t o t h e guidelines, n e i t h e r i s t h e r e any i n d i c a t i o n of improvement i n reducing t h e occurrence of geological problems o r t h e adequacy of cost-estimating procedures f o r hydro p r o j e c t s over time. A s t h e r e s u l t s of t h i s study show, t h e p r o j e c t s i n t h e second category, with loans approved between 1975-1982, do not i n d i c a t e a b e t t e r t r a c k record than t h e f i r s t group, with loans approved between 1966-1974. 29. This experience i n d i c a t e s t h a t p r o j e c t r i s k s a r i s i n g from uncertain geology rmst be t r e a t e d much more e x p l i c i t l y i n appraising p r o j e c t s having such u n c e r t a i n t i e s . However, given t h e current s t a t e of t h e a r t i n evaluating geological conditions, i t i s impossible t o prescribe s p e c i f i c approaches o r minimum parameters such a s 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 t c . which should be required f o r any given project because t h i s aspect of engineering i s s t i l l a s much a r t a s science. Given t h e c u r r e n t 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 c o s t e s t i m a t e s 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 c o s t s of r i s k y p r o j e c t components a r e unknowable within a broad range, say 50-300% of t h e estimate. 30. This suggests an approach f o r dealing w i t h such u n c e r t a i n t i e s i n project appraisal, involving establishing t h e robustness of project j u s t i f i c a t i o n by t e s t i n g t h e s e n s i t i v i t y of t h e j u s t i f i c a t i o n t o changes i n c o s t s of t h e c i v i l works components of t h e project. The procedures o u t l i n e d i n OPN 2.02 - 1/ can be used provided t h e equalizing discount r a t e i s known ( t h e 1/ - Operations Policy Note No. 2.02 (issued as Central P r o j e c 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 t h e p r e s e n t v a l u e of p r o j e c t c o s t s e q u a l s t h e c o s t of t h e 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 i m u l a t i o n models such a s W A SP may be r e q u i r e d t o e s t a b l i s h maximum p e r m i s s a b l e l e v e l s of c o s t s and c o n s t r u c t i o n time f o r t h e u n c e r t a i n components, beyond which t h e p r o j e c t would no l o n g e r be p a r t of t h e l e a s t - c o s t program. I f t h e p r o b a b i l i t y of exceeding t h e s e c o s t s o r d e l a y i n g t h e p r o j e c t i s h i g h ( i . e . above 30%) t h e n 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 r e q u i r e d t o reduce t h e u n c e r t a i n t y o r t h e p r o j e c t should be dropped. The r e s u l t s of t h e s e s t u d i e s s h o u l d always be d i s c u s s e d i n t h e P r o j e c t R i s k s s e c t i o n of a p p r a i s a l r e p o r t s . 31. P r o b a b i l i s t i c p l a n n i n g 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 g o r o u s l y ; 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 p l a n n i n g , i n g e n e r a l because t h e i n f o r m a t i o n requirements a r e large. Nonetheless, t o anticipate the a v a i l a b i l i t y of such t e c h n i q u e s i t i s d e s i r a b l e t h a t terms of r e f e r e n c e f o r p r o j e c t s t u d i e s r e q u i r e t h a t t h e e n g i n e e r u s e p r o b a b i l i s t i c methods f o r developing e s t i m a t e s of p r o j e c t c o s t and c o n s t r u c t i o n time, e s p e c i a l l y f o r t h o s e components which a r e l i k e l y t o be r i s k y . 32. I n t h i s r e s p e c t , i t is possible 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 p r i m a f a c i e r i s k y . Chief among t h e s e i s t u n n e l s . The s u r v e y showed t h a t 1111 p r o j e c t s with l o n g t u n n e l s (more t h a n 5 km) f a c e d s e r i o u s g e o l o g i c a l c o m p l i c a t i o n s , w i t h c i v i l works c o s t overruns of o v e r 60%. D e f i n i n g what c o n s t i t u t e s a "long" t u n n e l i s s u b j e c t i v e and depends p r i m a r i l y on t h e e x t e n 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 g e o l o g i c a l c o n d i t i o n s i n a r e l a t i v e l y l o n g t u n n e l may s t i l l be r e a s o n a b l y w e l l known i f f r e q u e n t t e s t bores a r e available--say n o t l e s s t h a n every 1 km--or i f t h e t u n n e l p e n e 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 i s risky!). O n t h e o t h e r hand, even i f f r e q u e n t b o r i n g s a r e a v a i l a b l e , e x t e n s i v e underground works s u c h a s powerhouse c a v e r n s 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 r g e dimensions. For example, an u n d e t e c t e d f a u l t i n t h e power c a v e r n of a p r o j e c t i n A f r i c a l e d t o l a r g e time and c o s t overruns and was a t l e a s t p a r t l y r e s p o n s i b l e f o r bankrupting t h e c o n t r a c t o r . 3 3. Other obvious a r e a s of r i s k i n c l u d e p r o j e c t s b u i l t i n k a r s t i c limestone. Here u n c e r t a i n t i e s i n c l u d e 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 p e r i p h e r a l problems such a s r e s e r v o i r leaks. The q u a l i t y and e x t e n t of s i t e i n v e s t i g a t i o n s i s e s p e c i a l l y i m p o r t a n t i n k a r s t i c a r e a s and i n such c a s e s Bank e n g i n e e r s 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 t h o s e u n d e r t a k i n g 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 d i s c o v e r e d d u r i n g c o n s t r u c t i o n of a l a r g e hydro p r o j e c t l o c a t e d i n k a r s t i c f o r m a t i o n s t h a t some of t h e s i t e b o r i n g s had gone completely through k a r s t i c c a v e r n s , y e t t h e caverns had not been noted i n t h e b o r i n g l o g s . 34. Dam f o u n d a t i o n s 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 h e amount and type of e x c a v a t i o n r e q u i r e d . For t h i s r e a s o n , f o u n d a t i o n e x c a v a t i o n and t r e a t m e n t should always be c o s t e d s e p a r a t e l y from t h e 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 p r o p e r a r e r e l a t i v e l y p r e d i c t a b l e and i n g e n e r a l t h e v a r i a t i o n s a r e s m a l l u n l e s s t h e r e a r e l a r g e changes i n t h e volume of t h e dam, o r i n t h e dam t y p e (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 u n f o r t u n a t e d i s c o v e r i e s d u r i n g construction. However, even changes of t h i s magnitude can u s u a l l y b e accommodated w i t h i n t h e u s u a 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 c o n s u l t a n t s a r e a b l e t o c a l c u l a t e dam volumes and s i m i l a r features (spillways) q u i t e precisely. T h i s i s important because t h e s e f e a t u r e s account f o r a l a r g e s h a r e 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 h e expense of focus on t h e l e s s c e r t a i n p r o j e c t components i s a common problem d u r i n g p r o j e c t p r e p a r a t i o n . 3 5. The range of problems i d e n t i f i e d d u r i n g t h i s s t u d y imply t h a t t h e r o l e of t h e board of e x p e 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 s p e c t s of t h e p r o j e c t , i n accordance w i t h O MS 3.80, might u s e f u l l y be expanded t o cover an assessment of t h e g e o l o g i c a l r i s k s a s s o c i a t e d w i t h 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 n o t a l r e a d y i n c l u d e d i n t h e terms of r e f e r e n c e of t h e e n g i n e e r i n g c o n s u l t a n t s , Rank s t a f f should r e q u i r e t h e borrower t o i n c l u d e such a n assessment i n t h e t a s k s a s s i g n e d t o t h e panel of e x p e r t s . I n f a c t , a review of t h i s a s p e c t of t h e p r o j e c t by t h e panel of e x p e r t s may be d e s i r a b l e even i f a l r e a d y i n c l u d e d i n t h e des i g n c o n s u l t a n t s ' terms of r e f e r e n c e . 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 r e d u c i n g t h e l e v e l of u n c e r t a i n t y i n geo-engineering a n a l y s i s and c o s t e s t i m a t i o n . There a r e two s p e c i f i c s t e p s t o be t a k e n i n t h i s regard: (i) The i n f o r m a t i o n on g e o l o g i c a l problems and c o s t overruns a v a i l a b l e from Bank p r o j e c 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 d a t a b a s e where a p p r a i s a l s t a f f can compare s i m i l a r paramters for different projects. For example, a d a t a b a s e could be c o n s t r u c t e d t o show h i s t o r i c a l c o s t overruns w i t h r e s p e c t t o t u n n e l l e n g t h , rock t y p e , g e o l o g i c a l f o r m a t i o n s , regions, e t c . I n p r a c t i c e , a project o f f i c e r i n t u i t i v e l y uses t h e d a t a b a s e a v a i l a b l e i n h i s own memory. This s y s t e m a t i c approach expands t h e memory and s t r u c t u r e s i t m r e c l e a r l y . Such a n 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 w i t h long t u n n e l s f a c e d s e r i o u s g e o l o g i c a l c o m p l i c a t i o n s , w i t h 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 r o j e c t s . This r e p o r t , along w i t h GAS 6 s h o u l d be used i n t h e meantime t o i n c r e a s e awareness of t h e e x t e n t and t h e u n c e r t a i n t y due t o g e o l o g i c a l problems i n hydro p r o j e c t s . ( i i ) There i s a need f o r a review of geo-science t e c h n i q u e s i n e v a l u a t i n g underground g e o l o g i c a l c o n d i t i o n s f o r h y d r o e l e c t r i c projects. This review should i n c l u d e comparison of d i f f e r e n t 11 - O p e r a t i o n a l Manual Statement No. 3.80, "Safety of Dams". s i t e i n v e s t i g a t i o n techniques and t h e i r a b i l i t y t o q u a n t i f y uncertainties. This i n a d d i t i o n t o t h e above-mentioned database w i l l enable t h e p r o j e c t o f f i c e r s t o b e t t e r judge t h e 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 c o s t e s t i m a t e s . will programs . Both of these tasks be incorporated in future research 37. For purposes of developing t h e f i n a n c i n g plan f o r t h e p r o j e c t t h e r e i s a l s o need f o r a change i n policy with regard t o p h y s i c a l contingency allowances. This study r e v e a l s t h a t among t h e 64 h y d r o e l e c t r i c p r o j e c t s surveyed only f o u r had c i v i l works c o s t overruns of under 17%, and yet t h e maximum contingency allowance was 15% (with t h e exception of Chixoy p r o j e c t with 24% allowance). A s s t a t e d e a r l i e r t h e average c i v i l works c o s t overruns f o r p r o j e c 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 c o n t r a s t c a l l s f o r a more r e a l i s t i c approach t o p r o j e c t c o s t estimates. 3 8. I n cases where t h e r e w i l l be considerable u n c e r t a i n t y about underground conditions and r e l a t e d 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 w i t h i n t h e g u i d e l i n e s 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 p r o j e c t can be brought within t h e limits s p e c i f i e d t h e r e i n . Again t h e important determination i s whether t h e p r o b a b i l i t y of c o s 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 p r o j e c t would.no longer be a p a r t of t h e l e a s t - c o s t development program. No p r o j e c t should be allowed t o go forward i f t h i s r i s k i s high. A l t e r n a t i v e l y , i f t h e p r o j e c t j u s t i f i c a t i o n is r o b u s t , contingency allowances used f o r determining t h e required financing may be somewhat more generous than prescribed i n O M S 2.28. - 11 39. I n any case, where p r o j e c t c o s t s a r e uncertain, t h e impact of p o t e n t i a l c o s t and time overruns on t h e borrower's f i n a n c i a l p o s i t i o n should be evaluated , and p o t e n t i a l sources of f i n a n c e under t h e s e circums t a n c e s should be i d e n t i f i e d . The r e s u l t s of t h e s e a n a l y s e s should be i n d i c a t e d i n t h e s t a f f appraisal report. I f l a r g e c o s t overruns could be p o t e n t i a l l y d i s a s t r o u s t o t h e borrower, then f u r t h e r s i t e i n v e s t i g a t i o n s , o r o t h e r Operational Manual Statement No. 2 -28, " S t a t e of P r o j e c t P r e p a r a t i o n Necessary f o r Loan Approval". It should be noted t h a t r e c e i p t of bids p r i o r t o Board p r e s e n t a t i o n , a s suggested i n paragraph 3 of O M S 2.28, i s not i n i t s e l f an assurance t h a t t h e r e w i l l n o t be c o s t overruns on r i s k y p r o j e c t s because c o n t r a c t s f o r complex works a r e almost always awarded on t h e b a s i s of u n i t c o s t s , with provisions f o r p r i c e e s c a l a t i o n and changes i n quantities. I n only a few of t h e p r o j e c t s covered by t h e survey were t h e o r i g i n a l c o n t r a c t p r i c e s s i g n i f i c a n t l y out of l i n e with t h e 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 o v e r r u n s , must be undertaken b e f o r e t h e p r o j e c t proceeds. However, t h e s e o t h e r measures must n o t i n c l u d e onerous p r o v i s i o n s such a s f i x e d - p r i c e 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 r o j e c t c o n t r a c t o r s . High r i s k s do n o t j u s t i f y a d e p a r t u r e from t h e g e n e r a l c o n t r a c t i n g 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 s p o n s o r , a l t h o u g h 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 t h 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 r e d u c t i o n 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 r o j e c t was t h e Topanti scheme, e x t e n s i o n of t h e e x i s t i n g Rio Macho p l a n t . A n i n t a k e on t h e Reventazon River and a 14.5 k m t u n n e l were t o be c o n s t r u c t e d t o d e l i v e r a d d i t i o n a l w a t e r t o t h e Rio Macho p l a n t , where 2 x 30 MW g e n e r a t i n g u n i t s were t o be i n s t a l l e d . The p r o j e c t a l s o included t h e i n s t a l l a t i o n of s p i l l w a y g a t e s w i t h a s s o c i a t e d 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. Estimate 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 r o j e c t faced major g e o l o g i c a l complications during t h e construction. The p r o g r e s s was on schedule f o r t h e f i r s t 3.4 k m of t h e Rio Macho t u n n e l . 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 t u n n e l s reached t h e igneous rocks and t h e i r a s s o c i a t e d w a t e r c o n d i t i o n s where average excavation program reached o n l y 8 meters p e r week. The c o s t i n c r e a s e on t h e T o p a n t i scheme ( e x c l u d i n g i n t e r e s t during c o n s t r u c t i o n ) accounted f o r 76% of t h e t o t a l p r o j e c t c o s t i n c r e a s e . The c o s t i n c r e a s e on Cachi R e s e r v o i r accounted f o r 14% of t o t a l p r o j e c t c o s t increase. This p a r t of t h e p r o j e c t was completed eleven m n t h s behind schedule. The d e l a y , a s w e l l a s t h e i n c r e a s e i n c o s t , was mainly due t o t h e p e r m e a b i l i t y of t h e rock on t h e l e f t abutment which proved t o be much h i g h e r t h a n expected. A s a r e s u l t a d d i t i o n a l g r o u t i n g work was r e q u i r e d . Some 60% of t h e t r a n s m i s s i o n l i n e s and s u b - s t a t i o n s o r i g i n a l l y included i n t h i s p r o j e c t were postponed s o 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 c o s t overruns of t h e Topani and Cachi p r o j e c t s . ANNEX I Page 2 of 13 Project: Third Power Country: Honduras Loan No.: 541-HO/Credit 116-HO Date: J u n e , 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 h e p r o j e c t was t h e 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 a n t would be conducted through a s t e e l p i p e l i n e , about 1350 m l o n g , t h e n through a 900 m t u n n e l t o a r e g u l a t i n g r e s e r v o i r c r e a t e d by a 25 m high e a r t h and r o c k - f i l l dam. A 350 m power t u n n e l and a l o n g 5200 m s t e e l penstock would b r i n g t h e w a t e r t o t h e power s t a t i o n . The p r o j e c t a l s o included t h r e e t r a n s m i s s i o n developments. Estirate Actual Change X Total Cost ($'MI 17.7 Civil Worits Cost ($HI 11.6 Construction Time (Honths) 39 Remarks: The c o s t overrun and completion d e l a y were p r i m a r i l y caused by t h e g e o l o g i c a l problems encountered during c o n s t r u c t ion. In t h e upstream t u n n e l , i n i t i a l e x c a v a t i o n was slowed by c l a y and f r a c t u r e d rock zones of 25 t o 50 meters n e a r both p o r t a l s and some s h e a r zones w i t h e i t h e r c l a y seams o r c a v i t i e s i n t h e c e n t r a l p o r t i o n ; t u n n e l s e c t i o n s i n t h e s e zones had t o b e reinforced . Second s t r i p p i n g of t h e dam f o u n d a t i o n r e v e a l e d s i n k h o l e s 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 t h a n expected. A s many a s 92 were t h e n 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 t o o had t o be f i l l e d . The Rank has t a k e n t h e view t h a t t h e s e g e o l o g i c a l problems should have been foreseen. The 138 KV t r a n s m i s s i o n l i n e t o San Pedro S u l a was dropped from t h e p r o j e c t . This p a r t accounted f o r 4% of o r i g i n a l l y e s t i m a t e d c o s t s . * The c o n s t r u c t i o n delay f o r t h e Rio Lindo scheme was 25%. ANNEX I Page 3 of 13 P r o j e c t : Pumped S t o r a g e Power Country: Ireland 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 r o j e c t c o n s i s t s of: 1 ) a n underground power cavern w i t h f o u r 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 a s p h a l t - l i n e d r e s e r v o i r and improvements t o a n a t u r a l l a k e , Lough Nahanagan, s e r v i n g as t h e lower r e s e r v o i r ; 2) a 220-KV s w i t c h y a r d , c o n t r o l equipment and t r a n s m i s s i o n l i n e s . Estimate Actual Change X Total Cost (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 r o j e c t c o n s t r u c t i o n unforeseen rock condi t.ions neces- s i t a t e d r e d e s i g n 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 e x c a v a t i o n and a more e l a b o r a t e system of compaction of t h e embarkment. ANNEX I Page 4 of 1 3 Project: Finchaa H y d r o e l e c t r i c Country: E t h i o p i a Loan No. : 596-ET Date: May, 1969 Project Performance Andit Report No.: 1102 Date: March 23, 1976 Project Description: The p r o j e c t comprises t h e c o n s t r u c t i o n 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 t o g e t h e r w i t h t h e a s s o c i a t e d t r a n s m i s s i o n l i n e and t e r m i n a l s u b s t a t i o n . C i v i l works i n c l u d e : ( i ) a low e a r t h f i l l dam w i t h a h e i g h t of about 20 meters and a l e n g t h of about 340 meters; ( i i ) a 3 meter diameter p r e s s u r e t u n n e l 4200 meters l o n g l e a d i n g t o t h e penstock; ( i i i ) a power s t a t i o n b u i l d i n g and an a c c e s s road, p a r t l y i n t u n n e l , from t h e dam s i t e 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 d e l a y of n i n e months i n comissioning t h e f i r s t u n i t . The d e l a y was mainly due t o t h e poor rock f o r m a t i o n whih w a s encountered when e x c a v a t i n g t h e road t u n n e l . This r e q u i r e d t h e i n s t a l l a t i o n of a r c h s u p p o r t s and g u n n i t i n g throughout t h e e n t i r e l e n g t h of t h e t u n n e l . S i m i l a r t r o u b l e was encountered i n t h e c o n s t r u c t i o n of t h e power t u n n e l which n e c e s s i t a t e d many s t e e l s u p p o r t s . These problems were a l s o t h e main causes of t h e c o s t overrun. ANNEX I Page 5 of 1 3 Project: Kamburu Hydroelectric Power / Ccmntry: Kenya Loan 100. : 74 5-KE Date: June, 1971 Project Performance Audit Report No.: 1230 Date: J u l y 14, 1976 Project Description: The p r o j e c t comprises t h e construction of t h e Kamburu h y d r o e l e c t r i c power s t a t i o n together with t h e associated transmission l i n e s and s u b s t a t i o n s . 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 t h e dam with a headgate c o n t r o l l i n g t h e flow i n t o t h e concrete l i n e d i n t a k e s h a f 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 s h o r t (70 m) open c u t t o t h e r i v e r . Estimate Actual Change X Total Coat ($MI C i v i l Works Coat (Sn) Construction Time (Months) Beulrks: An a r e a of f a u l t was encountered during excavation of t h e t a i l r a c e tunnel. This slowed down progress and was t h e p r i n c i p a l reason f o r t h e delay of f i v e months i n commissioning t h e power p l a n t . ANNEX I Page 6 of 1 3 Project: Second ENDE Power Cauntry: B o l i v i a Loan No.: C r e d i t 148-BO Date: A p r i l 28, 1969 Project Performance Audit Report No.: 1496 Date: March 7, 1977 Project Description: ( a ) C o n s t r u c t i o n of t h e S a n t a I s a b e l H y d r o e l e c t r i c p l a n t of 36 MW i n c l u d i n g a small compensating r e s e r v o i r between Corani and S a n t a Isabel plants; (b) a 8 k m long t r a n s m i s s i o n l i n e ; ( c ) e n g i n e e r i n g s e r v i c e s f o r design and s u p e r v i s i o n of t h e p r o j e c t ; ( d ) c o n s u l t a n t s e r v i c e s . Estlmate Actual Change X Total C o s t ($M) Civil W ork s Caet (Sn) Conetruction Time (Months) Remarks: C o n s t r u c t i o n of t h e compensating r e s e r v o i r was d e f e r r e d ( e s t i m a t e d c o s t of $450,000). The completion delay and c o s t overrun E r e mainly because of d i f f i c u l t g e o l o g i c a l c o n d i t i o n s encountered i n t u n n e l i n g and t h e r u p t u r e of t h e penstock. The g e o l o g i c a l complications c o n s i s t e d of: ( a ) p r e s e n c e of decomposed and broken rock i n v a r i o u s p a r t s of t h e t u n n e l and t h e s u r g e chamber; ( b ) heavy i n f i l t e r a t i o n of water i n t h e i n c l i n e d p r e s s u r e s h a f t . ANNEX I Page 7 of 1 3 Project: F i f t h Power Country: C h i l e Loan No.: 479-CH, 478A-CH Date: March, 1966; A p r i l 1974 Project Performance Audit Report No.: 1603 h t e : May 23, 1977 Project Description: ( a ) The 400 MW E l Toro h y d r o e l e c t r i c s t a t i o n , almost e n t i r e l y underground u s i n g w a t e r conveyed through a 9 k m t u n n e l from a deep i n t a k e i n Lake Laya; ( b ) a n a n c i l l a r y schelne known a s A l t o Polcura Diversion, t o y i e l d a d d i t i o n a l 400 GWM, by d i v e r t i n g waters from P o l c u r a r i v e r and two small streams i n t o Lake Lega by m a n s of some 13 km of t u n n e l s and two small dams; ( c ) t r a n s m i s s i o n systems; ( d ) d i s t r i b u t i o n systems. Estimate Actual Total Cost ($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 w i t h no c o s t overrun a s planned w i t h one y e a r delay. A l t o P o l c u r a D i v e r s i o n scheme faced major c o s t overruns and delays. This p a r t of t h e p r o j e c t was t o t a k e f i v e years from mid-1967 t o mid-1972, but a t t h e t i m e of e v a l u a t i o n r e p o r t was n o t completed y e t (1977). The e s t i m a t e d c o s t w a s $21.3 m i l l i o n . By 1977 $50.9 m i l l i o n was s p e n t . The major f a c t o r i n t h e c o s t overrun was t h e much g r e a t e r t h a n expected g e o l o g i c a l d i f f i c u l t i e s encountered i n c o n s t r u c t i o n of t h e Vega Larga - Lake L a j a t u n n e l . Apparently, e x t e n s i v e g e o l o g i c a l s t u d i e s , i n c l u d i n g use of s e i s m i c m t h o d s , were c a r r i e d out b e f o r e c o n s t r u c t i o n s t a r t e d . The Bank a l s o h i r e d its own g e o l o g i s t c o n s u l t a n t t o v i s i t t h e site. He concluded t h a t most of t h e rock f o r t u n n e l i n g appears good, t h a t t h e need f o r s t e e l s u p p o r t s and l i n i n g w i l l b e l i m i t e d . It i s b e l i e v e d t h a t i n t h i s c a s e , t o o , l i t t l e a t t e n t i o n was given t o t h e t u n n e l s a s compared w i t h t h e dam s i t e . I n 1974, t h e Bank approved a $6.7 m i l l i o n supplementary l o a n f o r t h i s p r o j e c t . ANNEX I Page 8 of 13 Project : Jaguara Hydroelectric Country: B r a z i l Loan No. : 442-BR Date: 1966 +' Project Performance Audit Beport No.: 1852 Date: January 13, 1978 Project Description: The project consisted of: ( a ) a r o c k f i l l dam, 40 m i n h e i g h t on t h e Rio Grande; ( b ) a powerhouse with 4 generating u n i t s of 100 MW each and provisions f o r 2 f u t u r e u n i t s ; ( c ) a concrete spillway with t a i n t e r g a t e s ; ( d ) a s u b s t a t i o n ; ( e ) a s e c t i o n bay a t t h e E s t r e i t o p l a n t . Estimate Actual Change X Total Cost ($If) Civil Works coat (Qn) Construction T i r e (Months) Bemarks: During t h e c o n s t r u c t i o n of t h e dam a weak s c h i s t l a y e r was uncovered. The layout had t o be revised. This caused a s i g n i f i c a n t i n c r e a s e i n engineering and c i v i l works c o s t s , 284% and 130% r e s p e c t i v e l y , p r i m a r i l y f o r s p e c i a l excavation and a d d i t i o n a l concrete f i l l i n g . The c o n s t r u c t i o n was delayed by seven months. - 1/ The major p a r t s of t h e p r o j e c t were completed w i t h 7 months delay. transmission l i n e wa The s expanded and t h e f i n a l p r o j e c t c l o s i n g d a t e happened with 3 1/2 years delay. ANNEX I Page 9 of 1 3 Project: Volta Grande Hydroelectric Camtry: B r a z i l Iacm No. : 566-BR Date: 1969 Project Performance bPdit Beport Bo.: 1852 Date: January 13, 1978 Project Description: The p r o j e c t c o n s i s t e d of: ( a ) an e a r t h f i l l dam of about 30 m i n h e i g h t on t h e Rio Grande; ( b ) a powerhouse with 4 g e n e r a t o r s with r a t e d c a p a c i t y of 100,000 KVA; ( c ) a concrete spillway with t a i n t e r gates; (d) transmission l i n e s ; ( e ) s u b s t a t i o n s . Total Cast ( $ I f) C i v i l W o r k s cast ($HI Construct i o n T i m e (Months) Remarks: The concrete s t r u c t u r e and t h e l e f t embarkment foundation is p a r t l y rock and p a r t l y s a p r o l i te. During t h e design s t a g e , i n v e s t i g a t i o n s were c a r r i e d out t o decide i f t h e s a p r o l i t e was a s u i t a b l e foundation f o r t h e e a r t h dam. The tests showed i t had l o w s t r e n g t h and high compressibility and p a r t of t h e s a p r o l i t e was removed. Measurements of t h e s e t t l e m e n t s have shown t h a t t h e a c t u a l c o m p r e s s i b i l i t y of t h e foundations is less than a n t i c i p a t e d . Some t i m e a f t e r t h e excavation of t h e foundations f o r t h e concrete s t r u c t u r e s , same problems ocarred i n spillway and powerhouse areas. The foundation of t h e s p i l l w a y was r i g h t above a c o n t a c t between flows. This c o n t a c t was thought t o be closed and w a t e r t i g h t , but four months a f t e r excavation, t h e contact w as found t o be somewhat open, possibly t r i g g e r e d by nearby detonations. I n t h e excavation of t h e power house, some 12 m high promontories of rock = r e l e f t between penstocks i n o r d e r t o save concrete. There wa s a "fault-joint" about 1 m above t h e base of t h e promontories; r i g h t a f t e r cleaning t h e excavation d e b r i s it was found t h a t t h e rock of t h e 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 t h e movement was caused mainly by t h e b l a s t i n g procedure. The spillway foundation had t o be re-excavated and t h e promontories removed. The above problems and some p r i c e i n c r e a s e s caused a c o s t overrun of 130%. C i v i l works coat increased by 174%, engineering c o s t s by 474%. The p r o j e c t was delayed f o r about one year. - 1/ The d e t a i l e d c o n s t r u c t i o n schedule had not been worked out a t t h e time of a p p r a i s a l , but award of major c o n t r a c t s was expected t o t a k e place i n 1969 and t h e e n t i r e p l a n t completed by 1974. The a c t u a l completion d a t e was August 1975. ANNEX I Page 10 of 1 3 Project: Marimbondo Power P r o j e c 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 a n t on Rio Grande c o n s i s t i n g o f : ( i ) an e a r t h embankmen 3000 m long w i t h a maximum h e i g h t of 65 m w i t h a volume of 20 m i l l i o n m'l ( i i ) a gated c o n c r e t e c h u t e s p i l l w a y , 150 m wide; and ( i i i ) ( a ) a powerhouse i n t a k e 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 e n c l o s e d , above ground powerhouse 220 m long; (b) transmission l i n e s ; ( c ) a d d i t i o n a l generator; (d) engineering, t r a i n i n g , etc. Estimate Actual Change X Total Cost ($MI Civil Wo*s Cost (a) Construction Tire (Nonths) Remarks: The d i s c o v e r y of poor g e o l o g i c a l f o u n d a t i o n c o n d i t i o n s i n t h e s p i l l w a y and t a i l r a c e a r e a s r e q u i r e d a s u b s t a n t i a l i n c r e a s e i n e x c a v a t i o n and c o n c r e t e work, p a r t i a l l y o f f s e t by reduced volume of e a r t h f ill due t o s l o p e and cofferdam volume r e d u c t i o n . This was t h e main cause of t h e c o s t overrun. The Marimbondo p l a n t c o s t i n c r e a s e d from e s t i m a t e d $126.20 m i l l i o n t o $249.92 m i l l i o n . The PCR s t a t e s t h a t g e o l o g i c a l c o n d i t i o n s a t t h i s dam s i t e should have been i n v e s t i g a t e d m r e extensively during project preparation. I n t h i s connection, i t is i n t e r e s t i n g and r e l e v a n t t o compare t h e experience of t h e Marimbondo p r o j e c t w i t h t h a t of J a g u a r a and V o l t a Grande H y d r o e l e c t r i c P r o j e c t s a l s o i n B r a z i l . These h y d r o e l e c t r i c p l a n t s a r e a l s o on Rio Grande. V o l t a Grande i s about 60 km and J a g u a r a about 200 km from Marimbondo. ANNEX I Page 11 of 1 3 Project: Kidatu H y d r o e l e c t r i c P r o j e c t I Country: Tanzania Loan No.: 715-TA, 715-2TA Date: Dec. 1970; J u n e , 1974 Project Performance Audit Report No.: 2765 Date: Dec. 19, 1979 Project Description: ( a ) C o n s t r u c t i o n of t h e f i r s t s t a g e ( 2 x 50 MW) of a h y d r o e l e c t r i c development a t Kidatu on t h e Great Ruaha R i v e r ; t h e p r i n c i p a l elements of t h e d e v e l o p ~ n ti n c l u d e d a r e g u l a t i n g dam with a s t o r a g e c a p a c i t y of about 125 m i l l i o n m , a 10 km long headrace and a t a i l r a c e t u n n e l , and an underground g e n e r a t i n g s t a t i o n ; ( b ) a 15-MW e x t e n s i o n of t h e e x i s t i n g Ubungo d i e s e l s t a t i o n ; ( c ) t r a n s m i s s i o n l i n e and d i s t r i b u t i o n s t a t i o n ; ( d l c o n s u l t i n g services. Estimate Actual Change X Total Cost ($I41 Civil Worts Cost (Sn) Construction T i r e ( ~ o n t h s ) Bevlds : The i n i t i a l phase of c o n s t r u c t i o n proceeded s a t i s f a c t o r i l y . Thereafter, d u r i n g underground e x c a v a t i o n s , t h e c o n t r a c t o r encountered u n f a v o r a b l e rock c o n d i t i o n s . Apparently, d u r i n g t h e f e a s i b i l i t y s t a g e , t h e true e x t e n t of t h e bedrock was not discovered. Consequently, t h e l e n g t h of t h e headrace t u n n e 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 1 1 km headrace t u n n e l was c o n c r e t e l i n e d and more t h a n 2,000 m (about 20%) were h e a v i l y gunnited and b o l t e d . Kidatu was o r i g i n a l l y designed a s an e a r t h and r o c k - f i l l e d dam. Rockfill would have been o b t a i n e d from t h e e x c a v a t i o n of t h e headrace t u n n e l . Due t o t h e u n s u i t a b i l i t y of rocks o b t a i n e d from t h e e x c a v a t i o n of t h e headrace t u n n e l , t h e o r i g i n a l dam design was changed and t h e dam was c o n s t r u c t e d a s a n earth-f ill dam w i t h extended semi-impervious f i l l . Thirty-f i v e (35) p e r c e n t of t h e o v e r a l l c o s t i n c r e a s e i s a t t r i b u t e d t o t h e unforeseeri bad rock conditions. 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 c o s t overruns. The g e o l o g i c a l c o n d i t i o n s encountered d u r i n g e x c a v a t i o n were very d i f f e r e n t from t h o s e a n t i c i p a t e d by c o n s u l t a n t s . 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, b u t t h e e x c a v a t i o n problems d u r i n g c o n s t r u c t i o n were n o t foreseen. The p r o j e c t was completed on s c h e d u l e , b u t t h e g e o l o g i c a l problems caused a d e l a y i n t h e c o n s t r u c t i o n s t a g e (2-6 months). The t a i l r a c e t u n n e l took 1 112 y e a r s l o n g e r t o complete. I n 1974, t h e Bank approved a $5.0 m i l l i o n supplementary l o a n f o r t h i s p r o j e c t . ANNEX I Page 12 of 1 3 Project : S i x t h Power P r o j e c t Country: E l Salvador b a n Uo.: 889-ES Date: A p r i l , 1973 Project Performance Audit Bepart Uo.: 3053 Jhte: June 27, 1980 Project Description: a ) t h e 135 MW Cerron Grande h y d r o e l e c t r i c p l a n t on Lempa River, c o n s i s t i n g of an earth-and-rock f i l l dam, surf ace powerhouse, and switchyard; (b) t h e f i r s t u n i t (30 M W) a t t h e Ahuachapan geothermalplant, p l u s switchyard, and a 60 k m g r a v i t y - f l w canal t o discharge waste water i n t o t h e P a c i f i c ; c ) transmission f a c i l i t i e s and l i n e s ; d) telemetering c e n t e r ; e ) preparation studies; f ) training. Estimate Actual mange 2 Total Cost ($HI civil works cost ($HI colletruction 'rime (Ibntbs) Remarks: It w as found Impractical t o build t h e discharge tunnels (Ahuachapan) o r i g i n a l l y planned f o r crossing mountain t e r r a i n , t h e c o n s u l t a n t s redesigned t h e c a n a l with syphon gorge c r o s s i n g s , which l e d t o a new route and a n extension of the l e n g t h of t h e canal from 60 k m t o 76 km. So, i n s t e a d of c o s t i n g about $2.6 m i l l i o n and being o p e r a t i o n a l i n Dec. 1974, t h e canal and d i f f u s e r pipe c o s t $23.24 m i l l i o n and was not f u l l y o p e r a t i o n a l u n t i l O c t . 1978. The o r i g i n a l plan was based on small-scale (1/100,000) a e r i a l photo- grammetric maps. ANNEX I Page 13 of 13 Project: Sigalda Hydroelectric P r o j e c t Camtxy: Iceland Loan No.: 951-IC Ilate: December 1973 Project P e r f o r u m w A d i t -port o N.: 3519 Ilate: June 30, 1981 Project D e s c r i p t i o n : Construction of a hydropower s t a t i o n having two 5O-MW generating u n i t s with provieions f o r an a d d i t i o n a l 50-MW u n i t ; and a double c i r c u i t transmission l i n e . T o t a l C o s t (Sn) Civil works Cost ($XI Construction T h e (26ntbs) Berarks: D i f f i c u l t i e s of t h e c i v i l c o n t r a c t o r arose out of heavier than a n t i c i p a t e d leakage of water through t h e porous t e r r a i n i n t o the powerhouse excavation. Problem of leakage through s i n k holes and other porous a r e a s of t h e r e s e r v o 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 r e s e r v o i r , i n t e r s p e r s e d with cainplete drainage and a p p l i c a t i o n of impervious m a t e r i a l over t h e a r e a s i d e n t i f i e d a s porous. The c o s t overrun w as due t o worse than a n t i c i p a t e d geological conditions and domestic inflation. 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: J u l y 1, 1977 R o j e c t Description: The p r o j e c t c o n s i s t s o f : ( 1 ) The Portuna 255-MW h y d r o e l e c t r i c power p l a n t c o n s i s t i n g of : ( a ) d i v e r s i o n works; ( b ) rockf ill dam; ( c ) power t u n n e l (about 6,000 m l o n g ) , s u r g e t a n k and penstock (about 1,400 m l o n g ) ; ( d l underground powerhouse; ( e l t a i l r a c e t u n n e l about 8,300 m l o n g ) ; and ( f ) a c c e s s r o a d s ; ( 2 ) t r a n s m i s s i o n system; ( 3 ) o r g a n i z a t i o n a l improvement. Total Cost ($PI) Civil Works Cost <*I Completion Time -*s : The d e l a y and c o s t overruns i n t h i s p r o j e c t were mainly due t o g e o l o g i c a l complications i n t h e underground powerhouse, power t u n n e l , and a t t h e s i t e of t h e r i g h t abutment which r e q u i r e d a d d i t i o n a l design work and more e x c a v a t i o n than expected. I n 1983, t h e Bank approved a supplementary l o a n of $31.3 m i l l i o n f o r t h i s project. Actual ANNEX 11 Page 2 of 1 0 Project: Aguacapa Hydro Country: Guatemala Loan No.: 1426-GU Date: June 10, 1977 Project Description: The p r o j e c t comprises t h e c o n s t r u c t i o n of: ( a ) dam i n t h e Aguacapa r i v e r and a r e s e r v o i r of 300,000 m3 f o r d a l l y r e g u l a t i o n ; ( b ) a 12 km power t u n n e l ; ( c ) a 3,700 k m s t e e l penstock; ( d ) a power s t a t i o n w i t h three 3 0M W generating units; ( e ) transformation f a c i l i t i e s ; ( f ) a switching s t a t i o n ; (g) transmission l i n e s . Appraisal Latest Estiaate fitinurte -9 Total Cost ($MI civil worts cast ($HI Completion Time Remarks: The p r o j e c t faced some problems during t h e power t u n n e l c o n s t r u c t i o n which caused a delay of 29 months. The r e p a i r on t h e t u n n e l 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 t u n n e l l e n g t h ) , 810 m r e i n f o r c e d g u n i t e ( 7 % ) and 5400 m (45%) of chemical t r e a t m e n t (Thorospan and Sinadur) of l o n g i t u d i n a l cracks. T o t a l p r o j e c t c o s t was $171.5 m i l l i o n , 71% o v e r a p p r a i s a l e s t i m a t e . 51% of c o s t overrun was f o r t u n n e l r e p a i r s . - 1 Actual - 39 - ANNEX I1 Page 3 of 1 0 Project: Riul Mare-Retezat Hydro Country: Romania o Loan N.: 1242-R0 Date: A p r i l 28, 1976 Project Description: The p r o j e c t ' s main components i n c l u d e : ( a ) a r e s e r v o i r t o be formed by a 173 m high.-clay-cored r o c k f i l l dam a c r o s s t h e v a l l e y of t h e R i u l Mare r i v e r w i t h 25 secondary i n t a k e s and an 18.4 km long p r e s s u r e t u n n e l t o convey t h e water t o t h e power s t a t i o n ; ( b ) a two u n i t underground p l a n t of 335 (MW) and a 14 MW above ground powerhouse; ( c ) t r a n s m i s s i o n system; ( d l roads. Appraisal Latest Estimate 1 Estinate -/ Total Cost ($MI Civil Worts Cost ($MI Completion Time Remarks: As of 1985 t h i s p r o j e c t i s s t i l l f a r from being complete. The b o r i n g of t h e headrace t u n n e l i s t h e main problem a f f e c t i n g t h e p r o j e c t . In 1983 unexpected g e o l o g i c a l c o n d i t i o n s 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 m a t e r i a l i s s u i n g from a f a u l t . Part of t h e delay i s a t t r i b u t e d t o causes o t h e r t h a n s i t e c o n d i t i o n s . -9 A s of November 2, 1983 ANNEX I1 Page 4 of 1 0 P r o j e c t : Chixoy H y d r o e l e c t r i c Power Country: Guatemala Loan No.: 1605-GU Date: J u l y 21, 1978 Project D e s c r i p t i o n : $a) g e n e r a t i o n : ( i ) r o c k f i l l dam 108 m high w i t h a volume of 2.8 m i l l i o n m , t h e dam w i l l be l o c a t e d about 58 k m upstream of t h e confluence of t h e Chixoy and Quixal r i v e r s ; ( i i ) power t u n n e l 25.6 k m long, c o n c r e t e l i n e d , 4.8 m i n diameter, t o develop a g r o s s head of 550 m; ( i i i ) s u r f a c e powerhouse w i t h 5 x 6 0 MW g e n e r a t i n g u n i t s d r i v e n by v e r t i c a l l y mounted t u r b i n e s ; ( b ) t r a n s m i s s i o n s u b s t a t i o n and l i n e s ; ( c ) c o n s u l t i n g . Appraisal Latest Estirate Estinate 9 T o t a l Cost ($MI Civil Works Cost (Sn) Capletion Tire Remarks: It was acknowledged, during t h e a p p r a i s a l , t h a t a s p e c i a l r i s k of t h e p r o j e c t i s t h a t i t i n v o l v e s c o n s t r u c t i o n of a 25.6 km t u n n e l i n an a r e a c o n t a i n i n g heterogeneous g e o l o g i c a l and k a r s t i c formations. A cost 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 p r o j e c t c o s t was e s t i m a t e d a t $815.8 m i l l i o n w i t h completion scheduled f o r 1986 w i t h f o u r y e a r s 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 c o n s t r u c t i o n of c i v i l works under t h e p r o j e c t . The composition of rock i n t h e r e s e r v o i r and power t u n n e l a r e a s was found t o be much more complex than p r e d i c t e d . Extensive k a r s t i c limestone formations were found a t t h e dam foundation and along t h e t u n n e l ; rock a t t h e s p i l l w a y was h i g h l y f i s s u r e d ; s e v e r a l l a n d s l i d e s along t h e a c c e s s roads occurred during c o n s t r u c t i o n , and t h e power t u n n e l caved i n a t a few p l a c e s a f t e r showing an unacceptable l e v e l of water l o s s . A t p r e s e n t , t h e s e i s m i c r i s k a t t h e s i t e has been r e c a l c u l a t e d 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 l o c a t i o n of t h e powerhouse, a t h r e e meter i n c r e a s e i n t h e dam's h e i g h t , lower dam s l o p e s , and reinforcement of h y d r a u l i c s t r u c t u r e s . These changes r e q u i r e d a s i x - f o l d i n c r e a s e of t h e g r o u t i n g c u r t a i n a r e a , a ten-fold i n c r e a s e i n d r i l l i n g works f o r t h e g r o u t i n g c u r t a i n , a f i v e - f o l d i n c r e a s e i n cement r e q u i r e d f o r such g r o u t i n g , l a r g e r r e i n f o r c e d c o n c r e t e s e c t i o n s a t t h e s p i l l w a y , i n c r e a s e d g r o u t i n g and s t e e l l i n i n g of 1400 meters of t h e t u n n e l , and c o n s t r u c t i o n of an a d d i t i o n a l bottom d i s c h a r g e tunnel. The c i v i l works c o s t of t h e power t u n n e l i s p r e s e n t l y e s t i m a t e d a t $130 m i l l i o n a s compared w i t h t h e a p p r a i s a l e s t i m a t e of $169.5 m i l l i o n . The Bank a p p r w e d a $37.3 m i l l i o n supplementary loan f o r t h i s p r o j e c t i n 1985. _1/ As of January 9 , 1985 I I ANNEX I1 Page 5 of 10 Project: Kulekhani H y d r o e l e c t r i c Country: Nepal Loan N o.: 600-NEP ( C r e d i t ) Date: January 9, 1976 Project Description: The p r o j e c t , l o c a t e d about 30 k m southwest of Kathmandu, would e n t a i l t h e c o n s t r u c t i o n o f : ( a ) a 107 m high r o c k f i l l dam; ( b ) a n open channel s p i l l w a y c o n t r o l l e d by two r a d i a l g a t e s ; ( c ) a n i n t a k e s t r u c t u r e connected t o a headrace o r t u n n e l of about 2.5 m i n diameter and 5.8 k m long; ( d l a s u r g e t a n k ; ( e l a penstock 1.6 m i n diameter and 1340 m long; ( f ) underground powerhouse c o n t a i n i n g 2 x 30 MW turbo-generating u n i t s ; ( g ) a t a i l r a c e t u n n e l of 1 km long; ( h ) o t h e r s . Appraisal Latest Estimate mtinate 9 Total Cost ($HI Civil Works C o s t (Sn) Completion Time Remarks: T h i s p r o j e c t faced numerous t e c h n i c a l , managerial, and l a b o r d i f f i c u l t i e s , mostly during t h e c o n s t r u c t i o n of t h e tunnel. I n 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 o c a t i o n s i n t h e head race t u n n e l where t h e r e were voids between t h e t u n n e l l i n i n g and t h e rock. I t was concluded t h a t t h e problems were due t o i n a d e q u a t e c o n s t r u c t i o n techniques. The major g e o l o g i c a l complication i n this p r o j e c t c o n s i s t of a number of l a n d s l i d e s which happened a f t e r t h e c o n s t r u c t i o n had s t a r t e d and a l s o a f t e r t h e completion i n 1983. These r e s u l t e d i n some design changes. The p r o j e c t c o s t over $1 20 m i l l i o n and was completed about 2 y e a r s behind t h e a p p r a i s a l e s t i m a t e . I n 1979 a supplementary c r e d i t of $14.8 m i l l i o n was granted t o Nepal on t h i s project. - 1 Actual ANNEX I1 Page 6 of 10 Roject: Nispero Power Country: Honduras Loan No.: 1629-HO Date: November, 1978 Roject Description: The p r o j e c t comprises: ( i ) t h e Nispero hydro p l a n t (22.5 MW ) and i t s connection t o t h e n a t i o n a l t r a n s m i s s i o n network; ( i i ) d i e s e l u n i t s a t Puerto Cortes; ( i i i ) consultant s e r v i c e s ; ( i v ) t r a i n i n g ; (v) d i s t r i b u t i o n expansion program. Appraisal Latest Estimate Estimate L/ Total Cost ($PI) Civil W orks Cost ($PI) Completion Time Bevrrks: C o n s t r u c t i o n of t h e g e n e r a t i o n component of t h i s p r o j e c t was completed i n 1982, about 18 months l a t e r than expected mainly because of c o n s t r u c t i o n d e l a y s r e s u l t i n g from d i f f i c u l t g e o l o g i c a l c o n d i t i o n s . The f a u l t i n g , s o l u t i o n v o i d s , c a v i t i e s , and f i n e l y crushed rock i n t h e v i c i n i t y of t h e t u n n e l were a major s o u r c e of d e l a y , a s e x t r a time was needed t o i n s t a l l e x t r a r e i n f o r c i n g m a t e r i a l s . F u r t h e r , t h e t u n n e l was twice flooded (March and June 1981 1, r e s u l t i n g i n some damage and c o n s t r u c t i o n delay. ! 1 Actual ANNEX I1 Page 7 of 1 0 Project: M e s i t a s H y d r o e l e c t r i c Power Country: Colombia Loan No.: 1628-CO Date: A p r i l 9 , 1979 Project Description: The p r o j e c t c o n s i s t s o f : ( a ) c o n s t r u c t i o n of t h e M e s i t a s Hydro c o n s i s t i n g of two s u r f a c e powerhouses, each w i t h t h r e e g e n e r a t i n g u n i t s t o t a l l i n g 600 MU, and t u n n e l s and p e n s t o c k s , as w e l l as a pumping s t a t i o n f o r a n e x i s t i n g head pond and t h r e e 230 kv t r a n s m i s s i o n l i n e s ; ( b ) s t r e n g t h e n i n g of t h e S e q u i t e dam; ( c ) an a s s e t e v a l u a t i o n s t u d y ; and ( d ) t e c h n i c a l assistance. Appraisal Latest EstiPate Estimate 1/ Total Cost ($MI Civil works Cog t ($HI Capletion Time Remarks: T h i s p r o j e c t ' s d e l a y and c o s t overrun were p a r t i a l l y due t o g e o l o g i c a l d i f f i c u l t i e s i n a number of t u n n e l s . During t h e c o n s t r u c t i o n some s o f t and w a t e r y s p o t s i n t h e main t u n n e l (Granada 1 1 ) were d i s c o v e r e d . The s o f t s p o t s had t o be by-passed. T h i s r e q u i r e d new d e s i g n and more e x c a v a t i o n . I n November 1983, p a r t of Chingaza t u n n e l c o l l a p s e d . This t u n n e l was t o d i v e r t t h e i n f l o w f o r Mesitas' g e n e r a t i o n and f o r w a t e r supply. T h i s p r o j e c t i s expected t o be completed by mid-1985. 1 - A s of March 7 , 1984 ANNEX I1 Page 8 of 1 0 P r o j e c t : Third Power Country: Swaziland Loan No.: 2009 S W Date: September 21, 1981 P r o j e c t Description: The p r o j e c t c o n s i s t s of: ( a ) a r o c k f i l l dam a t Lupoho, about 40 m i n h e i g h t and 400 m and l e n g t h , t o provide an e f f e c t i v e r e s e r v o i r c a p a c i t y of a b o ~ t20 m i l l i o n m3 on t h e L i t t l e Usuto r i v e r ; ( b ) a t u n n e l and penstock system c o n s i s t i n g of an unlined low-pressure power t u n n e l 4.4 km long; a 6 0 0 3 long s t e e l - l i n e d t u n n e l and a s u r f a c e penstock system; ( c ) a powerhouse w i t h two 1 0M - W t u r b i n e g e n e r a t o r s , w i t h a s h o r t t a i l r a c e channel; (dl consultant services. Appraisal Latest Estimate 1 E s t i m a t e -/ T o t a l Cost ($!I) C i v i l Works Cost ($!I) Completion T i a e Remarks: The p r o j e c t experienced s u b s t a n t i a l c o s t overruns and a s of 1984 was about s i x months behind t h e c o n s t r u c t i o n schedule. The i n c r e a s e s a r e a t t r i b u t e d l a r g e l y t o changes i n t h e main c i v i l works c o n t r a c t . Due t o unforeseen g e o l o g i c a l and geophysical c o n d i t i o n s , t h e amount of e x c a v a t i o n f o r t u n n e l i n g works h a s been s u b s t a n t i a l l y i n c r e a s e d and made more d i f f i c u l t by presence of l a r g e boulders mixed w i t h s o f t m a t e r i a l . Other g e o l o g i c a l problems i n c l u d e : t h e presence of f a u l t zones, lower bedrock than expected and mud-rush (inundated t h e high p r e s s u r e t u n n e l ) . To overcome t h e s e problems t h e c o n t r a c t o r had t o r e a l i g n t h e t u n n e l a x i s . The q u a n t i t y of t u n n e l i n g works was increased about 40% over t h a t o r i g i n a l l y expected. I n 1984, the Bank approved a $5.6 million supplementary loan for this project . 1/ A s of May 4 , 1984 ANNEX 11 Page 9 of 1 0 Project: Tenth Power Country: Indonesia Loan No.: 1950-IND Date: March 6, 1981 Project Description: The p r o j e c t c o n s i s t s o f : ( a ) t h e 700 MW Saguling h y d r o e l e c t r i c power f a c i l i t y ; i n c l u d i n g c o n s t r u c t i o n of a 97.5 m high r o c k f i l l s t o r a g e dam on t h e Citram r i v e r ; a 6.5 k m long water conductor system comprising t u n n e l s , s u r g e t a n k s , and penstocks; and a power s t a t i o n with an a s s o c i a t e d 500 KV s t e p - u p s u b s t a t i o n ; ( b ) equipment; ( c ) e n g i n e e r i n g s e r v i c e s ; (d) consulting services. Appraisal Latest Estimate Estiaate 9 Total C a s t ($PI) Civil W o*s Cost (SH) Ccmpletion Time Remarks: Major d i f f i c u l t i e s were experienced i n t h e c o n s t r u c t i o n of c i v i l works under t h e p r o j e c t i n 1982 and 1983. During t h i s p e r i o d e x t r a o r d i n a r y g e o l o g i c a l and g e o t e c h n i c a l problems were encountered. The p r i n c i p a l problems were t h e following: ( a ) Heavy r a i n s i n l a t e A p r i l 1982 caused s e v e r e l a n d s l i d e s , which d i s r u p t e d a c c e s s 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 t h e main t u n n e l , and delayed t h e s t a r t of underground tunnel work a t v a r i o u s p o i n t s by s i x t o twelve months. ( b ) Unexpected land movements a t t h e powerhouse s i t e occurred from J u n e t o October 1982. These land movements n e c e s s i t a t e d remedial work t o c l e a n away l a n d s l i d e s and c o n s o l i d a t e s l o p e s a t t h e powerhouse s i t e , which delayed work a t t h e s i t e by twelve months. ( c ) Geological weaknesses revealed a f t e r excavation commenced i n t h e s p i l l w a y penstock s l o p e a r e a s r e q u i r e d f a r more e x t e n s i v e s l o p e 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 l d i n a number of a r e a s , which r e q u i r e d i d e n t i f i c a t i o n of new s p o i l a r e a s and a d d i t i o n a l a c c e s s roads. ( d ) The i n c i d e n c e of extremely poor q u a l i t y rock i n some c r i t i c a l s e c t i o n s o f t h e main t u n n e l 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 r e a r e q u i r e d abandonment of t h a t quarry i n f a v o r of a more d i s t a n t s i t e ; i n v o l v i n g g r e a t e r t r a n s p o r t , t i m e and c o s t and i n c r e a s e d 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 r e q u i r e d deepening of t h e dam foundation. The Bank approved a supplementary loan of $50 m i l l i o n f o r t h i s p r o j e c t i n 1984. A s of January 30, 1985 ANNEX 1 1 P r o j e c t : Guavio Hydro Power Page 1 0 of 1 0 Country : Colombia Loan 190.: 2008-CO Date: May 13, 1981 P r o j e c t D e s c r i p t i o n : The p r o j e c t comprises : ( 1 ) t h e Guavio h y d r o e l e c t r i c p l a n t on t h e Guavio r i v e r i n c l u d i n g : ( a ) r i v e r d i v e r s i o n , r o c k f i l l dam and s p i l l w a y t u n n e l s ; ( b ) i n t a k e and d i v e r s i o n t u n n e l s (about 4 km) t o conduct w a t e r s of t h e C h i r o r and B a t a t a s R i v e r i n t o t h e r e s e r v o i r ; ( c ) p r e s s u r e t u n n e l (about 15 km) , underground powerhouse and t r a n s f o r m e r with a c c e s s t u n n e l (about 2 km), and t a i l r a c e (about 5 km); ( 2 ) o t h e r s i n c l u d i n g equipment and services. Appraisal Latest Estimate 1 E s t i m a t e -/ T o t a l C a s t ($HI Civil W o*s Cost (Sn) Completion Time Remarks: I n t h e e a r l y s t a g e s of c o n s t r u c t i o n i n t h i s p r o j e c t f r e q u e n t l a n d s l i d e s occurred d u r i n g t h e e x c a v a t i o n s f o r permanent works and a c c e s s roads. A c r i t i c a l zone was t h e Rocatoma a r e a where f o u r workers were k i l l e d i n S e p t . 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 h e p l a t f o r m a r e a n e a r t h e p o r t a l s of t h e power and d i v e r s i o n t u n n e l s where t u n n e l i n g crews were a t t h e end of t h e day s h i f t and b u . r r i e d about 120 workers. A d d i t i o n a l bad g e o l o g i c a l c o n d i t i o n s a t an a c c e s s t o t h e d i s c h a r g e t u n n e l have caused f u r t h e r delays. As of October 1984, t h e completion time i s e s t i m a t e d 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 Central Projects Staff P u b l i c U t i l i t i e s Department This paper i s one of a s e r i e s i s s u e d by t h e P u b l i c U t i l i t i e s Department f o r t h e i n f o r m a t i o n and guid- ance of Bank s t a f f working i n t h e power, water and wastes, and telecommunications s e c t o r s . It may not be published o r quoted a s r e p r e s e n t i n g t h e views of t h e Bank Group, and t h e Bank Group does not accept r e s p o n s i b i l i t y f o r i t s accuracy o r completeness. -ANNEX 111 Page 2 of 6 GUIDELINES FOR ESTIMATING COSTS OF TUNNEL CONSTRUCTION A- - B- S- R- T- C- A- T- This paper deals with the problems of estimating costs to execute underground works where uncertainties may be great. I t 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 ANNEX I11 Page 3 of 6 GUIDELINES FOR ESTIMATING COSTS OF TUNNEL CONSTRUCTION Introduction 1. The Bank f r e q u e n t l y f i n a n c e s p r o j e c t s i n t h e a g r i c u l t u r e , p u b 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 i n c l u d e t u n n e l s o r s i m i l a r under- ground works c a r r i e d o u t under c o n d i t i o n s of u n c e r t a i n t y . From time t o time e x e c u t i o n of t h e s e 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 i v i n g 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 o v e r 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 a n c e . The Bank h a s ready-to-hand r e l i - a b l e c o s t i n f o r m a t i o n on only a r e l a t i v e l y few t u n n e l s because t u n n e l s a r e u s u a l l y on1 elements of p r o j e c t s and c o s t s a r e g e n e r a l l y n o t r e p o r t e d on s e p a r a t e l y . 1 ' These d a t a , w h i l e s p a r s e , do t e n d t o show t h a t t u n n e l l i n g c o s t s a r e l i k e l y t o be underestimated. 2. The purpose of t h e s e G u i d e l i n e s i s t o r e i t e r a t e t h e need f o r s p e c i a l c a r e i n e s t i m a t i n g 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 r e q u i r e d (paragraph 5 ) ; and t o s u g g e s t t h a t generous allowances f o r c o n t i n g e n c i e s be provided i n l i n e w i t h t h e degree of uncer- t a i n t y i n v o l v e d (paragraph 6 ) . The need f o r s e n s i t i v i t y a n a l y s e s (para- graph 7 ) and broadening t h e Bank's d a t a b a s e (paragraph 9 ) a r e mentioned. 3. A t u n n e l , a s c o n s i d e r e d i n t h i s p a p e r , i s 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 f o l l o w i n g l i s t is t y p i c a l , b u t n o t n e c e s s a r i l y all-inclusive : (i) Conveyance t u n n e l s f o r i r r i g a t i o n , h y d r o e l e c t r i c , and w a t e r supply p r o j e c t s ; (ii) underground powerhouses w i t h p e n s t o c k s and t a i l r a c e t unne 1s ; (iii) r a i l w a y and highway t u n n e l s ; and (iv) diversion tunnels f o r various r i v e r projects. The Magnitude of t h e Problem and Need f o r S p e c i a l S k i l l s 4. A s i s t h e c a s e w i t h a l l heavy c i v i l works c o n s t r u c t i o n , t h e prob- l e m of c o s t e s t i m a t i n g f o r t u n n e l s i s p r o p o r t i o n a l t o t h e degree of i g n o r - ance of t h e n a t u r a l c o n d i t i o n s t o be encountered; and t u n n e l s , by t h e i r n a t u r e a r e t h e 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 a c c u r a t e p r e d i c t i o n of t h e s e c o n d i t i o n s 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 v a r i o u s k i n d s of s t r u c t u r e s covered by t h e ' For 1 example, where t h e d i v e r s i o n scheme f o r a h y d r o e l e c t r i c development i n c l u d e s a t u n n e l , a l t h o u g h i t may be a major c o n s t r u c t i o n a c t i v i t y , i t may n e v e r t h e l e s s be e x e c u t e d under a g e n e r a l c i v i l works c o n t r a c t as r e g a r d s r e p o r t i n g of c o s 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 , b u t i n g e n e r a l t h e more e x t e n s i v e t h e s t r u c t u r e i s and t h e d e e p e r i t l i e s underground, t h e h i g h e 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 i s i n f l u e n c e d 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 w a t e r c o n d i t i o n s , t h e p r e s e n c e o f g a s , and i n v o l c a n i c a r e a s by h e a 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 i n d i n g o u t what t h e s e c o n d i t i o n s a r e . Thus, d i v e r s i o n t u n n e l s , some s h o r t highway and r a i l w a y t u n n e 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 r e a s o n a b l e number of b o r i n g s and a d i t s can be c a r r i e d o u t economically and which can g i v e f a i r l y a c c u r a t e i n f o r m a t i o n of t h e n a t u r a l c o n d i t i o n s . I t may, t h e r e - f o r e , be concluded t h a t long ( o v e r a few k i l o m e t e r s ) t u n n e l s under deep c o v e r (more t h a n 150 m e t e r s ) 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 c o n d i t i o n s by b o r i n g s and a d i t s becomes i m p r a c t i c a l due t o t h e e x c e s s i v e c o s t s i n v o l v e d . Conveyance t u n n e l s make up t h e m a j o r i t y of t h e p r o j e c t s i n t h i s c a t e g o r y , b u t t h e r e may be some r a i l w a y and highway t u n n e l s , and o c c a s i o n a l l y some o t h e r t y p e s . I n all c a s e s t h e d e g r e e of u n c e r t a i n t y is i n f l u e n c e d by t h e complexity of t h e geo- l o g i c a l c o n d i t i o n s 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 p r e v i o u s o p e r a t i o n s i n t h e v i c i n i t y . 5. The two most i m p o r t a n t c l a s s e s of p e r s o n n e l needed f o r adequate t u n n e l e s t i m a t i n g a r e e n g i n e e r i n g g e o l o g i s t s and e n g i n e e r s w i t h e x t e n s i v e e x p e r i e n c e i n a c t u a l t u n n e l c o n s t r u c t i o n . The Bank c u s t o m a r i l y r e q u i r e s t h e employment of c o n s u l t i n g f i r m s w i t h t h e s e c l a s s e s of p e r s o n n e l on t h e i r r o s t e r s . G r e a t e r p a i n s s h o u l d be t a k e n t o a s s u r e t h a t t h e p e r s o n n e l i s 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 s h o u l d be some p e r s o n n e l i n v o l v e d w i t h e x p e r i e n c e i n t h e 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 p r o v i d e more i n t i m a t e ki~owledgeof l o c a l c o n d i t i o n s . (i) The b a s i c duty of t h e e n g i n e e r i n g g e o l o g i s t is t o examine t h e underground c o n d i t i o n s 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 c o n d i t i o n s on t h e b a s i s of g e n e r a l g e o l o g i c knowledge when d i r e c t means cannot be used. The e n g i n e e r i n g g e o l o g i s t ( o r g e o l o g i s t s ) s h o u l d v i s i t t h e s i t e of t h e p r o j e c t , e x p l o r e t h e ground s u r f a c e f o r r o c k o u t c r o p s and s i g n s of f a u l t s , examine a l l r e l e v a n 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 o b t a i n e d i n c l u d i n g a e r i a l photography where d r i l l i n g or a d i t s are nct practical. O n t h e b a s i s of a l l information 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 ( a x e s ) of t h e s t r u c t u r e and p r e - d i c t t h e t y p e , q u a l i t y , and p r o b a b l e b e h a v i o r of t h e v a r i - ous t y p e s of rock i n v o l v e d based on h i s p r e v i o u s knowledge and t h e examination of t h e n e a r e s t l o c a l exposures of t h e t y p e s i n v o l v e d . E s p e c i a l l y i f h i g h h e a t o r g a s may be e x p e c t e d 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 p u t down t o check. Ground w a t e r l e v e l s s h o u l d be ANNEX I11 Page 5 of 6 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 t y p e of r o c k p r o m i s e s t o have s e r i o u s w a t e r prob- l e m s . I t s b e h a v i o r w i t h w a t e r f l o w i n g o u t of i t must be predicted. (ii) The b a s i c d u t y of t h e e n g i n e e r i s t o d e v e l o p a c o n s t r u c t i o n p l a n which m e e t s 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 o f t h e work. The 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 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 h a u l a g e equipment ; o r a l t e r n a t i v e l y , t h e u s e of m i n i n g machines o r m o l e s . ( S i n c e t h e l a t t e r t y p e of e q u i p - ment i s 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 s h o u l d n o t a l w a y s 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 n e e d and s i z e of pumps, v e n t i l a t i n g e q u i p m e n t , and g a s 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 r o c k 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 n e e d t o j u d g e 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 p e r f o r m 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 timed 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 b a s e d 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 c o m p l i c a t e d g e o l o g y 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 b e c o n s i d e r a b l e u n c e r t a i n t y a b o u t u n d e r g r o u n d 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 c a n n o t 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 such cases the b e s t procedure appears t o be t o add l i b e r a l c o n t i n g e n c y 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 B a n k ' s e x p e r i e n c e s u g g e s t s t h a t s u c h 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 t h a n 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 i s p o s s i b l e t h a t t h e y may h a v e 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 u s e d on o t h e r p a r t s of t h e p r o j e c t . Where s u c h 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 r o p o s e d Bank Group f i n a n c i n g -- t h e s i t u a t i o n s h o u l d 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 proposed borrower. Excessive contingency a l l o w a n c e s have a c o s t i n t e r m s o f 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 t h a n a c c e p t a l a r g e r i s k t h a t f u n d i n g w i l l prove inadequate. ANNEX I11 Page 6 of 6 7. I n p r o j e c t s where h i g h contingency allowances a r e deemed n e c e s s a r y because of u n c e r t a i n t y , s e n s i t i v i t y a n a l y s e s should. a l s o be made s y s t e m a t i - c a l l y . I n t h e e v e n t t h e a n a l y s i s i n d i c a t e s i n c l u s i o n of generous allowances under c o n d i t i o n s of u n c e r t a i n t y would throw doubt on t h e 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 r e d e s i g n e d o r t h e a l t e r n a t i v e schemes reexam- i n e d t o s e l e c t t h e most a c c e p t a b l e . C o l l e c t i o n of Data 8. I t would be d e s i r a b l e t o broaden t h e Bank's d a t a base w i t h r e s p e c t t o t u n n e l c o s t s . Over time, i t might then b e p o s s i b l e t o s u g g e s t more p r e - c i s e l y what l e v e l s of contingency allowances would b e a p p r o p r i a t e under d i f f e r e n t c i r c u m s t a n c e s . 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 i n a c c u r a t e e s t i m a t e s might be p o s s i b l e , and means of t a k i n g them i n t o account developed. 9. Where i t can conveniently be done, s u p e r v i s i o n and a p p r a i s a l m i s - s i o n s should c o l l e c t r e l e v a n t d a t a on t u n n e l l i n g c o s 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 c a s e s where a c t u a l c o s t s i n c u r r e d have subs t a n t i a l l y exceeded e s t i m a t e s t o know t h e cause (i. e . , i n a d e q u a t e subsurf ace e x p l o r a - . t i o n , u n u s u a l l y bad g e o l o g i c c o n d i t i o n s , p o o r l y p r e p a r e d e s t i m a t e s , e t c . ) I n a d d i t i o n 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 w e l l t o t h e P u b 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 l o b a l b a s i s a s e x p e r i e n c e is gained w i t h a view towards improving t h e s e Guidelines.