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TNT-The Mecca light rail line
1
The Mecca light rail line
TNT
CHENG Ying 55634847
MA Cong 55375335
MENG Qingqi 55305486
XU Ye 55645468
YANG Yixin 55572761
ZHANG Chenhan 55296750
ZHANG Tiening 55469315
The Saudi Arabia government
Client:
Contractor:
China Rail Construction Corporation (CRCC)
Length:
18.25 kilometres
Introduction
Location:
Link three main sites in Mecca(Mount Arafat, Muzdalifah and Mina)
Utilization:
Reduce the heavy congestion during the Hajj.
1
Technology
Four “most” in the world
the most
complex operation
the highest
outdoor temperature
the shortest
construction period
the largest capacity
2
Contract
EPC
OM
Design, procurement, construction + operation management
3
Complete the project before contract date
but
Afford a big deficit of about
Result
620
million !
4
How is it happen?
Encountered
Difficulties
Main reasons
Analysis
Solution
Risk management
Cost management
Project control
5
Contract price
It seems very profitable, right ?
$ 16 millions per KM
Much lower than its competitors
Risk Management
Three times to some domestic projects
Neglected
aspect
6
Insufficient Risk Identification
Financial risk: Win the bid at the price lower than the market
Technical risk: Different project standards
Execution risk: Different culture
Contractual risk: Unfamiliar with the EPC contract
Insufficient Risk Identification
7
Low-efficient Risk Mitigation
Low-efficient Risk Mitigation
No effective
contingency plan
Unexcepted
difficulties
result even worse
8
Cost Management
Contract lost
$ 590 million
Expected total contract price $ 1.77 billion
Estimated total contract cost $ 2.36 billion
Total loss of the project $ 620 million
Financial expenses: $ 22.58 million
9
Low initial estimate
the domestic 19 km Wuxian intercity railway completed in 100 days
18 km mecca light rail
project at $2.2 billion
The strongest railway construction organization in Saudi Arabia: $2.7 billion
CRCC
finally at $1.7 billion
10
Unfamiliar with local situation
Chinese workers
•cheap
•higher wages but lower efficiency
•high efficiency
•Strict eight-hour work schedule
•Three shifts 24 h
•Morning tea and afternoon tea
India and Pakistan workers
11
Unfamiliar with EPC contracts
Foreign design subcontractors
uncontrolled design management
design delays
increase of
cost!!!
unfamiliar with the European and local construction standards and specifications
unexpected increase of work amount
12
Project
Control
Setting a goal
project control system
Take action
Measuring
progress
Comparing actual with
planned performance
13
Performance
Cost
Time
14
Performance
Inappropriate performance goals
The construction side lacks experience
Evaluation process was faced with great resistance
Do not have the right of the general contractor
15
Time
Project duration: 1 Put into operation on November 13, 2010, reaching 35% of the capacity. In May 2011, reaching 100%.
The same scale in China needs 3 years from design to operation.
Started construction in February 2009, and the actual construction period is only 16 months.
16
Reasons
Win the bid at a price lower than market
Unfamiliarity with EPC contracts and EPC operations
Summary
Unfamiliarity with Saudi Arabia's market
Lack of experience in international construction projects
17
What have we learnt?
• Avoid legal, cultural, and political risks
• Do as locals do
• Avoid contractual risks
• Establish risk awareness
• Balance business projects and political tasks
18
How can we do better?
How can we do better?
Pre-project stage
Investigation
Project stage
Reasonable bid price
Achievable goals
Clear milestones
Global-visioned talent pool
Monitor project process
Regular evaluation and follow-ups
19
Q&A