17. January 2008 DB Export section

DRB &

The Øresund Link

Peter LundhusMan. Dir. Femern Bælt A/S

17. January 2008

17. January 2008

Øresund – Crossing a Border

Copenhagen

Malmø

17. January 2008

Who am I?

Contractor 20 yearsOwner 20 yrs.

- involved in the 3 major links

• Great Belt Link 1988 - 1992

• Øresund Link 1992 - 2000

• Fehmarn Link 2001 - ?

17. January 2008

The organisation behind the 3 Links

Femern Belt Link

BanverketVägverket

Øresund(Land)

Sund & Bælt Holding

The Danish state The Swedish state

SVEDAB (Land)

Øresund Link Consortium

50 % 50 %

50 % 50 %

Great Belt Link

17. January 2008

Tunnel assembly factory, Copenhagen

17. January 2008

Øresund – 55 000 T tunnel units

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Bridgefoundation assembly line, Malmö

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Øresund – placing a 7000 T bridge section

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The connecting bridge section – 4 years + 1 mths.

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Consortium Agreement

§ 1

Name and Operations of the Consortium

1. In the light of the provisions of the agreement dated 23 March 1991 between the governments of Sweden and Denmark the Parties hereby establish a consortium, which, under the name :

ØRESUNDSKONSORTIET

shall on behalf of both Parties and as a single entity own and be responsible for the planning, designing, financing, construction, operation and maintenance of a toll-funded fixed link for rail and road traffic between Kastrup and Limhamn, hereinafter referred to as “the Øresund Link”.

2. The operations of the Consortium shall be conducted in accordance with sound business principles.

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Main numbers

Øresund duration: 8 yearsConstruction time: 5 years

Contracts: 9 major (10+ nationalities)Budget: Euro 3 billion (1990 prices)

Monthly T/O: Approx. US $ 50 million

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Bridgebuilder job

ContractorsParliaments

The Press

The Owner

IndividualsCompanies

Organisations

Authorities in general

Local authorities

Consultants

Other Fixed Links

Competitors(ferries) Rail

operatorsInfrastructural

managers

Shareholders

”Neighbours” around Øresund

The public in general

OH 09

17. January 2008

“He flung himself from the room, flung himself upon his horse and rode madly off in all directions.”

Stephen Leacock

What strategy ?

17. January 2008

Partnership - Goals, a comparison

‘Owner’ requirements:

Value for money

Timely completion

On budget

Contractor’s intentions:

Value for money

Timely completion

On (his) budget (= profit)

OH 03

17. January 2008

Partnership - Historic conclusions (mine)

General observations over time:

1. ‘Owners’ are rarely aware of their obligations in the process

2. The result is an unclear contract

3. An unclear contract is not a satisfactory foundation for cooperation

OH 04

17. January 2008

Partnership - ‘Owners’ responsibilities # 1

a) Define clearly

- his functional requirements- his timeframe- his quality level

b) Choose risk philosophy

c) Choose advisors

d) Choose contractors

OH 06

17. January 2008

Partnership - ‘Owners’ responsibility # 2

Understand the relationship:

Time, Quality, and Money

Any change after award:

only 2 out of 3 – can remain fixed at the same time.

OH 07

17. January 2008

Partnership - Konsortiets original choices

Konsortiet decided:

- to be a competent ’Owner’

- to produce no budget surprises,

- allow contractors to make money- to ensure long term good quality

Mental consequence:“We are a Contractor ourselves - the Main Contractor” i.e.

part of the solution to the problem, - not part of the problem itself.

OH 08

17. January 2008

Partnership # 1- How?

Co-operation happens only, if both parties profit from it

OH 10

17. January 2008

Partnership #2 - Contract basis

Clearly written contracts• Based on expectations of co-operation, not conflicts

Clearly defined requirements• No compromise on quality (= low maintenance)

Construction contracts had a clear division of risks, i.e.• gambling belongs to the Owner• all defined risks, not under the contractor’s control, were

price-able• all risks under the contractor’s control belonged solely to

the contractor

OH 12

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Procurement

The procurement of works follows EU Directive 93/37/EEC of 14 June 1993:

Restricted procedure with prequalification

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Tendering basis

Transparency required

EEC 93/37• most advantageous tender

Design + Construct • Delegation / Partnership• Functional criteria • Illustrative Design (For information only)

• DRB included (General Conditions

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Intergrated contract principles

Milestone Concept• Max. 1% (paid when all NCO fixed)• Selfcontrol

Dispute Review Board• Decision on manning at award• Frequent meeting schedule

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DRB operations

Individual DRBs

DRB meeting frequency 2-3 months

No DRB ever had to make a decision

i.e. No claims

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All objectives were met:

The link opened on July 1, 2000 (9 months early)

Budget not exceeded Within environmental framework No contractors lost money on the project No arbitrations or disputes No political or media-related complications

A textbook win-win situation

Win-win situation