London eyes super sewer, but at what cost?
N E W S & O P I N I O N by JACOB BRONSTEIN, SmartWorlds Manager | Aug 28, 2015
A consortium led by German insurance giant Allianz earlier this month won a tender to invest in London’s much-debated, $6.2-billion “super sewer," a 15-mile-long system of tunnels now expected finally to break ground in 2016 and take seven years to complete. The massive undertaking, dubbed the Tideway Tunnel, is intended to alleviate system pressure and stop the annual flow of 39 tons of untreated sewage into the Thames River, the city's signature waterway.
But the project still has many doubters. Just this week, the Financial Times had this to say:
The risks involved in digging the “super sewer” beneath the Thames River are substantial — from the potential undermining of Big Ben’s foundations to the flooding of the London Underground transport network. However, soaring costs and a novel financial structure designed to keep the expense of building it “off balance sheet” for the government and Thames Water, the capital’s privately owned water supplier, have added to long-running concerns that the biggest risks may be financial.
Sir Joseph Bazalgette
The unique project delivery scheme required a comprehensive overhaul, allowing the consortium to foot the entire bill for the project. Just for this program of projects, the private Thames Water Utilities has formed a special purpose firm, Bazalgette Tunnel Limited (BTL), named after the legendary Sir Joseph Bazalgette. As chief engineer of London's Metropolitan Board of Works, he fathered the city's original Victorian network of sewers, built in response to the Great Stink of 1858.
No Small Plan: The Tideway Tunnel will run 25 km along the Thames River and intercept 34 combined sewer overflows. Expected to break ground next year, the controversial project will take until 2023 to complete. (Photo: WWTOnline)
BTL will own the tunnel and be been granted an operating concession from Ofwat, the UK’s water regulatory authority. Thames Water will now begin the process of selecting a contractor to deliver the new sewer, with construction to start in 2016 and completed in 2023.
Christian Fingerle, who runs infrastructure investments for Allianz, told The Telegraph, "We are convinced that this project will modernize a pivotal aspect of London’s essential infrastructure and are delighted that Allianz can help to upgrade London’s sewage system for (the) 22nd century.”
Of note, subterranean London is now home to two of the UK’s largest greenfield projects. The “super-sewer” is the city's second largest infrastructure project, behind only the $20-billion East-West Crossrail line - which consists of 26 miles of tunnels and is speeding toward a 2018 finish.
Project Controversy
Of course, as noted above, not everyone is as upbeat as Allianz about the Tideway Tunnel. Very vocal opponents, more than a few in high places, have publicly voiced concerns. On July 14, in a Financial Times article, the former director of utilities at the European Bank for Reconstruction and Development, Martin Blaiklock, bluntly asked, “Is it wise to let a bunch of construction amateurs dig and operate a £4 bn tunnel under the heart of London? Would any other government contemplate such a venture under their capital?”
“Is it wise to let a bunch of construction amateurs dig and operate a £4 bn tunnel under the heart of London?”
By "amateurs", Blaiklock was referring to the fact that none of the members of the winning consortium has owned or built a tunnel before. Given the complex nature of having to operate and manage 42 job sites, hundreds of feet below the streets of London, some meters away from residences, project risks become exceptionally great, he added.
Another source of controversy is the fact that, as planned, project costs will be shouldered exclusively by Thames Waters’ five million customers, who will incur an estimated £80 ($125) increase per year in their bills. That could have indefinite implications.
Cleaner & healthier? That's the goal for the 15-mi. tunnel that will largely follow the river. (c/o Thames Water).
My perspective
One has to question whether the project itself, and the delivery model chosen are in the best interest of consumers and taxpayers in the long term -- especially since the government has guaranteed that the consortium will be repaid in full and on-time, irrespective of project performance.
Project stakeholders are essentially transferring project risks to the taxpayers. Given the risks involved in a seven-year construction timeline, the contract scheme stipulates that the consortium will start benefitting financially from the project at its outset, beginning in 2016.
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I urge stakeholders to identify other options and investigate more cost-effective solutions.
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The Thames Tideway Scheme is resource-intensive, complex and prone to delays. With all this in mind, I urge stakeholders to identify other project options and investigate more cost-effective solutions. In the end, the project delivery model should be chosen on the basis of a value-for-money assessment that hedges against unnecessary financial risks. Engaging in such an approach would encourage the analysis of all possible upgrade opportunities to the existing asset, such as new sustainable drainage systems that could function just as well as those currently proposed.
By implementing shrewder design and more value-engineered decisions, coupled with available innovative technologies, I believe that the project's stakeholders --ultimately the citizens of London-- can and will see significant time and cost savings, and a much more sustainable public asset.
The author manages our SmartWorlds Initiative. He can be reached at jacob.bronstein@builtworlds.com.