Design/Build Agreement For The Niagara Tunnel Project

Award of the Design/Build Agreement for construction of Ontario Power Generation’s (OPG’s) Niagara Tunnel Project was made after an intensive 8-month international procurement process. The 14.4-m diameter × 10.4-km long rock tunnel will divert 500 m3/s of water from the Niagara River to the Sir Adam Beck hydroelectric generating complex. The procurement process and Design/Build Agreement included features to address the owner’s requirements regarding risk allocation and cost and schedule certainty, while encouraging innovative ideas from the industry, both technically and commercially. The process included an international expression of interest and prequalification, followed by an invitation for design/build proposals to qualified proponents, and comprehensive proposal evaluations and negotiations with several respondent proponents. An honorarium was provided to the unsuccessful participants in the proposal stage. The resultant negotiated Design/Build Agreement includes Owner’s Mandatory Requirements, negotiated contract terms and conditions, performanceincentive bonuses and liquidated damages for schedule and water delivery performance, a multistaged Geotechnical Baseline Report, joint risk management, references to preexisting community impact agreements and measures to reduce impact on tourism. It also addresses regulatory approvals and permits, an owner controlled insurance policy that required reference to the International Tunneling Insurance Group (ITIG) Code of Practice for Risk Management as a condition of coverage, site specific safety, security and environmental plans, formal team building, a dispute review board, and escrow documentation.