WATER IN TUNNEL Manapouri Contract Varied

Press, Volume CVI, Issue 31236, 7 December 1966, Page 3

WATER IN TUNNEL Manapouri Contract Varied

fN.Z. Press Association)

WELLINGTON,

December 6.

The contract for the construction of the tailrace tunnel at Manapouri has been renegotiated to allow the payment of an extra £250,000 to the contractors to compensate for the volume of water encountered in the area worked in the last eight months.

The Minister of Works (Mr Allen) said today that the renegotiation was made under certain provisions in the original contract.

"The contract had a provision that should ‘latent conditions’ be encountered such as could not be reasonably contemplated by either party at the time of tendering, and which would have the effect of ‘gravely increasing’ cost of the w’ork, the contractors would have the right to ask that the contract price be adjusted to cover the extra costs.” said Mr Allen. The contractors. Utah-Wil-liarason-Bumett. had based their estimate on an average of 210 feet of tunnelling a week. This was in line with Utah’s achievement on similar tunnels in Australia and the United States, and was based on geological and other evidence available at the time of tendering. Mr Allen said that from the commencement of tunnelling in February, 1964, until February this year rock conditions were for the most part reasonably good, although some difficult areas had been encountered and there was more water than had been expected. During this period progress had averaged less than half the planned rate and the assessed losses of the contractors were about £BOO.OOO. From last February until the end of September, increasing quantities of water and broken ground were encountered and progress dropped still further. At times no advance was made over periods of some days.

Mr Allen said the contractors claimed the existence of “latent conditions” in terms of the contract, and made it clear that if conditions in the tunnel did not improve substantially. they would not be able to carry on because of their losses.

Mr Allen said the Crown had not conceded the existence of “latent conditions,” but to ensure the completion of the tunnel negotiations began on the basis that future risks to the contractor would be reduced in exchange for a strict limitation on the profit if conditions improved.

The contract had been reframed on what is known as a “datum estimate plus fee” basis, similar to that in force at the West Arm powerhouse site. Mr Allen said the contractors would not receive any payment for the loss of £BOO.OOO over the first two years of the contract—but £250,000 had been conceded on account of the heavy volume of water found during the last eight months when the contractors’ losses amounted to another £750,000. Mr Allen said the exact value of the datum estimate would be determined after investigation of the engineering

and construction measures necessary—for example, the extent of pumping equipment required to cover all contingencies—and after detailed accounting checks had been made to establish values of equipment to be taken over by the Crown. It has been agreed that the datum estimate would be based on a rate of progress estimated not by the contractors, but, by the Ministry of Works arid the consulting engineers, Bechtel Pacific Corporation. Mr Allen, said that if the contractors failed to achieve this progress, and as a result increased the cost above the

datum estimate, they would forfeit proportionate amounts of their fee even to the point of receiving no fee at all. “As the provision for overhead charges is fixed in amount, they would in such circumstances lose money on this account as well,” he said. “On the other hand, should future progress be better than estimated, the gain will be shared between the contractors and the Crown. “In this case the contractors will receive 30 per cent of the savings and the Crown 70 per cent, but in no case will the contractors receive more than twice the fee.” '