Panama Canal agrees to pay cost overruns, advancing expansion project - Peter T. Leach, Editor-at-Large | Jan 05, 2015 2:18PM EST The Panama Canal expansion cleared another hurdle in its path after authority agreed to pay $233 million for cost overruns incurred by a consortium of engineering firm, but the move puts the project close to busting the $5.25 billion budget. As part of a decision reached by an international arbitration board, the authority will pay the extra money to GUPC, the consortium building the third set of locks. The canal agency payment will come very close to busting the project’s budget because it may not include enough for this contingency. “We have $100-$200 million built into that amount for contingencies, but if we have a finding by the arbitration panel that goes beyond that amount of contingency, that would of course pierce the cap,” Panama Canal Administrator Jorge Quijano said in an interview last year with JOC. The arbitration board’s decision is related to a claim for the concrete mix and the basalt aggregate used in the new locks’ construction. GUPC will recover $233 million of the $463 million it had claimed. In addition, the decision includes an extension of 176 days for delivery of the project. GUPC’s claim asked for 265 days. When the new locks open in early 2016, container lines will able to traverse the waterway with vessels three times the size they can currently deploy now, providing them with greater economies of scale.
Posted on: Tue, 06 Jan 2015 00:36:13 +0000
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