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Hill has Oversight Role in Panama Canal Expansion Project, Unveiled June 26

It is not too often in the global construction industry that projects are mounted on the drawing board with such major challenges and yet equal benefits as the Panama Canal expansion. Also called the Third Set of Locks Project, the expansion is targeted to double capacity of the 102-year-old canal by creating an additional lane of marine traffic and facilitate passage of the latest generation of ‘New Panamax’ vessels that are nearly one and a half times the maximum width and length of the current ‘Panamax’ container ships and carry over twice as much cargo. To use a shipping term, a New Panamax vessel is capable of carrying up to 13,000 TEU (twenty-foot equivalent) of cargo, compared with a capacity of just 5,000 TEUs by a Panamax ship. However in a macro-economic perspective, an expansion of the canal will bring the Americas closer to Asia and also shift international trade routes, allowing ships to reach Asia from the US Gulf Coast more than two weeks faster than they would going east through the Suez Canal. It will also will be able to handle tankers carrying liquefied natural gas (LNG), liquefied petroleum gas (LPG) and other hydrocarbons.

The expansion is due to open on June 26, 2016 Autoridad del Canal de Panama (ACP or the Panama Canal Authority) Administrator Jorge Quijano, was quoted as saying by the Bloomberg news agency in late March. Contractors building the new locks, which will allow bigger ships to pass through the waterway, will substantially complete works on May 31. “The date is very close and there is still a lot of work to do,” Quijano said during the inauguration of a new canal training center. The ACP has resolved problems associated with contractors and seepage from the new locks discovered during testing, said Jose Ramon Arango, senior international trade specialist at ACP that operates the 50-mile (77-kilometer) waterway connecting the Atlantic Ocean to the Pacific Ocean. The authority is planning a test of the new locks with a tanker in May and shipments through the canal may rise to 360 million tons in 2017 following the project’s completion, after reaching a record 340.8 million tons in the fiscal year that ended September 30, the authority said in October. The expansion has spurred a series of port and infrastructure upgrades throughout the Caribbean and the US East Coast as docks make room for bigger vessels, Bloomberg said, adding the expansion was 97% complete at the end of March, with testing and the construction of minor structures accounting for the remaining 3%.

Watching these developments closely and actively playing its role is Hill International, which was retained in 2010 when ground was broken for the historic expansion by the Office of the Inspector General of ACP to provide Project Oversight and Construction Assurance services. Hill’s construction assurance services has benefited the Panama Canal expansion program by providing a detailed risk analysis over the entire construction program to determine what is known and what is unknown and how to manage the risks.  A five-year audit plan was developed to focus on specific risks and performed risk-based audits to provide increased certainty for the expansion.

The original Panama Canal project – when completed in 1914 – was viewed at the time as the largest and most significant construction project in history. Providing a strategic maritime link between the Pacific and Atlantic oceans, the canal’s path took nearly a decade to build and reduced maritime travel and shipping time in half. With growing trade and driven by the maritime industry’s need to build bigger vessels to carry goods and commodities in shorter time, a formal proposal was made in 2006 by the Panama government to forge ahead with the expansion. Former President Martin Torrijos, in an April 24, 2006 speech while announcing the expansion said, the canal is like our ‘petroleum’. “Just like the petroleum that has not been extracted is worthless and that in order to extract it you have to invest in infrastructure, the canal requires to expand its capacity to absorb the growing demand of cargo and generate more wealth for Panamanians,” he said at that time. What followed was a national referendum and approval of the project by the Cabinet and the National Assembly. The expansion is primarily focused on building two new sets of locks, one each on the Atlantic and Pacific sides, and excavating new channels to the new locks. Each set of locks will have three chambers with water-saving basins. The scope of works also includes widening and deepening of the existing channels and other related facilities. The new locks are 427 meters long and 55 meters wide or the equivalent to the size of four football fields and when it was first built, there were more than 152.9 million cubic meters of soil material removed. This was enough material, when placed on rail cars, to circle the earth four times.

With the expansion now on the verge of being complete and to be officially unveiled soon, a major success for Hill International has been its ability to ensure that a 20th century canal has been expanded to keep up with a 21st century demand. For Panama, the project will have far reaching benefits with the $1.7 billion per year in additional revenues from the canal being put into the nation’s infrastructure like hotels, resorts and upgrades of rail service between the Atlantic and the Pacific. Nearly 1 million vessels have crossed the Panama Canal since it was first built and the expansion will open up the doors for record crossings to be registered in the log books of the ACP. The next task for the canal authority in the years to come will be yet another expansion to handle Post-Panamax vessels or the supertankers.

By Ashok Dutta