Preparing for the big ships often leads through rough seas - many parallels between Vogtle and canal project - Rome News-Tribune: Business

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Preparing for the big ships often leads through rough seas - many parallels between Vogtle and canal project

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Posted: Monday, January 27, 2014 2:00 pm

ATLANTA -- Georgia's preparations for the next generation of large container ships has dragged on for 16 years and involves hundreds of millions of dollars in rail, road and waterway improvements, but that's a dingy compared to the titanic efforts to widen the Panama Canal.

The story is well known of how the state has set aside $266 million for its share of deepening the shipping channel of the Savannah River while awaiting federal approval and the lion's share of the money. A week ago, President Barack Obama signed a budget bill into law that effectively gives the state a green light to begin work in the next six months or so with its own funds while Congress gets around to appropriating the federal share.

Familiar are the battles with environmental groups warning of saltwater intrusion into the Floridan Aquifer and South Carolina politicians protective of their competing port in Charleston.

Georgia officials have been racing to be ready with the highways and deepening by the completion of the canal widening, originally slated for this year, the hundredth anniversary of its opening. But the Peach State isn't alone in being behind schedule.

The work in the tiny country of Panama involves essentially digging a new canal. Despite its description as a widening, it's really the creation of a third lane dug through the mountains and forests 50 miles from the Atlantic to the Pacific oceans.

The project was budgeted at $5 billion and change, or about one-third of the price tag of doubling the number of nuclear reactors at Georgia's Plant Vogtle. While the canal construction might seem small in comparison, consider that Panama's gross domestic product only totals $36 billion where the state of Georgia's is 10 times larger with three times the population.

The United States, after building the canal in the first place, started construction on a wider, third lane back in 1939 to accommodate its largest warships but stopped in 1941 to devote those resources to fighting World War II. Since then, it agreed in 1977 to turn over control to the Panamanians by 2000.

The seven decades since the war wasn't the last interruption. The European consortium contracted by the Panama Canal Authority in 2007 to finish the widening, Grupo Unidos por El Canal known as GUPC, had its own delays.

One six-month pause was required for the consortium's engineers to find a workable formulation for the concrete mix that wouldn't trigger corrosion with the reinforcing metal. Interestingly, an issue about the steel rebar in the concrete at Plant Vogtle also caused an expensive delay.

Now that the canal's construction is about two-thirds complete, a potentially bigger snag is a work slowdown and threats of a complete halt by GUPC over who should pay for $1.6 billion in unexpected costs. Compare that to Vogtle's roughly $1 billion overage that has the contractor and plant owners suing each other. The Panama project is 31 percent over budget while Vogtle's dispute is about a 7 percent overage, and work hasn't slowed in Waynesboro where the nuclear plant is being expanded.

Time is money, and the 16-year delay in deepening the Savannah River inflated the original price of $459 by 42 percent over the years.  But a study by the U.S. Army Corps of Engineers concluded the economic benefits will pay six-fold dividends on the higher cost. And in the meantime, the state has improved the landside transportation with cranes, intersections and highway connectors.

Whether the canal is finished by late next year, the current target, depends on how this latest dispute is resolved. Speaking last week in Atlanta to the Southern Motor Carriers Association, the deputy administrator of the Canal Authority, Manuel Benitez, expressed confidence that agreement was possible. However, if the work slowdown continues past Monday, the authority is prepared to declare GUPC in violation of its contract and to hire another firm to finish the job since the trickiest engineering hurdles are behind.

"From here on, it's really much easier, so I anticipate no further delays even if the contractor fails to complete the project," he said. 

Any family that's built a house understands that delays and cost overruns can happen. Professional engineers, financial managers and contractors on gigantic projects face the same challenges a hundred times over.

Walter Jones is the Atlanta bureau chief for Morris News and has been covering Georgia politics since 1998. Follow him on Twitter @MorrisNews and Facebook or contact him at walter.jones@morris.com and (404) 589-8424.