Tunnel Losses: Causes, Impact, Trends and Risk Engineering Management

"Tunneling and Underground works are unequivocally subject to a diversity of inherent uncertainties associated with the geotechnical, hydro-geological and environmental regime that surrounds them. On many occasions, these uncertainties can provoke loss events of considerable consequences. The present contribution elaborates on losses that the insurance market has suffered in the recent years, following a construction failure event. These losses are being considered and analysed on a quantitative basis through evaluation of cost related data, with explicit discretization of the applied construction methodology and of the subsequent developed failure type since both of which are considered of major importance. Given the identified persistence and regularity of some loss-contributing factors, recommendations are provided on the basis of a proactive risk engineering management approach that are envisaged to reinforce the understanding of project risks and alleviate the incurred insurance cost. 1 INTRODUCTION The underground construction sector has always been a very challenging area for all involved parties, including the insurance market. Main reason for that remains the uniqueness of the uncertainties sources and the subsequent inherent risks that the tunneling and underground projects are exposed to. In many instances, these risks materialize, leading to loss events with substantially high impact on reinstatement cost and incurred delays, which depending among others on the insurance coverage will have to be bared by the Insurance market. In the recent decades and as the tunneling industry boomed and expanded with many major and significant projects undertaken around the world, the insurance market was faced with additional challenges. Increased competition during tender coupled with the scale and complexity of the projects and politically driven decision making exerted pressure on the project timelines, completion dates and budget. The pressure for on-time or even early project completion- to avoid liquidated damages or achieve bonus payments, respectively- along with cost reduction efforts and the incentive for innovative failure events. That, in turn, put additional pressure on the Insurance market which had experienced a significant amount of losses with substantial cost. One of the triggered mitigation actions was the introduction of the Code of Practice for Risk Management of Tunnel Works (ITIG, 2006 & 2012; MunichRe 2006, Wannick, 2007, Spencer, 2008, Adeyemo, 2011)."