Underground Contracting Practices/A Case Study

This case study embodies the problems of an underground project under current contracting practices. It will provide a realistic framework for a structured examination of the anatomy of a major complex underground project. Just as it will illustrate the frustrations of the parties to an underground contract, it will also provide a means to examine potential opportunities to provide a better way to develop underground space. Urban Transit Authority (UTA) had planned to expand their heavy rail underground transit system through an extension to an existing line. UTA lacked sufficient funding to guarantee the construction and operation of this planned extension. Venture Partner Associates (VPA) in conjunction with four major department stores entered into an agreement to create a major underground space for a commercial/recreational facility. The concept was to locate the facility adjacent to a planned station and beneath existing aboveground office facilities. This group was known as Commercial Development Corporation (CDC). UTA had reached an agreement with UMTA to provide 20 percent of the line and station costs. UTA then entered into an agreement with CDC to provide the needed additional funding for the station work in return for locating the station adjacent to the planned underground commercial/recreational complex. The agreement called for CDC to contribute 20 percent to the station cost to a maximum of $25 million plus a one percent contribution from commercial/recreational revenues for operating costs.