...that of vessels currently able transit the waterway if loaded to maximum capacity. “Typically, it is us as a contractor to the client or us to the side of the client, but to integrate with the client and actually act as if we [were] a part of the owner is very different,” says CH2M Hill Executive Vice President Mike Kennedy, who is heading the third-lane expansion program for the firm.

The partnership swung into action almost before the ink on the contract had dried. While CH2M Hill initially planned to arrive in Panama and spend significant time setting up operations, its officials quickly ended up working with ACP to handle inquiries from the bidders about the project.

Following the initial request for proposals issued in December 2007, the participating consortia submitted more than 1,200 formal inquiries for changes and the need for amendments to the proposal document. The need to address the inquiries forced ACP to push back the bid deadline twice, extending the bidding process a full six months.

Although it was unexpected, CH2M Hill’s participation provided the company a unique opportunity to learn the details of the locks project, the companies vying for the work and, most important, about ACP itself. “In some respects, the cultures of the two organizations have their similarities,” Kennedy says. “They have their differences, obviously, but a lot of cultural values are very similar and there is a basis to start the relationship.”

Getting that relationship right from the start is an imperative, given the delicate balance facing the team in overseeing the locks project after it is awarded in July, Quijano says. The huge cost of the locks plus the global importance of the canal means a responsibility to ensure the investment is justified. But, at the same time, the winning firm needs enough leeway to carry out the project as it sees fit. “We have to manage ourselves in a way that does not become a stumbling block to the project’s success,” Quijano says.

Funding Flow

While forging its partnership with the American firm, ACP was lining up financing for the cash flow that will be necessary once the locks effort begins. The authority has lined up approximately $2.3 billion in funding through five multilateral and development agencies. The proposed debt will have a 20-year maturity, with a 10-year interest-only payment phase. Moody’s Investors Service graded the ACP investment rating at A2.

One major reason for the fiscal confidence is the large portion devoted to contingencies. Approximately 30% of the project’s financing is reserved for the possibility of cost increases and overruns. About 57% of the expansion effort costs will be accounted for by the operating revenue of the canal—the primary factor for a toll increase that began this year.

The next priority is making sure the funds will be spent wisely. CH2M Hill’s expertise in managing largeinfrastructure efforts is critical. At the same time, for the Panamanians, the integrated management structure is designed so that they may gain invaluable experience in developing large-scale infrastructure projects.

“What [ACP] did not want was for someone to come in, do the job and then just turn the key,” said CH2M Hill’s Joe Casares, construction manager for the expansion effort. “When the project is done, their staff will have gained the experience, gained the knowledge of the processes and procedures of a major program-management operation.”

Within four months after stopping work on the canal in 1906, John Frank Stevens had completely reorganized the project and had almost 24,000 people at work—three times the number laboring on the site when he arrived. While the bulk of the credit for the accomplishment lies with the achievements of his successor, George Washington Goethals, the importance of Stevens’ contribution cannot be underestimated.

In his book “The Path Between the Seas,” McCullough highlights how Stevens streamlined project administration and outlined priorities in clear directives. By the time Stevens stepped down as head of the project in 1907, it was well under way and the canal team had been transformed into a cohesive, effective unit. ACP and CH2M Hill hope they have re-created this approach as they enter the most daunting phase of the project.

“The biggest challenge we face is managing everything that happens on the Atlantic side,” says Kennedy. “Weather, distance, security, transportation, logistics… everything is magnified on the Atlantic side, with much less support. When we started, we just thought of this as ‘the Panama Canal.’ Not being Panamanian and not being from here, we looked at both sides of the waterway as the same thing....It was not until we got down here and started thinking through [the conditions] that we realized these were very different situations.”