Initial excavation will occur in the foreground area of the canal. Pedro Miguel locks are to the right.

A Panamanian contractor landed the first construction contract of the $5.25-billion expansion to the Panama Canal on July 18.

Constructora Urbana S.A., known by its Spanish-language acronym CUSA, submitted the winning bid of $41.1 million for the removal 7.3 million cubic meters of material near the Pacific entrance of the canal. Site work could begin as early as two weeks after the Panama Canal Authority (ACP) gives CUSA the order to proceed, officials said.

"It's a significant step forward in the creation of the new lane," said ACP Executive Vice President of Engineering and Program Administration Jorge L. Quijano in a press release. "We look forward to breaking ground very soon."

The expansion project will add a new lane of traffic through the waterway by the construction of new larger sets of locks on each end of the canal. When completed in 2014, the project will double the tonnage capacity and allow the transit of substantially larger vessels.

The dry-excavation contract is the first of five that will be needed to create a 6.7 km link between the existing navigational channel at the entrance to the Gaillard Cut and the new set of locks that will be constructed on the Pacific side of the canal.

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The entire Pacific Locks Access Channel will require the removal of 46.8 million cubic meters of material at an estimated cost of $400 million.

ACP officials said they had subdivided the contracts to allow Panamanian firms a better chance to compete in the bidding process. The complex geography of the excavation site was also a factor in the decision.

Panama City-based CUSA is one of Panama's leading construction firms, specializing in large infrastructure projects. Since about 2000 the ACP has sought outside contractors for modernization efforts of the canal and CUSA has been active in these efforts including a recent $219-million widening of the Gaillard Cut.

The ACP released its request for proposals on May 7 and the 55-day bidding period was later extended through July 6. Ten contractors from Panama, Brazil, Mexico, Colombia and Italy submitted bids.

The CUSA bid was the lowest proposal that met all of the project's requirements, ACP officials said. The sole US firm participating, Jay Cashman Inc. of Quincy, Mass., offered the highest bid of $89.97 million.

The CUSA contract will mainly consist of removing the top of a large hill near the Pedro Miguel locks and will make up approximately 16 percent of the total excavation for the Pacific Locks Access Channel. The contract also includes the removal of non-classified material and disposal of excavated material at indicated locations, and the construction of new gravel roads and ditches.

In an interview with ENR earlier this year, CUSA President Rogelio E. Alemán, said his firm's experience with the canal site, prior work with the ACP and connections with local subcontractors were reasons the firm felt positive about their chances for winning expansion bids.

"Panama can be quite difficult technically it has a long rainy season and a complex geography as well. It's a difficult area to be moving earth," he said. "We have 50 years of experience with these issues and we feel that's a big advantage we bring to the table."

The next of the five dry excavation contracts is expected to be offered next year. The ACP also plans to invite outside contractors to bid on he dredging of 9 million cubic meters of material for the Pacific entrance and offer another contract to remove 14 million cubic meters from the Atlantic approach.

Originally, the ACP intended to open the bidding on the Pacific dredging this summer but that will most likely be pushed back until the authority names a project manager. Last month, the authority released a request for proposal for the position and is still accepting bids.

The largest component of the expansion will be the $3.35 billion locks contract that represent almost 60% of the entire expansion project's cost. The preliminary timeline for the project announced in March set the tender for the new set of locks design and construction contract be let in the third quarter of this year but that will likely not be set until the project manager is named as well.

Alemán said CUSA is considering taking part in the lock bid in some capacity.

"We need to take a long look at the locks projects on if that's something we wish to take on as a consortium or subcontractor," he said.

Earlier this year, Tokyo-based Mizuho Corporate Bank, Ltd. was named the project's financial advisor, Mayer, Brown, Rowe & Maw LLP of Chicago won the legal counsel contract and URS Holdings, Inc of San Francisco was awarded the contract to conduct an environmental impact study.