Panama Canal Owner and Contractors Agree to Final Cost, Schedule Terms

Global Cast Complicates Panama Canal Expansion Project


After a tumultuous year that included a challenging negotiation to get the lock contractor back to work, the Panama Canal Authority's $5.25-billion third-lane expansion program is entering its homestretch. Still, key challenges lay ahead, such as moving the enormous new gates into their recesses, installing valves, building the electromechanical system that lets it all move and then flooding and testing the system, the largest of its kind in the world. Functional completion is set for the first quarter of 2016, meaning the canal should be able to pass ships even though some work may be ongoing.

Unlike the original 100-year-old Panama Canal locks that feature miter gates that swing open and shut, the locks for the new lane use rolling gates that open and close straight in and out of the recesses that are perpendicular to the lock chambers. The new locks will be able to pass ships carrying 13,000 to 14,000 TEUs (twenty-ft-equivalent units).

"A very important part in this last leg is to get all of the electromechanical systems working as soon as possible," says Jorge L. Quijano, administrator and CEO of the Panama Canal Authority (ACP). With all the gates on-site since November, Quijano and his team now await the arrival of control systems for installation.

When asked what keeps him up at night, Joe Cazares, program manager for CH2M Hill, the program management adviser to ACP, says, "I used to say concrete. Now I say instrumentation and controls. We built the body. But now the 'brains' and 'nervous system' have to go in—all the software, instrumentation, interfaces, valves—assuring the intelligence of the whole system is in sync and operating correctly."

Giuseppe Quarta, CEO of the contractor consortium Grupo Unidos por el Canal, says a major milestone on the way to completion is to be able to flood the locks by the end of June 2015. To get to flooding, the project team must finish the buildings for the electromechanical systems, install those systems, put the gates in the locks, install all the valves and "test the systems to make sure everything works," he says. There are 50 electrical- and mechanical-component suppliers that have to be coordinated, and "no locks in the world of this size and performance. Also, the software is a very important actor in this play," he observes. GUPC, composed of Spain's Sacyr S.A., Italy's Impregilo S.p.A., the Netherlands' Jan De Nul n.v. and Panama's Constructora Urbana, S.A. won the design-build contract for the locks work in July 2009.

Strategically Vital




As a strategically vital infrastructure asset both for Panama and the world, the canal expansion program has impact beyond its size. "This is more than just a project. It's a national goal to continue to be the premier route and the integrated logistics hub for the Americas," said Roberto R. Roy, chairman of the Panama Canal's board of directors and minister of canal affairs for Panama. He explained that, to keep politics away, canal board decisions are made independently of the government, but all profits help support the country. "First, we pay for all expenses, then make a reserve for investments. The rest is given out to the government as a dividend. We may be the only corporation in the world that pays out 100% tax," Roy quips. The direct contribution is not more than 9% of the country's income, but a lot more than the canal is involved. "The entire logistics industry supported by the canal—ports, aviation, banking, logistics parks—all of these contribute 20% to 25% of the GDP," he says. Panama's 2013 GDP was $42.65 billion, according to the World Bank.