In recent weeks, the Norwegian Coastal Administration's project team has been working intensively to finalize all documents before the construction of Stad ship tunnel can be put out for tender.
– We have conducted a comprehensive review of the tender documents and all attachments. We have completed most of the documents, while also identifying any sections and text that need adjustments, says project manager Terje Skjeppestad.
In other words, the announcement of the contract to build the world's first ship tunnel is approaching. The project will be tendered as a fixed-price turnkey contract, procured through a competitive negotiation process.
During Arendalsuka in mid-August, coastal director Einar Vik Arset revealed that the tender announcement might be right around the corner.
– The Norwegian Coastal Administration is on schedule for the start of the construction, and we are planning for the tender announcement in October, said the coastal director.
What does a turnkey contract actually involve?
A turnkey contract, in brief, is a contract type where a single main contractor assumes responsibility for the entire delivery of the project. The main contractor has the overall responsibility for the project’s execution, including design, construction, quality, HSE (Health, Safety, and Environment), communication, schedule, and delivery.
The contract awarded is based on NS 8407, a standard contract for turnkey contracts in Norway. This contract regulates the rights and obligations between the client and the main contractor. The main contractor must ensure that all work is performed in accordance with applicable laws, regulations, and the contract's requirements. The Norwegian Coastal Administration, as the client, will closely monitor the contractor throughout the project to ensure that all requirements and functions are met.
Extensive planning work
Before the Norwegian Coastal Administration can issue the tender, all regulatory plans related to the ship tunnel must be approved.
– This has been an extensive process involving (local) democratic procedures, with significant input and objections from Vestland County Council and the County Governor of Vestland. However, after constructive dialogue with all parties, we are now resolving these issues, so that the Stad City Council can approve the regulatory plans at a council meeting at the end of September, says Skjeppestad.
Tender in October
This sets the stage for the construction of the Stad ship tunnel to be put out to tender on Doffin (the database for public procurements) in October. The tender process usually takes up to a year.
– First, we will conduct a prequalification phase, which takes about three months. Then, a select group of suppliers will be invited to submit bids, which we will evaluate and negotiate—often in several rounds. This phase typically takes six to nine months, says Skjeppestad.
If everything goes as planned, a contract with a contractor could be signed in the fall of 2025, with construction starting around the turn of 2025/2026.
The steps in the tender process
There are several phases in a tender process. Here is a brief summary of how we envision the process leading up to contract signing:
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Announcement of the competition: After a long preparation phase, the Norwegian Coastal Administration is ready to announce the competition. This will be done on Doffin, the national public procurement database.
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Deadlines for questions and participation: After the announcement, contractors are given a deadline to ask questions regarding the qualification criteria, followed by a deadline to submit their request to participate in the competition.
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Invitation to selected contractors: The Norwegian Coastal Administration evaluates the requests and then invites the best-qualified contractors to submit their bids.
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Information meeting: A joint information meeting is held, with possible separate clarification meetings arranged.
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Submission of the first bid: The suppliers submit their initial bids, which are then evaluated. This may result in a reduction in the number of bidders.
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Negotiations and revised bids: New round(s) of submission and evaluation of updated bids take place. Separate negotiations are conducted, with a further reduction in the number of bidders until only one bid and one bidder remain.
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Contract award: The best bid/the best bidder based on the award criteria is awarded the contract to build the ship tunnel. A standstill period then begins, during which other bidders may appeal the contract award.
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Contract signing: Once the standstill period has passed, the contract can be signed.
The tender process usually takes up to one year.
How long is the construction period?
– Our estimates indicate that the construction of the ship tunnel will take just under five years, from the signing of the contract to final delivery. However, it is up to the contractor to plan this, says Skjeppestad.
Must stay within budget
It must be emphasized that the bid received by the Norwegian Coastal Administration from a turnkey contractor for the construction of the ship tunnel must fall within the total project budget of NOK 5.060 billion, as approved by the Norwegian Parliament. If no bids are received within the approved budget, the new budget must be approved by Parliament.
Important milestone
The fact that the contract for the construction of the Stad ship tunnel is now going out to tender is an important milestone in the project.
– Most of what we have worked on so far has been subprojects and actions leading up to the tender announcement. Since this type of tunnel has never been built before, the technical documentation—detailing how the ship tunnel will be constructed, including technical installations—has been demanding. Additionally, it has involved extensive and time-consuming work on planning processes, land acquisition, reuse of rock masses, and notably, efforts to reduce risk and costs in the project. This takes time, and I would argue that our project team has worked well and effectively since we were tasked with building the Stad ship tunnel in 2021, says Skjeppestad.
