Bar - Boljare highway: A complex project chalenges and predictions

After frequent allegations by certain Montenegrin media that the State, that is the Government of Montenegro, behaves as an irresponsible investor in the realization of capital infrastructure projects, and in the first place of the Bar-Boljare Highway Project, the Ministry of Transport and Maritime Affairs, respecting first and foremost an expert, professional and responsible approach to work and the right of the public to be acquainted with the true facts, circumstances and activities undertaken by the Ministry of Transport and Maritime Affairs and the Government of Montenegro, in order to best protect the interests of the Project and citizens, who are at the same time the key investors of our most significant development project and its end users, for whose benefit this project is implemented, wishes to inform the public about the following indisputable facts.

Building permit for the construction of Sub-section 4.4.1 (construction works on the Tara 1 and Tara 2 bridge, Matesevo tunnel, Matesevo interchange with the belonging parts of the open road on the Smokovac-Matesevo ​​section of the Bar-Boljare highway), issued by the Ministry of Sustainable Development and Tourism on 23 June 2017, when the legal conditions for starting the main works on the above mentioned sub-section were fulfilled. Works on the tunnel Matesevo, which are carried out by the Croatian Company "Skladgradnja d.o.o.” Split, as the subcontractor, started after the building permit had been issued, and the works already underway relate to the excavation of the northern portal of Matesevo tunnel, ​​and to a slightly smaller extent on the approach cutting of the southern portal. However, from 16 October 2017, there were some cracks on the works performed, which started spreading in the following period, due to the sliding of the approach cutting slopes. Due to such a situation regarding the stability of the facility on the route, amendments to the Main Design were required for the purpose of its adaptation to the actual conditions on the ground, which had to be previously approved by the State Review Panel for technical documentation. Since 22 December 2017, the Contractor that signed a contract with the Employer (Government of Montenegro, represented by the Ministry of Transport and Maritime Affairs) has twice submitted the documentation for review, and both times it has been sent back due to some deficiencies, within a period significantly shorter than that stipulated under the Contract. For the third and last time, the documentation was submitted for review on 1 February 2018, and it is currently in the process of being reviewed, and it will be possible to continue the works on the facility concerned after a positive review by the State Review Panel for technical documentation, composed of experienced eminent experts and university professors. Such procedure is usual and in accordance with relevant regulations and contractual procedures, and the construction of the tunnel Matesevo has not in any way been conditioned by the construction of the Smokovac interchange.

Aware of the importance of the Project and the money that has been allocated for this project, we have set a high performance standard for the Contractor, both in terms of consistency in the application of European standards and quality, and in relation to all other contractual obligations. This inevitably implies a high degree of accountability and a great deal of dedication, both in the process of approving individual segments and in the process of their realization, whereby the quality, safety and longevity of the works must never be jeopardized, and in that sense any interpretation that is not based on arguable facts is inadmissible, such as establishing a connection between the construction of the Matesevo tunnel with the Smokovac interchange.

Phased implementation of the Bar - Boljare highway project is stipulated under the Detailed Spatial Plan of the Bar-Boljare highway (2008.). The Smokovac - Matesevo section, approximately 41 km long, is defined as the first stage of the Bar-Boljare highway project implementation; it starts after the Smokovac interchange and extends to the site of Matesevo. The Smokovac interchange is an integral part of the Farmaci - Smokovac section, which is defined as the second stage of implementation under by the Detailed Spatial Plan of the Bar - Boljare Highway (2008). The Smokovac interchange is foreseen as a link between two highways, the Bar-Boljare highway and the Adriatic-Ionian highway, and as a link between the Bar-Boljare highway and the main road Podgorica - Kolasin. The interchange will be designed to enable its phased construction, so that a part of the interchange, i.e. the connection linking the section Smokovac-Uvac-Matesevo of the Bar-Boljare highway with the M2 main road, will be designed at this stage, i.e. the connection of the newly built section of the highway Bar-Boljare with the existing infrastructure will be provided.

The Preliminary Design, which was prepared based on the Detailed Spatial Plan of the Bar-Boljare Highway and the Conceptual Design of this section, specified the beginning of the Smokovac-Matesevo section from chainage 0 + 000km behind the Smokovac interchange, so that the interchange was not an integral part of the Preliminary Design. As a potential solution to the connection of the newly constructed section of the highway with the M2 main road, a temporary solution was considered at the beginning of the route itself, in a similar way as the links were solved between the built highway sections and the existing infrastructure, and in the countries of the region. The abovementioned solution was abandoned, due to the fact that, because of limited space, it would result in an unsafe solution, with modest elements, which would represent the point at which potential traffic congestion could be created.

The State Review Panel that reviewed the Preliminary Design of the Smokovac-Matesevo interchange recommended that it was necessary to provide a connection (part of the Smokovac interchange) as part of the preparation of the Main Design of that section. The expert team who developed the Terms of Reference for the preparation of the Main Design of the section Smokovac - Matesevo, having in mind the above mentioned recommendation, included the design of the Smokovac interchange in the scope of work, in order to fully establish the transport and technical function of the highway and avoid temporary negative consequences of that stage of the works.

The Terms of Reference for the preparation of the Main Design envisaged a phased design of the interchange, which was an undisputed obligation of the Contractor, in order to enable a good solution for the connection to this section of the Bar-Boljare highway through Phase I, until the adoption of the Detailed Spatial Plan of the Adriatic-Ionian Highway, i.e. until making the final decision on the route of the Adriatic-Ionian highway and the continuation of the Bar-Boljare highway construction via the Farmaci – Smokovac section.

The construction of the entire Smokovac interchange is not envisaged under Phase I, but only the construction of a connection to the contracted priority section Smokovac - Matesevo of the highway Bar-Boljare. The access road to the highway section that is built from M2 main road will be about 1.5 km long, as the Phase I of the overall design solution for the Smokovac interchange, which will also remain as the final solution at later stages of the Bar-Boljare highway construction through the following sections.

As it is well known, the Contractor's Offer was requested and submitted on the basis of the Preliminary Design of the Smokovac-Matesevo section in February 2013, which was evaluated as the first-ranked by the Government of Montenegro in July 2013, thus opening the process of negotiations that was completed on 1 February 2014, when the Contract was approved (initialed) by both Contracting Parties, including all the supporting and constituent binding parts.

Bearing in mind:

-           The content of the Preliminary Design and the need to elaborate in detail in the Main Design, as a senior level document, all the elements in order to ensure the completeness, full functionality and longevity of the works,

-           The content of the negotiations preceding the Contract signing,

-           The need to align the Main Design with spatial and planning solutions,

-           Evidently complex geomorphology of the terrain and unpredictable underground conditions and risks that may arise during the works,

It was established by the Contract with the Contractor that the maximum guaranteed price for which the Contractor was obliged to provide the completeness and functionality of the works, with the possibility of its correction, up to 10% in the case of the need for the execution of subsequent and unforeseeable works, which is a common case during implementation of construction contracts, even those which are much less complex and valuable. For these reasons, the FIDIC General Conditions of Contract (design and construction) provide the possibility of reserving the so-called framework amount for the purpose of financing subsequent and unforeseeable works. Among other things, this is one of the key principles and models of the FIDIC contract, which defines the sharing of risks and responsibilities of the contracting parties in a just way. Due to the scope, complexity and value of the works, as well as the conditions and the risks of carrying out works on this section, limiting the value of subsequent and unforeseeable works up to a maximum of 10% of the contract price is in function of protecting the interests of the Employer.

The scope and the price of subsequent and unforeseeable works will be defined through contract procedures, to be determined by the selected Supervisory Authority/Engineer (French-Italian Consortium Ingerop-Geodata) responsible for the evaluation and determination in units of measurement and unit prices, so that in this moment it would be very tactless to make any claims about the cost of the entire Smokovac interchange construction. According to the Contract, the priorities, the scope and types of subsequent works are determined by the Employer.

Certain savings have even been recorded for the benefit of the Employer as a result of the more favorable design solutions that have been accepted by the State Review Panel for technical documentation and approved by the Supervisory Authority (Engineer).

In the light of the above facts, the contents of the Contract and the usual FIDIC procedures, it cannot be claimed in any case or context that there were some "omissions" and "shortcomings" of the Contract, or "forgotten works", "ignorance" or " irresponsibility", as cited in some media.

Implementation of capital infrastructure projects is often followed by different ways of looking at and interpreting certain issues resulting from the complexity of the projects themselves. But also, FIDIC's Conditions of Contract include common contractual arrangements for their first and foremost amicable settlement, or else the issue is referred to the Dispute Adjudication Board (DAB), and in the next stage to the Swiss Chamber‟s Arbitration Institution in Zurich, in those situations where the contracting parties cannot reach an amicable solution. At this point, the proceedings before the DAB and the Arbitral Tribunal have not stated yet, nor they are expected to begin soon.

In disputes over any contractual issue, it is customary that each party has its own strategy to overcome the challenges, so public disclosure and explanation of positions and plans of the Contracting Parties, before the contractual procedures are carried out in such cases, may cause damage to the contracting party concerned. If any Contracting Party acts in a balanced and cautious way, it does not mean that it is secretive and/or corrupt, as it could be heard in the media, and no activity, especially of this value and importance, is managed through the media and through daily political competition.

Since the beginning of the Project and the business relationship with the Chinese partners, the political decision has been primarily based on the opinions and positions of the profession, and this statement is supported by the fact that an absolute primacy is given to the profession in the implementation of this project, and not to any daily political disputes and interests, and therefore the preparation of contract documents, the Law on the Bar-Boljare Highway, supervising the works, project management, review of technical documentation and technical audit of the works have been carefully entrusted to the expert teams, organizations and commissions consisting mostly of recognized Montenegrin and foreign experts in particular areas, who were expected to maximally contribute to the success of such a significant project.

Ministry of transport and marritime affairs