Transportation

Expanded Panama Canal Opens

When the first ship traveled through a new set of locks at the Panama Canal on June 26, it marked the completion of an infrastructure project that will be critical to world trade in the 21st century.

expanded Panama Canal opens

©2016 RODRIGO ARANGUA/GETTY IMAGES

Cosco Shipping Panama was the first vessel to travel through the expanded canal during an opening ceremony on June 26. The massive vessel crossed the nearly 50-mile-long canal from the Atlantic to the Pacific oceans in about 11 hours.

The Chinese ship Cosco Shipping Panama was the first vessel to travel through the expanded canal during an opening ceremony on June 26. The massive vessel, 984 feet long and 158 feet wide, and carrying nearly 9,500 containers, crossed the nearly 50-mile-long canal from the Atlantic to the Pacific oceans in about 11 hours. Thousands of spectators, including the Panamanian president, Juan Carolos Varela, officials of the Panama Canal Authority (ACP), and 70 heads of state, greeted the ship as it reached the Pacific portal.

The $5.2 billion project added a third set of locks to the 102-year-old canal, allowing it to receive the huge new container ships that now dominate the world maritime trade but are too large to fit through the canal’s existing locks, completed in 1914. The new locks can accommodate so-called neo-Panamax or post-Panamax vessels, which can accommodate as many as 14,000 containers stacked as tall as a 15-story building.

For WSP | Parsons Brinckerhoff, the opening was the culmination of years of advisory and planning work for the expanded canal, as well as a history of involvement with the original canal dating to the early years of the 20th century.

For the last decade, the prospect of an expanded Panama Canal “captured the imagination and aspirations” of port authorities and other transportation infrastructure interests throughout the U.S., which competed to invest in projects that would allow them to remain competitive with respect to containerized shipping trade between the U.S. and Asia, according to Scudder Smith, a principal consultant with WSP | Parsons Brinckerhoff who prepared forecasts of expansion impacts for the ACP.

The related infrastructure improvements include dredging ports to the deeper depths required by the neo-Panamax vessels, development of expanded terminal capacities, as well as improvements to the nation’s freight rail system and other inland infrastructure, said Smith. For instance, WSP USA is on the team for the Bayonne Bridge Navigational Clearance Project, which will raise the deck of the bridge by 64 feet to accommodate the entry of neo-Panamax ships to New York Harbor.

History with the Panama Canal

expanded Panama Canal, president Theodore Roosevelt, original locks, 1912

©WSP ARCHIVE

In 1905, William Barclay Parsons was appointed to the Board of Consulting Engineers for the Panama Canal, which advised President Theodore Roosevelt on the best means of building a canal across the Isthmus of Panama. Parsons argued for a sea-level canal rather than a canal with locks, which was what was ultimately built.

In 1905 William Barclay Parsons was appointed to the Board of Consulting Engineers for the Panama Canal, which advised President Theodore Roosevelt on the best means of building a canal across the Isthmus of Panama. Parsons voted with the majority of the board to build a sea-level canal (without locks), and was a forceful advocate for that method. However, a minority of the board argued for a canal with locks, and Roosevelt sided with the minority. The canal, with two sets of locks, was completed in 1914 and is considered a marvel of modern engineering. [Parsons later successfully engineered a sea-level canal for Cape Cod, Massachusetts.]

Walter J. Douglas, an early partner of the firm, served as engineer of maintenance for the canal during World War I and, in the absence of the governor of the Canal Zone, occasionally served as acting governor. His son, Walter S. Douglas, who led the firm from 1966 to 1977, recalled that when his father, as acting governor, declared a school holiday in the Canal Zone on Armistice Day (Nov. 11, 1918), the younger Douglas was “the most popular boy in the entire Isthmus of Panama.”

Walter S. Douglas, expanded Panama Canal opens

Walter S. Douglas

Maurice Quade

Maurice Quade

Walter J. Douglas

Walter J. Douglas

Another partner of the firm, Maurice Quade, directed several projects between 1955 and 1965 for the improvement and expansion of the canal, including a study of the possibility of building a sea-level canal, as advocated by Parsons. In 1960, the firm was commissioned to study methods of excavation for a new, sea-level canal at five possible locations in Central America.

Other studies conducted by the firm included engineering reviews and updated cost estimates of earlier proposals for improving the channel of the existing canal, constructing additional locks, converting the existing canal to a sea-level canal, and a possible new canal in Nicaragua. No proposal for a new or expanded canal came to fruition until the voters of Panama approved an expansion plan in 2006.

William Parsons, expanded panama canal, Cape Cod Canal

©WSP ARCHIVE

August Belmont (left) and William Barclay Parsons (right) shake hands across the stream that became the Cape Cod Canal, which successfully used the concept of a sea-level canal that Parsons had unsuccessfully advocated for the Panama Canal.

Strategic Advisory

In 2002, when it competed for the program advisory assignment for the canal expansion, the firm was asked to provide traditional program management oversight of more than 100 technical studies that had been produced for the ACP.

Instead, WSP | Parsons Brinckerhoff proposed a much broader strategic advisory role. The ACP agreed to the expanded role, and “facilitating the decision-making process of the Authority became a big part of our scope,” said David Earley, director of strategic planning and development for the firm’s transportation sector, who oversaw the firm’s planning and strategic advisory work on the canal expansion before a design-build contract was awarded to an international consortium in 2009.

From 2002 through 2007, WSP | Parsons Brinckerhoff, in association with Montgomery Watson Harza, played a key role in advising the ACP in developing the framework for defining, planning and executing the expansion of the canal. The firm served as program advisory consultant to the ACP, providing guidance to the Authority as it outlined the scope of the project, determined the methods for financing and constructing it, and developed an approach to managing it.

“We assisted the Authority in developing a process and a model for a project that would be technically, environmentally and financially feasible,” Earley said. During the critical planning stage of the project, WSP | Parsons Brinckerhoff was the principal consultant to the Authority, “responsible for bringing the program together.”

Defining and Managing the Process

Following the award of the program advisory consultant contract in 2002, WSP | Parsons Brinckerhoff worked closely with the ACP to implement the management structures that would allow the Authority to manage the $5.2 billion project.

“The major challenge of this project was the depth and breadth of the services that the Authority demanded. We responded to that challenge by drawing upon our diverse resources across the globe, engaging over 40 professionals from various operating divisions to deliver advisory service that was innovative, comprehensive and holistic,” said Earley.

expanded Panama Canal, opens new locks

©2016 JOHAN ORDONEZ/GETTY IMAGES

The $5.2 billion project added a third set of locks to the Panama Canal, allowing it to receive the huge new container ships that are too large to fit through the canal’s existing 102-year-old locks.

“Initially, we sought to bring order to the process,” Earley continued. “Our team worked closely with the Authority to establish goals and objectives of the canal expansion. We developed a study plan, established priority for studies and analysis, the concepts of risk assessment and alternatives analysis, and the need for third-party legal review to improve the transparency of the project. We also assessed the organizational readiness of the Authority and provided training and coaching for Authority staff as necessary,” Earley said.

“We then concentrated on defining the project. We developed and integrated five models—capability, operation cost, market demand, hydrologic and financial—to identify the development strategy that would maximize the economic value of the canal. We also provided guidance and advice to Authority personnel in developing the socio-economic aspect of the program in accordance with internationally accepted standards.

“We then shifted toward implementation strategy for the master plan. We developed a decision matrix for implementation and advised the Authority on overall cost structure, cost methodology and project control systems. We also provided guidance, coaching, direction and assistance to the Authority staff during the process of drafting the master plan document.

“As the master plan was finalized, our team assisted the Authority in determining the optimal contracting method for the program, developing an overall strategy to maximize bidding participation and creating contract specifications for the project,” Earley said.

The result of the firm’s work was a framework for a master plan that would guide the project through the design and construction phases and pass muster among all of the canal’s stakeholders, including the international shipping and financial communities, and the public of Panama.

Plan Approved, Construction Begins

The ACP in 2006 submitted to the National Assembly of Panama a $5.2 billion proposal for expansion of the canal that included two new locks (one at the Atlantic portal and one at the Pacific portal), rolling gates and tugboats to position vessels, and widening and deepening of entrance and exit channels to the canal. That plan was approved by the voters of Panama in a 2006 referendum, and in 2009 the ACP awarded a contract to an international consortium to design and build the project.

David Earley

David Earley

Scudder Smith

Scudder Smith

WSP | Parsons Brinckerhoff’s program advisory role on the project was largely concluded by 2007, although the firm subsequently “developed a long-term, investment-grade analysis and forecast of vessel and cargo volumes to support the financing of the canal expansion,” explained Smith, who served as project manager for the work. The forecast model was refined and updated in 2010 to account for the slump in maritime trade that resulted from the Great Recession.

WSP | Parsons Brinckerhoff was awarded the Friendship Award by the U.S.-Panama Business Council in 2006 for its service to the ACP. In 2009, the ACP stated that the firm’s advisory services for the canal expansion included “envisioning and developing the program from conceptualization and formulation all the way to its implementation.”

Reading news accounts of the canal opening, Earley said, was gratifying in that it validated the critical role of WSP | Parsons Brinckerhoff in assisting the ACP to define a viable plan for marshaling the project to completion.

“It’s a privilege for our firm to have been associated with one of the great infrastructure projects of our time,” said Earley. “The expanded canal will promote world trade for the next 100 years, just as the original canal did for the past century.”

To learn more about our services and projects, visit usadvisory.wsp-pb.com.