Geological Risk Assessment and Its Impact on Tunnel Construction

Abstract

There are three major risks associated with tunnel construction projects: limited information on site conditions, selection of the appropriate construction method, and the occurrence of unpredictable events. Firstly, underground conditions cannot accurately be predicted, since geotechnical investigation merely provides a forecast of underground characteristics. Secondly, unforeseen ground conditions may drastically affect the selection of the construction method. Thirdly, seismic activity may threat the project´s feasibility without warning. Therefore, tunneling projects are inherently risky and uncertain with significant consequences in the project´s financial viability. Consequently, this paper attempts to assess and valuate the risks inherent to tunneling projects so as to consider their impact on project´s free cash flow estimation and the return on invested capital. The methodology employed to assess risks included Monte Carlo simulations and statistical methods. The results were obtained using data from an actual project currently under construction in Colombia. The findings suggest cost uncertainty is primarily determined by quantity variations during construction. Furthermore, the degree to which quantities vary is dependent upon previous field sampling thoroughness and the extent of geotechnical investigation during the project´s initial stages.