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Fired Contractor Claims $1B Needed for CO Airport

Tuesday, August 20, 2019

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Not long after the Denver International Airport decided to end its public-private partnership with Great Hall Partners for terminal renovations, the contractors released documents showing that the project requires more than $1 billion to complete.

Up $650 million from the original budget, the documents also claim that various delays have pushed the completion date back to February 2024 as well.

About the Project

In November 2017, the DIA proposed the addition of 39 gates, an expansion from its original proposal of 26. According to The Denver Post, the gate-expansion project was estimated to cost $1.5 billion and would serve as a part of a public-private partnership headed by private partner Ferrovial Airports, with a four-year, $650 million terminal renovation overseen by Saunders Construction.

arinahabich / Getty Images

Not long after the Denver International Airport decided to end its public-private partnership with Great Hall Partners for terminal renovations, the contractors released documents showing that the project requires more than $1 billion to complete.

Overall, the Jeppesen Terminal project was part of a $1.8 billion deal struck with Great Hall Partners.

At the time, the DIA had 107 regular gates and 42 “apron load” positions, according to the Post. The apron load area allowed passengers to board smaller planes on the tarmac. The proposed expansion would increase the total of regular gates by 36%.

A little over a year later, two subsidiaries of Hochtief, a Germany-based construction company, were selected to oversee the expansion project. Around the same time, Turner Construction and Flatiron Construction were awarded the work for the construction of the two new hubs, 16 new gates and the installation of additional pavement—making up one of four deals. Concourse A was slated to expand by 530,000 square feet, and Concourse B would see the addition of 91,000 square feet.

Additionally, awarded contractors Jacobs Engineering and HNTB Corp each won a $65 million contract for designing and engineering new gates; and joint venture Holder-FCI won a $655 million contract for pre-construction as well as new gate construction.

By July 2018, an airport construction timeline was released as renovation kicked off, revealing a 30-year plan of private oversight of expanded terminal concessions as provided by the Great Hall Project partnership. The expansion project was expected to be complete by November 2021 through a series of four phases.

In February of this year, work at the airport faced what could extend to a 10-month-long delay after finding that the concrete in the main floor was weaker than expected. At the time the project was still in Phase No. 1, which was originally slated to run to the summer. In this phase, the plan was for workers to tear down walls and extend the “floor plate” of the upper level by about 30 feet into the atrium. Baggage offices on Level 5 were also set to be redone.

However, according to spokesperson Stacey Stegman, the issue could not be fully known or realized until April when the testing was completed, and the airport was able to review and analyze the results.

By July, Great Hall Partners issued a new report announcing the project wouldn’t be complete until at least 2024, three years behind its original schedule, due to various airport-requested design changes and structural issues found in old concrete initially used for the airport’s construction.

The changes were slated to increase the change order by $288 million, however, this estimate was less than an earlier projection of $311 million. Shortly after the report was announced, Great Hall released an updated renovation timeline. A groundbreaking ceremony for the project took place on July 12.

A month later, the DIA announced it would be terminating the $1.8 billion Great Hall renovation contract.

What’s Happening Now

Although the DIA still needs to pay Great Hall Partners at least $200 million in reimbursements for the financing it provided for the start of the airport renovation project, a total termination fee is still being negotiated between the two.

Regarding the termination, DIA Chief Executive Officer Kim Day said, “We are very far apart in terms of cost and schedule and our values, prioritizing safety the passengers experience and our airline operations. This termination gives us control of the project going forward—we can now complete the project in a timely manner.”

Expected to take effect by November, Great Hall Partners has reportedly been given three months to wrap up and transition off of the project.

“We are disappointed with DEN’s decision and strongly disagree with their characterizations of how we have arrived at this point,” said Great Hall Partners in a released statement.

“The reality is that the Project’s time and cost overruns are a direct result of the discovery of weak concrete in some areas of the Terminal, which DEN did not disclose to GHP at the outset of the Project, and more than 20 large-scale, badly timed and unnecessary change directives issued by DEN to the design they had previously approved.”

According to a DIA-hired independent consultant, inspections revealed that no safety issues were present in the concrete. However, additional testing was recommended for alkali-silica reaction, known to cause swells, cracks and even weaken concrete. Traces of the ASR were later found in the terminal.

In concluding the recent events, Day has expressed to reporters that although the airport must go through another procurement process, she hopes to stay close to original budget, choosing to use a $120 million contingency fund. The project scope may face edits to meet the budgetary goals.

   

Tagged categories: Airports; Business management; Business matters; Business operations; Commercial / Architectural; Commercial Construction; Commercial contractors; Construction; Contracts; Expansions; Maintenance + Renovation; NA; North America; Ongoing projects; Partnerships; Project Management; Projects - Commercial; Public-private partnerships (P3); Renovation

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