$170M Phase 2 of CO Airport Project Begins

THURSDAY, JULY 15, 2021


Officials gathered last week for the groundbreaking of Phase 2 of the Denver International Airport’s Great Hall Project.

DIA Chief Executive Officer Kim Day was joined by Alan Salazar, Chief of Staff for Mayor Michael B. Hancock; Larry Nau, TSA Federal Security Director, Colorado; and Derek Hoffine, Hensel Phelps Vice President and District Manager for the ceremony.

This part of the larger, $770 million renovation project is slated to focus on building a new security checkpoint.

“The new security checkpoint will have improved technology and a new queuing concept that will provide more effective and efficient security,” said Day. “These improvements combined with the new ticketing pods being constructed as part of Phase 1 will ultimately allow us to build a terminal for the future with enhanced security, increased capacity, improved operational efficiency and an elevated passenger experience.”

The plan estimates that all work for Phase 2 will be done by mid-2024 (despite the plan also scheduling the checkpoint itself to be open in early 2024).

Phase 2 work will take place simultaneously with the completion of Phase 1 as crews finish the work on the new ticketing areas for United and Southwest Airlines. Phase 1 is slated to be done at the end of this year and is currently about $25 million under budget.

The scaled-down, $170 million plan for Phase 2 was released in December with officials noting that Hensel would also take point for this work.

Project Background

In November 2017, the DIA proposed the addition of 39 gates in an expansion project, up from the airport’s original proposal of 26. At the time, the project was estimated to cost $1.5 billion and would be a P3 headed by Ferrovial Airports. The overall deal was slated to include a $650 million terminal renovation, which would be overseen by Saunders Construction over the course of four years. (Cost estimates for the actual expansion at the time were not yet available, however.)

A couple months later, in January 2018, two subsidiaries of Hochtief, a Germany-based construction company, were announced as the companies to oversee the expansion. The companies, Turner Construction and Flatiron Construction, would be building two new hubs for the airport, with the capacity for three more, as well as 16 new gates and installing additional pavement.

That summer, DIA would announce an official multi-year, multi-phase renovation timeline headed by Great Hall Partners with a budget of $650 million. The P3 also included 30 years of private oversight of expanded terminal concessions. A groundbreaking ceremony followed on July 12, 2018.

However, first delays struck in February 2019 when concrete on the main floor was found to be weaker than expected. According to officials, early testing of the concrete’s compressive strength was lower than what the project’s plan specified, so the area followed up with intensive testing. The DIA also noted that the testing needed to be complete prior to cranes going onto the main floor to erect steel.

At the time of the discovery, preliminary estimates stated that the project could be delayed by 209 workdays—roughly 10 months total.

In July, GHP reported that the renovation of Jeppesen Terminal wouldn’t be complete until at least 2024, three years behind its 2021 deadline. The companies (Ferrovial Airports, Saunders Construction and JLC Infrastructure) claimed the delay was due to various airport-requested design changes and structural issues found in old concrete initially used for the airport’s construction.

However, Channel 4 CBS Denver claimed that the project’s full completion could extend to 2025—with costs projected to increase by nearly 50%, or $311 million.

Contract Saga

A month later, not long after DIA announced that it would be ending its P3 relationship with GHP 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 claimed that various delays have pushed the completion date back to February 2024 as well.

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 September, Day presented a revised renovation budget totaling $770 million, which included the original budget and a $120 million contingency.

According to Day, subcommittees and steering groups were working to process the closing of GHP’s contract and settling associated claims so that the contractor could successfully vacate the property by Nov. 12. Although a 34-year concession deal was included in GHP's contract, Day also confirmed that the DIA will run that component themselves after the renovation is complete.

It was also noted that although the new $770 million budget failed to include GHP's termination fees, a report from Moody’s Investors Service shows that the airport has roughly $900 million in liquidity to back up any settlement.

The following month, the DIA announced that it had selected Hensel Phelps to serve as the preferred construction manager and general contractor for Phase 1 of the project previously held by GHP. Canada-based engineering company Stantec has been chosen as the preferred lead design firm for the entire project moving forward.

In addition, the DIA also selected Gilmore Construction, Sky Blue Builders and roughly another dozen subcontractors it hopes to take over from GHP to continue to aid in design, engineering, steel placement and electrical work. Those contracts totaled about $136 million.

At the end of March, the DIA announced that it had settled all claims with Great Hall Partners and the Denver Post reported that the two reached a final settlement of $183.6 million.

The agreement, which was dated March 13, details more than $55 million in promised final payments on top of the $128.2 million previously reported.

In May of this year, contract amendments were requested and included:

  • the $700 million contract to the JV of Turner and Flatiron would increase to $940 million;
  • the $655 million contract with Holder and FCI would increase to $920 million;
  • the Jacobs’ design contract and the HNTB’s contract would increase from $65 million to $85 million; and
  • program manager WSP’s contract would increase from $45 million to $60 million.
   

Tagged categories: Airports; Commercial Construction; Contracts; Maintenance + Renovation; NA; North America; Ongoing projects; Renovation

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