Jeppesen Terminal, courtesy of Denver International Airport

News

Denver airport picks new team for expansion after firing Ferrovial JV

18 October 2019 | By GCR Staff | 0 Comments

Denver International Airport (DEN) said yesterday it had selected a new preferred lead designer and construction manager/general contractor for Phase I of its $770m Great Hall expansion project after terminating a public-private partnership (PPP) contract with a Ferrovial Airports joint venture in August.

Stantec is now the preferred lead design firm and Hensel Phelps is the preferred construction manager/general contractor for the project, DEN said in a press release on 17 October, adding that both companies have a strong local presence, are familiar with the Denver community, and have existing contracts with DEN, which enables them to mobilise quickly.

The selection is pending approval by Denver City Council.

DEN surprised the international airports and infrastructure PPP community on 13 August this year by terminating its contract with Great Hall Partners, a joint venture comprising Ferrovial Airports, JLC Infrastructure and Saunders Concessions, which it signed on to the 34-year deal in August 2017

Serious issues have impacted this project, which include the discovery of weak concrete in some areas of the terminal and more than 20 large in scale, badly timed and unnecessary change directives issued by DEN to the design they had previously approved– Great Hall Partners

Ferrovial Agroman was to build the Great Hall for a fixed price of $770m, with Great Hall Partners to provide operations and maintenance within specific commercial areas of the terminal for 30 years after to recoup its investment. Work began in July 2018

Terminating the contract in August 2019, DEN said: “Many factors contributed to the airport and city’s decision.”

It cited the discovery in November 2018 of issues with the compressive strength of the airport’s original concrete (placed in 1991), which required additional testing, and design changes it made in response to safety and operational needs. It said Great Hall Partners had “been unable to obtain the necessary permits to keep the project on schedule”.

The parties tried mediation but could not agree on the cost and schedule impacts of these issues, DEN said in a press release.

For its part, Great Hall Partners part-blamed “20 large in scale, badly timed and unnecessary change directives issued by DEN” (see below).

Now DEN is committed to keeping the design and construction cost of the overall Great Hall Project at the original $770m, a figure that includes contingency. The project is no longer a PPP.

“When we announced the termination of our contract with Great Hall Partners in August, we said that we expected to select a new project team this fall. The selection of the lead designer and contractor is right on schedule and will allow us to begin construction in Q1 2020, as we committed to doing,” said DEN chief executive Kim Day said yesterday.

Stantec will now complete the design for the remainder of the project, verify existing designs, look for cost savings and other design improvements, and prepare for construction to proceed.

Phase I work primarily includes construction of the airline ticketing pods in the centre of the Terminal on Level 6. It also includes new restrooms and conveyances. The construction manager/general contractor’s role for further phases has not been determined.

Great Hall Partners has until 12 November to vacate the site.

The JV made an initial investment of $258m in the scheme.

DEN said the total termination payment amount owed to Great Hall Partners has not been finalised.

After the termination in August, Great Hall Partners issued a statement saying: “We are disappointed that we were unable to find a mutually acceptable resolution to the serious issues that have impacted this project, which include the discovery of weak concrete in some areas of the terminal and more than 20 large in scale, badly timed and unnecessary change directives issued by DEN to the design they had previously approved.

“Since November 2018, we have made good faith attempts to reach a mutually acceptable resolution with DEN and [Denver] Mayor Hancock’s office, and it has always been our strong desire to resolve these issues in order to deliver the Project.

“We would have preferred to work with DEN to bring this Project to execution, but will continue to cooperate fully with DEN to ensure a smooth transition.

“The Termination for Convenience shall entitle Great Hall Partners to a compensation as stated in section 21.2 of the Development Agreement.”

Image: Jeppesen Terminal, courtesy of Denver International Airport