Denver airport’s breakup with contractors drags on
Denver International Airport’s effort to end its $1.8 billion relationship with the private partner overseeing its massive terminal renovation is turning into a drawn-out breakup — with no end in sight yet.
Since DIA officials pulled the plug on Great Hall Partners’ contract nearly two months ago, they have made progress on lining up a new manager, lead designer and builder to take over the renovation project by early next year. But airport officials confirm that it’s unlikely the termination — which requires pinning down contractual breakup fees that are likely to exceed $200 million — will be settled by Nov. 12, the end of the 90-day termination period.
That is when the old contracting team must finish winding down — and it’s when airport officials had hoped to button up Great Hall’s costly exit deal.
The delays, if they persist, could inject new uncertainty into still-unresolved questions about massive cost overruns and years of delays that Great Hall had forecast for the original $650 million renovation. It was part of a larger publicprivate partnership deal.
As with the two sides’ longrunning battles over the impacts of a concrete strength issue and a slew of airport design directives, the process of settling Great Hall Partners’ final invoices has been, by all accounts, anything but simple. The two sides also are still attempting to resolve the contracting team’s earlier claims.
“Nothing has been easy on this project,” said Michael Sheehan, DIA’s senior vice president of special projects, in an interview Wednesday.
Neither Great Hall nor DIA would disclose the total amount being sought to satisfy the contractors’ outstanding costs and the breakup fees.
Moody’s Investors Service, an outside rating agency, has estimated the eventual termination payment at between $140 million and $180 million, according to The Bond Buyer. Moody’s also estimated DIA owes Great Hall another $70 million or so to repay its lenders. That would make the total cost $210 million to $250 million.
Regardless of when they cut Great Hall a final check, DIA officials say they have been working hard to reboot the project in coming months.
As DIA lines up new lead contractors, committees have been confronting the biggest question facing the project’s future, which Sheehan posed as: “Where can we identify cost savings and really dial this project in, from a schedule and budget standpoint, to ensure success?”
The renovation, which began in mid-2018, includes relocation of security screening areas from the main floor to the upper level, consolidation of airline check-in areas, and the revamping of most other spaces.
Great Hall had projected in July that finishing the project would take an additional $288 million and 28 months, pushing completion from late 2021 to early 2024. Airport CEO Kim Day has said DIA would reevaluate the project’s scope to cap its cost at $770 million — the original budget plus a $120 million contingency fund.
DIA has ditched the publicprivate partnership deal that had called for Great Hall to oversee new concession spaces for decades.
During a terminal tour Wednesday, most walled-off construction spaces were vacant, with unused materials and construction equipment moved to storage. As it exits, Great Hall has installed insulation around exposed pipes ahead of winter and otherwise prepared the site for handover, to varying degrees of satisfaction, DIA officials said.
“One of the things you’re really going to see … (is that) we’re going to have a transparency with this project that obviously hasn’t existed,” Sheehan predicted, including plans for a publicly accessible “dashboard” displaying updated progress and budget information. “We recognize, given what’s happened on this, we have to reestablish that trust and show people we can do that.”
Sheehan confirmed that DIA has selected Jacobs Engineering Group to begin assessing how to manage the project under a more traditional setup — similar to how DIA’s separate concourse expansion projects are being run — and plans to make Jacobs the terminal’s new program manager. That means Jacobs would assist another contractor with tracking the schedule, the budget, the progress of work and any stakeholder concerns. Plans call for taking an amendment to an existing Jacobs contract to a City Council committee on Nov. 6, Sheehan said, along with a contract for a yet-to-be-named new lead designer.