Denver airport chief takes blame for $1.8B Great Hall P3 debacle

Dive Brief:

Kim Day, CEO of Denver International Airport, told city council members during private meetings that she and the airport were to blame for the failure of the $1.8 billion Great Hall public-private partnership (P3) deal, according to CBS4 Denver.
Day reportedly said that airport and city officials signed off on a bad contract that did not make clear the schedule or costs; the inexperienced airport staff did not provide adequate oversight and fell behind in decision-making; and project officials gave Ferrovial-led Great Hall Partners “too long a leash.”
Day identified other shortcomings as well, including that the project's precontract feasibility study was inadequate; Great Hall Partners based its estimate on poor-quality materials, which had to be upgraded at higher prices; airport officials had no means to track construction progress; decision-making authority was unclear among the unqualified airport management team; the project was too complex for the anticipated, traditional permitting and inspection process; the airport team was not open to airline suggestions; and airport administrators did not act quickly enough when it was apparent that Great Hall was not acting on requested changes.

Dive Insight:

In previous statements, Day put the majority of the blame for delays and rising costs on Great Hall Partners. Airport officials did not respond to Construction Dive's request for comments.

The trouble between Great Hall and the airport heated up last year when the contractor determined that the concrete in the existing terminal was weaker than preconstruction tests indicated. The airport hired an independent consultant to conduct additional tests, which indicated that the terminal concrete presented no safety issues but did detect traces of a condition known as alkali-silica reaction (ASR), which causes concrete to swell, crack and weaken. The consultant recommended additional ASR testing elsewhere around the airport property.

But concrete was not the only dispute. A July letter from Great Hall to the airport said the biggest problem on the renovation project was "the owner's lack of engagement, direction and cooperation." In addition, Great Hall said, "The owner's failure to issue much-needed direction and support regarding these owner-caused changes plagues the project."

As of late last year, Great Hall was looking for $288 million in change orders and termination costs, $166.7 million of which represents approximately 24 change orders for restrooms, concession offices, door hardware, water connection design and 200,000 square feet of solid-surface wall panels instead of the specified walls covered with laminate and other materials.

CBS4 estimates that the termination fee the airport will pay to Great Hall will be approximately $20 million.

As for the construction project, the airport has been busy hiring a new construction and management team since the city fired Great Hall. DEN hired Jacobs Engineering as a consultant in October, and the Denver City Council approved a $195 million construction management and general contracting (CM/GC) services contract with Hensel Phelps earlier this month. Construction on Phase 1 of the renovation is expected to start in March.