UPDATE: Aug. 16, 2019: Just a few days after being terminated from the Denver International Airport terminal renovation public-private partnership, Great Hall Partners has released documents showing that it would have cost more than $1 billion to complete the project, up from the original budget of $650 million, Colorado Politics reported, and that delays would push project completion to February 2024.
Great Hall would have required a change order of $288 million, and, when taking the project contingency into account, the total cost would have been approximately $1 billion. The contractor's estimate was less, however, than an earlier projection of $311 million of additional costs.
In a statement on its website, Great Hall said it is "disappointed" that it could not reach a resolution with airport officials to the "serious issues" presented by the weak concrete and "more than 20 large in scale, badly timed and unnecessary change directives" issued by the airport.
Dive Brief:
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Amid rising costs and delays, Denver International Airport officials have terminated the airport's $1.8 billion public-private partnership (P3) contract with Great Hall Partners, the consortium performing a renovation of the facility's Jeppesen Terminal, The Denver Post reported. The construction portion of the contract is $650 million, but the total payout for Great Hall would have been almost $2 billion when factoring in a 34-year concession management agreement.
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DIA must pay Ferrovial-led Great Hall at least $200 million to reimburse the group for the financing it provided at the start of the project, but the total termination fee will be negotiated between the two. DIA now will begin the search for another contractor to take over the project's reins when Great Hall begins stopping work in November.
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In a press conference Tuesday, DIA chief Kim Day told reporters that delays past the original completion date of 2021 are a given that the airport has to go through another procurement process, but that it hopes to stay close to the original budget using a $120 million contingency fund. Day did concede, however, that the project scope might change in order to meet those budgetary goals.
Dive Insight:
"Clearly we're disappointed," Day said. "This is not the outcome that we anticipated."
The termination of Great Hall was for convenience rather than for cause, which will likely allow the airport to avoid legal battles around the firing. Most construction contracts have a convenience clause, which means that the recipient of the contract can be fired for any reason. Many general contractors and owners try to work things out before the situation escalates to that point because stopping a project and finding another contractor can be costly and time-consuming.
In a statement to CBS4, Great Hall said it was committed to a smooth transition off of the project but denied any allegations by the airport that the group is to blame for excessive change orders.
One of the major issues has been around the quality of the terminal's existing concrete. After testing the concrete, Great Hall found areas of weak compressive strength. The airport hired an independent consultant to evaluate the concrete, and while there were relatively weaker areas, an inspection revealed no safety issues.
The consultant did, however, recommend additional testing around the airport property to check for alkali-silica reaction (ASR), which causes concrete to swell, crack and weaken. Traces of ASR were found in the terminal.
