Dive Brief:
- Denver International Airport (DEN) announced it has settled all claims, "financial and otherwise," with Ferrovial-led Great Hall Partners, the consortium that was part of a now-defunct $1.8 billion public-private partnership (P3) renovation and concession management deal, for a total of $183.6 million.
- DEN officials said the airport paid Great Hall $55.5 million to settle almost $290 million of submitted claims plus another $121.8 million last December. The airport did not have to pay a contract termination penalty, and the total amount falls within the $170 million to $210 million that DEN expected parting ways with Great Hall would cost.
- The final payment covers Great Hall's equity investment, work completed prior to its termination and work performed during the project's transition back to the airport. DEN said that reimbursing a developer for these "transition and contract breakage costs" are not unusual when terminating a construction contract for convenience. Also, the payments were required under the development agreement that the airport had with Great Hall.
Dive Insight:
In the run-up to this agreement, Great Hall said it was owed $288 million for changes and termination costs. That amount included $166.7 million of change orders for items such as concession offices, door hardware and the decision to replace laminate and other wall coverings with 200,000 square feet of solid-surface wall panels.
One of Great Hall's biggest complaints was that airport officials wanted to micromanage the project but lacked the authority to make decisions. Last month, after publicly faulting Great Hall for escalating costs and delays, airport CEO Kim Day reportedly told city council members that she and the airport entered into a bad contract that was fuzzy on the schedule and costs; that the staff was inexperienced and fell behind on delivering answers to Great Hall; and that the airport gave Great Hall too much leeway.
Construction has resumed at the airport, but new contractor Hensel Phelps and others on the project team face a different challenge. Shellee Casiello, communications manager at DEN, told Construction Dive that the coronavirus threat has forced the airport to evaluate all aspects of its capital plan. However, she said, construction is moving forward.
In a Great Hall update, Day said that DEN has more than a year’s worth of cash on hand but has been looking at ways to cut costs and is "working on reprioritizing the timing and delivery of capital projects." She said the airport is working with contractors to help identify areas of savings, possible rate changes and scope reductions.
"We have a lot of balls in the air," Day said, "and it will take us some time to put all the pieces together."
Some states and cities around the country have issued shelter-in-place orders to slow the spread of the virus. While these mandates are keeping many individuals from working in offices and other places, some authorities have categorized construction as an essential service, thus allowing building to continue."
Meanwhile, Hensel Phelps, Casiello said, is taking precautions to ensure workers' safety, including:
- Ensuring that all project personnel comply with Centers for Disease Control and Prevention (CDC) and Colorado Department of Public Health and Environment (CDPHE) recommendations, including "continual refinement" of best practices to prevent the spread of COVID-19.
- Incorporating CDC and CDPHE COVID-19 precautions into project orientations and safety meetings and posting the information in high traffic and common areas.
- Following CDPHE and CDC guidelines for preventing the spread of COVID-19 by disinfecting high-touch surfaces and common areas and by encouraging remote meetings and social distancing.
