Template revised September 22, 2016.
COMMISSION
AGENDA MEMORANDUM
Item No.
9a
BRIEFING ITEM
Date of Meeting
March 27, 2018
DATE: March 20, 2018
TO: Stephen P. Metruck, Executive Director
FROM: Ralph Graves, Senior Director, Capital Development
David Brush, IAF Program Leader
SUBJECT: International Arrivals Facility (IAF) Program Update (CIP #C800583)
EXECUTIVE SUMMARY:
The purpose of the International Arrivals Facility (IAF) program is to provide expanded capacity
for immigration and customs processing of arriving international flight passengers. Design is
nearly complete and construction is advancing. This Memo updates the Port Commission on
the program’s progress since the last overview on November 14, 2017.
PROJECT UPDATE:
Design is nearing the 100% completion milestone, Clark has bid 98% of the trade work,
construction stands at 15% complete and the Port has disbursed approximately 24% of the
design-build contract; however, the negotiation of the Guaranteed Maximum Price (GMP) has
not yet concluded. It is forecasted that a fair and reasonable number will be negotiated for the
GMP by April 30
th
of this year. That GMP will include several key cost components including
General Conditions (design-builder staff), General requirements (jobsite support equipment,
facilities and services), Direct Costs (bid/contracted work and unbid work), Design-Builder
Allowance, Risk Contingency and Design Fees. The negotiations also include a detailed
discussion of (and required agreement on) assumptions used to generate estimates for the
foregoing cost components.
BUDGET:
The original Project Notebook Budget was $608.4M. In late 2015, the design-builder
independently validated that number which contractually created the IAF “Target Budget”. On
several occasions, the Commission increased the Target Budget to accommodate added scope
e.g., the extension of the Sterile Corridor, acceleration of the Phase 2 work, providing an
opportunity to expand the outbound baggage operation, and the reconfiguration of the narrow
body aircraft on the South Satellite. Those approved scope additions resulted in an Adjusted
Target Budget of $684.4M to which the design-builder was to design. As design proceeded it
became apparent that the design-builder would be unable to achieve the budget. Accordingly,
COMMISSION AGENDA – Briefing Item No. 9a Page 2 of 4
Meeting Date: March 27, 2018
Template revised September 22, 2016.
in August 15, 2017, the Port Commission increased the IAF project funding to $790M to address
the $106M budget overrun reported by the design-builder at the time.
By way of background, in late 2015, the design-builder, Clark Construction, concluded the first
of three contract phases, the Validation Period, when it completed a conceptual design and
established a Target Budget and Target Schedule. In response, in January 2016 the Port
authorized the design-builder to commence design of the new IAF. Throughout that entire year
and half way into the next year the design-builder continued to reaffirm to the Port that the
budget and schedule were achievable, however, by mid-2017 it became apparent that the
design-builder had exceeded its adjusted design-to-budget by approximately $100M.
Additionally, once construction commenced in August 2017, hazardous polychlorinated
biphenyls (PCBs) were discovered on the IAF Building site that required costly remediation.
Finally, in late 2017, when the design was approaching the 90% completion mark, certain
equipment specifications and project occupancy requirements changed late in the design
process driving additional costs and further delaying the schedule. Although a final GMP
number has not been agreed, it is forecast that, in the aggregate, these factors could cause the
final project completion cost to rise to $830M ($40M over the currently approved project
funding of $790M or $146M over the Adjusted Target Budget of $684M).
Description of Forecasted Cost Overruns:
Seattle Market Conditions
$14M
Clark Understated the Original Target Budget
$29M
Misjudged Code Requirements (ex. Smoke Control)
$22M
Failure to Design to the Adjusted Target Budget
$35M
Baggage Handling System Enhancements and Changes to the
Equipment Specifications
$13M
Emergency Generator Change
$4M
Remediation of PCBs on IAF Building Site
$4M
CBP Facial Recognition (Addition of a 3rd Escalator)
$1M
Occupancy Classification Change in Bagwell
$2M
Schedule Phasing/Complexity
$5M
Increased Costs Driven by Above Cost Overruns (WA B&O Tax, Sales
Tax rate, Builder’s Risk, etc.)
$17M
Total
$146M
COMMISSION AGENDA – Briefing Item No. 9a Page 3 of 4
Meeting Date: March 27, 2018
Template revised September 22, 2016.
SCHEDULE:
The IAF consists of three major building components, the main IAF Building, Passenger Walkway
and Sterile Corridor. The original Target Schedule showed the completion of all three project
elements to be coterminous in September 2019. The added Pod D of the Sterile Corridor is
scheduled to be completed in August 2020. The Passenger Walkway and Sterile Corridor
elements remain on that original schedule, but due to some of the factors mentioned above,
the opening of the main IAF building is currently expected to be delayed until February 2020 (a
five-month delay). The project team and Clark are exploring measures that could accelerate
the remaining work in order to deliver it as close as possible to the original September 2019
date. Such acceleration would further increase costs. Cost information that would permit a
decision to be made in this matter will be made available by the contractor in the coming
month.
ADDITIONAL BACKGROUND
None
ATTACHMENTS TO THIS BRIEFING
PowerPoint presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
November 14, 2017 – The Commission was briefed on 3
rd
quarter 2017 progress.
August 15, 2017 – The Commission authorized the balance of IAF funding in a joint request
with the NSAT project.
March 28, 2017 - The Commission authorized additional IAF funding.
October 11, 2016 – The Commission authorized IAF to add balance of Phase 2 for
accelerated execution.
September 27, 2016 – The Commission was briefed on IAF reconsidering phasing and
project update.
September 13, 2016 – The Commission authorized IAF FAA reimbursement agreement.
July 12, 2016 – The Commission authorized IAF to add Phase 2 scope to meet continuing
rapid growth.
June 28, 2016 – The Commission was briefed on two additional international aircraft gates
at IAF to meet continuing rapid growth briefing.
May 17, 2016 – The Commission was briefed on Plan of Finance update.
April 26, 2016 – The Commission was briefed on IAF 1Q2016 update.
February 9, 2016 - The Commission was briefed on IAF 4Q2015 update.
December 8, 2015 – IAF guaranteed maximum price (GMP) Development Period
authorization (presented in combination with NSAT authorization request).
November 10, 2015 – The Commission was briefed on IAF update.
August 11, 2015 – The Commission lead a special roundtable meeting with airline
representatives.
COMMISSION AGENDA – Briefing Item No. 9a Page 4 of 4
Meeting Date: March 27, 2018
Template revised September 22, 2016.
July 28, 2015 – The Commission lead an IAF forum.
July 14, 2015 – The Commission lead an IAF forum.
June 23, 2015 – The Commission authorized execution of the IAF Design-Build Contract.
May 26, 2015 – The Commission approved IAF preliminary funding plan motion.
April 28, 2015 – The Commission authorized a service agreement for Commissioning
Services.
April 28, 2015 – The Commission authorized execution of a lease agreement with SEATAC
VENTURES 2010 LLC for IAF program management office space near Sea-Tac
International Airport.
February 24, 2015 – The Commission authorized a service agreement for IAF consultant
program leader.
January 27, 2015 – The Commission was briefed on IAF funding plan.
January 27, 2015 – The Commission approved IAF request for proposals advertisement.
January 13, 2015 – The Commission was briefed on IAF update.
December 2, 2014 – The Commission was briefed on IAF scope and budget update.
October 28, 2014 – The Commission was briefed on IAF 3Q2014 update.
August 19, 2014 – The Commission was briefed on IAF 2Q2014 update.
August 5, 2014 – The Commission authorized IAF request for qualifications advertisement.
July 22, 2014 – The Commission was briefed on IAF progress.
June 10, 2014 – The Commission was briefed on IAF 1Q2014 update.
May 6, 2014 – The Commission was briefed on IAF project delivery.
April 22, 2014 – The Commission was briefed on capital program.
March 11, 2014 – The Commission authorized IAF master planning.
February 25, 2014 – The Commission was briefed on IAF program.
November 19, 2013 – The Commission authorized IAF construction management, testing
and inspection; surveying and locating and safety service agreements.
July 23, 2013 – The Commission authorized IAF project and program support; and price
factor design-build methodology.
July 9, 2013 – The Commission was briefed on IAF.
July 9, 2013 – The Commission was briefed on alternative public works contracting.
April 9, 2013 – The Commission was briefed on IAF.
June 26, 2012 – The Commission was briefed on airport terminal development challenges at
Seattle-Tacoma International Airport.
June 14, 2011 – The Commission was briefed on international air service growth and future
facility.
February 2, 2010 – The Commission was briefed on South Satellite passenger growth and
facility considerations, Delta’s proposed airline lounge and other possible future
aviation projects.
