Template revised April 12, 2018.
COMMISSION
AGENDA MEMORANDUM
Item No.
9b
BRIEFING ITEM
Date of Meeting
October 23, 2018
DATE: October 16, 2018
TO: Stephen P. Metruck, Executive Director
FROM: Jeffrey Brown, Director AV Facilities and Capital Program
Wendy Reiter, Director, Aviation Security
Wayne Grotheer, Director, Aviation Project Management
SUBJECT: Baggage Optimization Project Update (CIP #C800612)
EXECUTIVE SUMMARY
The Baggage Optimization project replaces six individual baggage screening systems with a
centralized system that optimizes operation of the checked baggage system at Seattle-Tacoma
International Airport. The purpose of this project is to optimize the baggage system to achieve
the maximum outbound baggage capacity within the current airport footprint. The project
increases screening capacity for greater baggage volumes, increases flexibility to allow bags to
be checked in from any ticket counter and be conveyed to any makeup device, meets the
established minimum-connect-time goal, and increases energy efficiency. Additional benefits
include increased reliability, redundancy, and security. Meeting travelers’ baggage needs will
significantly contribute to increased customer service, and address growing passenger
demands of the region. The project is currently scoped to accommodate 60 million annual
passengers (MAP) and will be implemented through three phases of construction.
The project is being bid and constructed in three separate phases. Phase 1 is currently on
budget but has recently experienced schedule setbacks of an estimated three to six months.
The biggest risks to the project are schedule delays and baggage handling market conditions
during Phase 2 and 3 bids.
PROJECT UPDATE
Phase One
Notice to Proceed was issued to the Phase 1 prime contractor, PCL Construction Services Inc.,
on May 26, 2017. Construction is currently underway, including the following activities and
accomplishments:
(1) New Central Terminal ramp to the basement has been completed.
(2) Maintenance breakroom in Concourse B has been completed.
(3) Conveyor delivery and installation is continuous.
(4) Construction on utilities and infrastructure continues.
COMMISSION AGENDA – Briefing Item No. _9b___ Page 2 of 5
Meeting Date: October 23, 2018
Template revised September 22, 2016.
(5) Conveyor Factory Acceptance Test has been conducted but will need to be retested.
Upcoming critical elements include conveyor deliveries and installation, computer
programming, and purchase of network equipment for the baggage handling system.
On-going stakeholder coordination continues to be essential, particularly with other projects,
Aviation Maintenance, and airport tenants.
The contractor has been maintaining two work shifts, Monday – Friday. As of the latest
September pay application, 103,726 work hours have been reported and work complete is
estimated to be 60 percent.
Contracting requirements (status as of Oct 2018)
Program
Requirement/Goal
To-Date
Small Business Enterprise (SBE)
15% of total contract
16.10%
Small Contractors & Suppliers (SCS)
5% of SBE
11.90%
Apprenticeship
15% of total hours
20.27%
Phase Two
The Port of Seattle and the Design Consultant continue to develop bid documents for Phase 2.
The Consultant has completed separating the Phase 2 design from the comprehensive 100%
design package; held working construction sequencing meetings and has developed
construction documents for the previously approved scope increase to bring the new baggage
system to a capacity of 60 MAP.
Bi-weekly coordination meetings are underway with the Consultant, internal Port departments,
and Airlines. Critical upcoming activities include review of the 100% design that was received in
mid-August, obtaining the airport building permit, and preparing bid documents. We expect to
request Commission authorization for Phase 2 construction in Q1 2019 and to advertise in Q2
2019, pending an anticipated completion of Phase 1 in Q4 of 2019.
SCHEDULE AND BUDGET
Schedule
Based on the most current contractor schedule, Phase 1 is 77 days behind schedule (based on
baseline schedule set in April 2015). Holding this schedule would place Phase 1 Substantial
Completion in 2019 Quarter 4. However, the contractor has fallen behind on conveyor
submittals, fabrication, and has been further delayed by a failed Factory Acceptance Test (FAT).
The contractor has continued to miss key start dates and mitigates by shortening schedule
durations to show minimized schedule delay. The Port Project Team feels that the project is
currently six-months behind schedule due to the contractor delays.
COMMISSION AGENDA – Briefing Item No. _9b___ Page 3 of 5
Meeting Date: October 23, 2018
Template revised September 22, 2016.
To address the performance and schedule concerns, the Port Baggage Team has implemented
the following:
Three additional design review meetings were held to help the Contractor understand
the project requirements.
Port staff was sent to Denver to meet with both the Contractor and Designer in order to
speed up critical submittal reviews.
Multiple letters have been issued documenting the delay caused by the Contractor.
The Project Team now meets on-site with the Contractor’s Executives quarterly to
discuss ways to mitigate the schedule delays. Actions resulting from these meetings:
o BHS Installation Foreman were swapped with other projects to help speed
production,
o Night shift hours were adjusted to provide for more Port oversight,
o The Contractor added a Field Engineer to assist with field layout,
o BHS Subcontractor field staff were increased to speed installation and improve
quality, and
o Three additional BHS installation crew were added (total of five) to mitigate
submittal and fabrication delays.
To avoid further delay resulting from another failed FAT, the Team required the
Contractor to provide a recovery schedule showing weekly milestones leading up to the
re-test. Beginning September 19
th
, a Port representative along with a member of the
Design Consulting Firm will travel weekly to the BHS Contractor headquarters in
Michigan to verify successful completion of the designated milestones. All required tests
will be successfully demonstrated prior to the official FAT retest, greatly minimizing the
chance for another failure.
Laydown area to store uninstalled conveyor has become a point of contention. The Port
has secured warehouse space to free the area of stored conveyor and speed installation
at the site.
Phase 2 design efforts started on October 31, 2017, and 100-percent design documents were
received mid-August 2018. Phase 2 advertisement in Q1 2019 was contingent upon on-time
Phase 1 completion and will now be delayed for three to six months to avoid overlapping of
Phase 1 and 2 work. The South Satellite (SSAT) portion of Phase 2 is dependent on the
International Arrivals Facility (IAF) project being operational in order to demolish the baggage
system in the SSAT tunnel and begin construction. The overall project is now scheduled for
Phase 3 (the final phase) to obtain Substantial Completion in 2025 Quarter 2 (based upon a
Contractor delay of 77 days to Phase 1).
2019 Quarter 4
2022 Quarter 3
2025 Quarter 2
COMMISSION AGENDA – Briefing Item No. _9b___ Page 4 of 5
Meeting Date: October 23, 2018
Template revised September 22, 2016.
Budget
The Baggage Optimization Phase 1 portion of work is on budget as currently scoped.
The budget summary for the project to date is as follows:
$445,050,000
$94,043,296
$136,312,200
$58,566,741
$27,005,449
The team reported in June that updated budget estimates for the remaining Phase 2 and Phase
3 scopes of work were being prepared. Price increases in the baggage handling and steel
markets have created a budget concern, and the latest estimates reflect market condition
increases. The team has performed a sensitivity analysis with particular emphasis on
appropriate escalation rates to carry through the project, as well as market contingency to
account for PLA and Small Business requirement premiums. The sensitivity analysis shows that
these conditions have the potential to require a budget increase of $27M to $69M, with most
likely scenario requiring an additional $46M being added to the budget. The exact budget
requirements will not be known until bids are received.
To minimize the market condition increases, the Port Baggage Team is conducting marketing
meetings with contractors to develop interest in the future phases of the project to create a
more competitive bidding environment.
ADDITIONAL BACKGROUND
The Baggage Optimization project was scoped in 2012 to accommodate 45 MAP with an
expandable design to accommodate future growth. At the time, growth forecasts were flat and
predicted that 45 MAP would be adequate through 2027. The decision was made to proceed in
building an expandable 45 MAP system with the expectation that an expansion would occur in
the future in time to accommodate growth up to the 60 MAP level. Due to unprecedented
growth at the airport, the 45 MAP threshold was met in 2016, over ten years earlier than
anticipated. In June 2017, the Commission authorized the project to incorporate a capacity
expansion of the Baggage Optimization project in order for the new outbound baggage system
to accommodate 60 MAP. The additional capacity will be incorporated into Phases 2 and 3 and
will add 14 months to the overall project schedule and a net budget increase of $126 million.
The $126 million increase is included in the overall budget of $445 million.
ATTACHMENTS TO THIS BRIEFING
(1) Presentation slides
COMMISSION AGENDA – Briefing Item No. _9b___ Page 5 of 5
Meeting Date: October 23, 2018
Template revised September 22, 2016.
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
June 12, 2018 – Baggage Optimization Quarter 2 Project Briefing
January 9, 2018 – Baggage Optimization Quarter 4 Project Briefing
September 26, 2017 – Baggage Optimization Quarter 3 Project Briefing
June 27, 2017 – Commission authorization to (1) authorize additional design and project
management funds to expand the capacity to 60 million annual passengers (MAP); (2) use
Port crews and small works contracts to perform additional construction work; and (3)
amend Service Agreement P-00317641 to add $10,160,000
October 25, 2016 – Baggage Optimization Quarter 4 Project Briefing
July 12, 2016 – Commission authorization to advertise and execute a contract for
construction Phase 1
June 28, 2016– Baggage Program Briefing
May 17, 2016 – Checked Baggage Optimization Project Briefing
March 8, 2016 – Commission authorization for the Chief Executive Officer to amend the
Baggage Optimization Design Services contract
June 23, 2015 – Checked Baggage Optimization Project Briefing
September 10, 2013 – The Commission authorized the execution of an Other Transaction
Agreement (OTA) with TSA for reimbursable costs for design; construction, and to authorize
$15 million to continue from 30% to 100% design; and execute a consultant service
agreement for program management support services
August 20, 2013 – Response to questions from Commissioners asked during August 6, 2013
Commission Meeting
August 6, 2013 – The Commission was briefed on the near-term and long-term challenges
related to handling checked baggage at the Airport
January 22, 2013 – The Commission authorized $5 million for staff to begin design through
30%, and to enter into an agreement to allow reimbursement from the federal government
to the Port for eligible elements of the 30% design effort
January 8, 2013 – Baggage Systems Briefing
August 14, 2012 – Baggage system recapitalization/optimization was noted in the 2013
business plan and capital briefing as a significant capital project not included in 2013-17
capital program
August 7, 2012 – Baggage system recapitalization/optimization was referenced as one of
the drivers for the need to develop an Airport Sustainability Master Plan
June 26, 2012 – The Airport’s baggage systems were discussed during a briefing on terminal
development challenges
May 10, 2012 – TSA’s interest in a national recapitalization/optimization plan for all
baggage-screening operations was referenced in a design authorization request for the C60-
C61 Baggage Handling System Modifications Project