Template revised April 12, 2018.

DATE: February 15, 2018

TO: Stephen P. Metruck, Executive Director

Baggage Optimization is an airport-wide project that improves customer service for both

airlines and passengers. This is a long-term, 3-phase project that won’t be completed until

2025. This project was initially cost estimated and scheduled in 2013. Phase 1 is under

construction, within budget, and will be substantially complete in early 2020.

Phase 2 is now fully designed so estimated costs can be compared to projections from 2013.

Since that time market conditions have changed for four reasons. Baggage equipment prices

have raised, tariffs have been imposed which drove up steel prices, airline customer reviewers

have added scope, and a hot construction market has escalated labor and material costs at a

rate faster than general inflation. A sensitivity analysis using 100% Phase 2 design documents

and 70% Phase 3 design documents indicates the increase in overall project cost ranges

Port staff are meeting with contractors to gather more market information and to increase the

number of bidders to reduce market condition impacts on construction costs. Following bid

results in the third quarter of 2019, staff will return for authorization of additional funds. Port

executive management believes that in this hot construction market it is wise to adjust our

practice for mega-projects from projecting exact construction costs at 30% design to awaiting

actual bids prior to authorizing construction funds.

SUMMARY OF PROJECT OBJECTIVE AND BENEFITS

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

Template revised September 22, 2016.

increases screening capacity for greater baggage volumes, increases flexibility to allow bags to

be checked in from any ticket counter and be conveyed to serve any gate, 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).

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.

on May 26, 2017. Construction is currently underway, including the following activities and

accomplishments:

(1) Conveyor Factory Acceptance Retest has been successfully completed.

(2) All conveyor equipment has been delivered to Seattle and stored at provided

(3) Structural steel has been installed at the Central Terminal to create additional

(4) Conveyor installation is scheduled to be complete in May.

(5) Construction on utilities and infrastructure continues.

(6) Network hardware equipment for baggage handling system has been purchased and

Aviation Maintenance, and airport tenants.

The contractor has increased work shifts from five to six days per week. As of the latest

December pay application, 103,726 work hours have been reported and work completed is

estimated to be 73 percent.

Template revised September 22, 2016.

that includes the previously approved scope increase to bring the new baggage system to a

capacity of 60 MAP. The project is currently in the permit phase awaiting the Airport Building

Department and Fire Department review and permit approval.

Critical upcoming activities include obtaining the airport building permit and preparing bid

documents. We expect to request Commission authorization for Phase 2 construction in April

2019 and to advertise in Q2 2019, pending an anticipated completion of Phase 1 in Q4 2019.

This timing will allow fastest possible completion of the overall 3-phase project.

SCHEDULE AND BUDGET

months behind schedule due to the contractor delays.

While the current delay to the project is likely unrecoverable, the project team is working to

eliminate further delay. To address the performance and schedule concerns, the 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.

quality,

Template revised September 22, 2016.

control.

 To avoid further delay resulting from another failed factory acceptance test, the team

required the contractor to provide a recovery schedule showing weekly milestones

leading up to the re-test. Beginning September 19, a Port representative along with a

member of the design consulting firm traveled weekly to the BHS contractor

headquarters in Michigan to verify successful completion of the designated milestones.

This extra attention allowed all the required tests to be demonstrated ahead of the

official factory acceptance test and greatly contributed to a successful retest.

Phase 2 design efforts started on October 31, 2017, 100-percent design documents were

received August 2018 and are currently being reviewed by the Airport Building Department.

Planned Phase 2 construction 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 portion of Phase 2 is dependent on the International Arrivals Facility

project being operational in order to demolish the baggage system in the South Satellite tunnel

and begin construction. The overall project is now scheduled for Phase 3 (the final phase) to

obtain substantial completion in Q3 2025 (based upon a contractor delay of 6 months to Phase

1).

Template revised September 22, 2016.

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

Template revised September 22, 2016.