Template revised January 10, 2019.

COMMISSION

AGENDA MEMORANDUM

Item No.

ACTION ITEM

Date of Meeting

October 13, 2020

DATE: October 5, 2020

TO: Stephen P. Metruck, Executive Director

FROM: Eileen Francisco, Acting Director, Aviation Facilities and Capital Programs

Wayne Grotheer, Director, Aviation Project Management Group

SUBJECT: Main Terminal Infrastructure Upgrades Preliminary Design Funding (CIP# C801202)

Amount of this request:

$4,850,000

Total estimated project cost:

$300,000,000 to $400,000,000

ACTION REQUESTED

Request Commission authorization for the Executive Director to (1) execute a contract for

Architecture and Engineering (A&E) services in the amount not-to-exceed $4,500,000. The

amount of this request is $4,850,000 for a total estimated project cost of $300M-$400M. The

Main Terminal Infrastructure Upgrades project was briefed to Commission on September 22,

2020. This is the first of multiple action requests as the project progresses in design and then

construction.

EXECUTIVE SUMMARY

This project will update and upgrade the Main Terminal to ensure compliance with current life

safety and building codes.

The existing Main Terminal was built in the 1970s, with an extension to the north added in the

1980s, and Gina Marie Lindsay Arrivals Hall added in the 2000s. Although some improvements

have been made in the Main Terminal, there has not been a comprehensive renovation. The

different sections of the Main Terminal met the building codes that were in place at the time they

were constructed. Over the last couple of decades, building codes have evolved to provide

additional safety measures. These new safety measures include fire sprinklers and smoke control.

Projects in the Main Terminal have installed fire sprinklers in the areas where the work was

completed; however, large areas in the Main Terminal are still deficient in multiple areas

including the following life safety systems: fire sprinklers, smoke control (including emergency

power upgrades), fire standpipes, and emergency exit signage.

This project will bring the Main Terminal up to current code, which is required for future projects

in the Main Terminal to move forward, including a new restroom renovations project, replacing

aging bag claim devices, and the zones 6 & 7 renovation. This project will update life safety

COMMISSION AGENDA – Action Item No. _6h___ Page 2 of 6

Meeting Date: October 13, 2020

Template revised June 27, 2019 (Diversity in Contracting).

systems to current code. In addition, this project will include full asbestos removal from the

ceiling.

Staff will return to the Commission following the completion of the preliminary design work. At

this time staff will provide an updated project cost estimate and request authorization to move

forward with the next phase of project delivery. Staff will also request authority to add significant

money into the design contract amending it to authorize the design team to complete full design

and be available to provide design support during construction.

JUSTIFICATION

For the Main Terminal building to meet current code, the entire building must have a sprinkler

system installed. This will involve removing the existing ceiling, abating asbestos in the area, and

putting in new ceiling and lighting on ticketing, baggage claim, and the skybridge level. New

lighting controls to improve efficiency will also be included.

In addition to sprinklers, a fully-integrated smoke control system will need to be installed. The

smoke control system will include adding exhaust fans and connecting to an upgraded emergency

power system. The existing emergency power is not sufficient to meet the demand of the new

smoke control system and will require significant upgrades.

The existing emergency power system supports the Main Terminal; Concourses B, C, and D; and

the South Satellite. The total future emergency power need of these spaces is currently unknown.

Therefore, the preliminary design will focus on designing the smoke control system for all areas

except the South Satellite and evaluate any other code-required emergency power needs to

determine the total system requirement. The South Satellite will get its own dedicated

emergency power and smoke control systems when it is renovated. The future C1 building will

also be incorporated into the total emergency power needs.

All of this must be completed in a facility that is operational 24 hours a day, every day of the year.

Although currently passenger traffic is reduced, it is anticipated that traffic numbers will have

returned to 2019 levels by the time of construction and the project will need to be able to limit

impacts when that occurs. This is a complex project and the preliminary design is an important

first step to help mitigate some of the unknown risks to be able to provide a better cost estimate

and schedule. As part of the preliminary design we will conduct an operational impact analysis.

In addition to the design of smoke control and emergency power, the preliminary design will

include an updated cost estimate. The $4,500,000 not-to-exceed amount represents 50% above

the initial estimate, that is $3,000,000 for the preliminary design. Full design is estimated at

$40,000,000.

Project Scope and Budget Controls

COMMISSION AGENDA – Action Item No. _6h___ Page 3 of 6

Meeting Date: October 13, 2020

Template revised June 27, 2019 (Diversity in Contracting).

The total program budget for the ‘Main Terminal Infrastructure Upgrades Preliminary Design’ is

estimated at $300M to $400M. At this early stage of the project, planning and budgeting is of the

most importance for a successful initiative. The team will have project controls in place to ensure

project scope, costs, and schedule are successfully managed. The project team has implemented

several strategies similar to other successful design projects. Those strategies are as follows:

1. The original cost estimate was prepared by the Aviation Project Management estimating

manager. A second independent estimate will be performed by a cost estimating firm

under a different contract to the Port.

2. Project designer will be directed to design to budget and produce an updated

construction estimate at all major design milestones.

3. Subject to further authorization by the Port Commission, the Port intends to procure a

General Contractor, Construction Manager (GC/CM) firm. The same firm would be used

for the entire project to maintain predictability, budget, and scope.

4. Design review comments will be limited to identified key individuals representing the

different stakeholders. This will provide additional controls on scope creep.

Aviation Capital Programs and Aviation Project Management have implemented a formal change

management system (applicable to all projects) that will require budget and schedule impact

analysis and formal approval for any discretionary scope increases beyond the scope established

in the Project Definition Document.

Diversity in Contracting

The project team with the Diversity in Contracting Department determined a Women and

Minority Business Enterprise (WMBE) participation aspirational goal of fifteen percent (15%) for

the design contract.

DETAILS

This project will update the Main Terminal to ensure life safety and building code requirements

are met to ensure passenger safety. Asbestos removal will occur in all areas that the project is

conducting work. The preliminary design will focus on the emergency power system and smoke

control system.

Scope of Work

The following life safety issues will be addressed:

(1) Fire sprinklers throughout all levels of the Main Terminal;

(2) Fire sprinklers above both arrivals and departures drives;

COMMISSION AGENDA – Action Item No. _6h___ Page 4 of 6

Meeting Date: October 13, 2020

Template revised June 27, 2019 (Diversity in Contracting).

(3) New emergency power system for the main terminal and new feeders for Concourses

B, C, and D;

(4) Smoke control system added to the main terminal;

(5) Fire doors on the terminal side of the skybridges to ensure proper operation of the

smoke control system;

(6) New fire standpipes throughout the main terminal to meet NFPA requirements;

(7) Replacing and adding emergency exit signage to meet current codes; and

(8) Asbestos abatement in all areas under construction.

Schedule

Activity

Preliminary design start

2021 Quarter 1

Commission full design authorization

2022 Quarter 1

Full design start

2022 Quarter 2

Commission construction authorization

2025 Quarter 2

Construction start

2025 Quarter 2

In-use date

2030 Quarter 2

Cost Breakdown

This Request

Total Project

Design

$4,850,000

$40,000,000

Construction

$321,206,000

Total

$4,850,000

$361,206,000

ALTERNATIVES AND IMPLICATIONS CONSIDERED

Alternative 1 – Initiate full design for the project.

Cost Implications: $40,000,000

Pros:

(1) Potentially shorten the schedule.

Cons:

(1) Several unknowns exist within the Main Terminal which will likely cause increased costs

during design without adequate planning.

(2) Total emergency power loading is unknown.

(3) Does not provide information for stakeholder buy-in on operational impact analysis.

(4) Does not provide third-party estimate for construction.

This is not the recommended alternative.

COMMISSION AGENDA – Action Item No. _6h___ Page 5 of 6

Meeting Date: October 13, 2020

Template revised June 27, 2019 (Diversity in Contracting).

Alternative 2 – Conduct preliminary design to determine options for the emergency power

system and smoke control of the Main Terminal.

Cost Implications: $5,000,000

Pros:

(1) Will develop initial smoke control design for the Main Terminal and Concourses B, C,

and D which helps provide total emergency power requirements for the project.

(2) Evaluates existing emergency power system and will provide alternatives for

replacement.

(3) Provides alternatives to operational impacts.

(4) Will allow sufficient information for stakeholder buy-in.

(5) Provides comprehensive existing conditions for full project design.

(6) Will provide third-party estimate for construction cost.

Cons:

(1) Potentially increases design schedule.

This is the recommended alternative.

FINANCIAL IMPLICATIONS

Following a third-party cost estimate, as part of the preliminary design, the project will update

the revised estimate for total project cost.

Cost Estimate/Authorization Summary

Capital

Expense

Total

COST ESTIMATE

Original estimate

$350,000,000

$11,206,000

$361,206,000

AUTHORIZATION

Previous authorizations

$150,000

Current request for authorization

$4,850,000

Total authorizations, including this request

$5,000,000

Remaining amount to be authorized

$345,000,000

$11,206,000

$356,206,000

Annual Budget Status and Source of Funds

This project, CIP C801202, was open with a new CIP that has a new scope and is estimated at

$350M which was included in the 2021-2025 capital budget and plan of finance. The remediation

liability would be budgeted in the operating budget.

Financial Analysis and Summary

Project cost for analysis

$356,206,000

Business Unit (BU)

Terminal Building

COMMISSION AGENDA – Action Item No. _6h___ Page 6 of 6

Meeting Date: October 13, 2020

Template revised June 27, 2019 (Diversity in Contracting).

Effect on business performance

(NOI after depreciation)

NOI after depreciation will increase due to inclusion of

capital (and operating) costs in airline rate base.

IRR/NPV (if relevant)

N/A

CPE Impact

$1.24 in 2030

Future Revenues and Expenses (Total cost of ownership)

The addition of a new emergency power system and smoke control system will increase

maintenance costs as additional assets come online; however, the removal of asbestos in the

ceiling will make maintenance easier and faster as asbestos control will no longer be required for

ceiling entry.

ATTACHMENTS TO THIS REQUEST

(1) Presentation slides

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

September 22, 2020 – The Commission was briefed on the overall project and intended use

for the preliminary design funding request.