Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8f
ACTION ITEM
Date of Meeting
July 26, 2022
DATE: July 15, 2022
TO: Stephen P. Metruck, Executive Director
FROM: Eileen Francisco, Director Aviation Project Management
Dawn Hunter, Director of Commercial Management
SUBJECT: Concourse Expansion Early Work Package Budget Authorization
(CIP# C800845)
Amount of this request:
$71,000,000
Estimated Project Budget
Range:
$340,000,000 -
$420,000,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) authorize $71,000,000 of
the program budget for enabling construction work and early work packages for the C
Concourse Expansion program, including (2) execute an amendment in the amount of
$2,500,000 to Service Agreement P-00320163 for additional costs associated with accelerating
design packages and added sustainability scope, for a new contract total of $26,500,000.
EXECUTIVE SUMMARY
The C Concourse Building Expansion (CCE) program was created to address shortfalls in Airport
Dining and Retail (ADR) capacity, public amenities, office space, and premium lounge space.
The project is located at the intersection of Concourses C and D and will add four floors to the
existing three floor structure.
At this time, the project is programmed to provide additional food and beverage space, retail
space, and lounge space. The public amenities being provided include new restrooms, a
meditation room, a sensory room, nursing suites, and an “outdoor” public lookout.
The project team has accelerated the design of the structural steel package, the vertical
circulation package, and the exterior wall design and detailing to facilitate an earlier overall
completion of the CCE program. Accelerating these packages allows for known long lead time
materials to be purchased and fabricated while the design of the building is still progressing.
Early buy out of these packages will also reduce schedule risk and cost uncertainty due to
supply chain issues and inflation.
COMMISSION AGENDA – Action Item No. _8f___ Page 2 of 6
Meeting Date: July 26, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Program Budget Update
The original project was estimated at $340 million. Since that original budget was established,
project cost risk has increased and the estimates for the project have grown. The main drivers
of the increased estimates are additional sustainability scope, baggage transfer line impacts,
and contractor estimates reflecting escalation due to COVID and the current geopolitical
situation.
To manage costs and scope the project has taken several steps. Between concept and 15%
design the Port, the contractor, and the design team met every two weeks to value engineer
and right size the project scope. That effort led to a $20 million reduction to the concept
estimate. That right-sized scope and project programming was used to develop a 30% design.
The 30% design was again estimated, and the estimates were reviewed and reconciled with the
Port, the designer, and the contractor.
The design is currently moving from 30% development to 60% development and the project
team holds weekly Target Value Design meetings. At these meetings the project team meets to
review specific cost savings ideas. Cost savings that do not violate Port design standards or the
project program are incorporated into the design.
As the design develops, the project teams will continue to assess potential savings in real time
with the design team and the contractor. While this will not prevent the higher cost of
delivering the project, it will be a tool to control the cost increases and ensure that the scope of
work is appropriate to the needs of SEA.
Estimate Trends
Sustainability Initiatives: $10.4M
Non-Discretionary Scope Changes: $24M
Escalation and Scope Definition: $32.6M
Current Estimate Range: $340M – $420M
The available Program Contingency is $14.5M. The project team is assessing how much of this
contingency can be allocated to the existing budget. The team is working to balance known
risks against the available funds.
JUSTIFICATION
Early work packages allow the project to accelerate specific scopes of work that will benefit the
project schedule. Staff worked with the design team and the General Contractor Construction
Manager (GCCM) to identify scopes of work that could be accelerated without causing
excessive risk to the project. The three major scopes of work that this request represents are
the structural steel, vertical circulation, and the exterior curtain wall.
COMMISSION AGENDA – Action Item No. _8f___ Page 3 of 6
Meeting Date: July 26, 2022
Template revised June 27, 2019 (Diversity in Contracting).
The structural steel is a long lead item. The steel package must be bid and awarded followed by
a product submittal and shop drawing process. By starting to bid this package in September of
2022, the project can lock in raw steel costs and start steel erection in earnest when the project
starts full construction in April of 2023. The administrative work and order time will happen
concurrently with the remainder of the building design.
There are two advantages to accelerating the vertical circulation design and construction
package. The first advantage is that the design requirements for elevators change based on
manufacturer. By identifying the manufacturer early through a competitive bid process, the
design documents can be finalized to meet the specific manufacturer's specifications. This
makes the design more reliable and less likely to require changes during construction. Like
structural steel, elevators and their supporting equipment have long lead times. The second
advantage is that getting at least one of the long lead time freight elevators up and running
early in construction will help support construction activities because materials will more easily
be moved from level to level.
The advantages of accelerating the exterior wall are very similar to the structural steel package.
The contractor can start the submittal, engineering, and shop drawing process. These activities
will happen concurrent to the remainder of the design and not after it is complete. The project
will also be able to purchase long lead materials and set that cost early.
Diversity in Contracting
WMBE outreach efforts through local community organizations and publications have begun in
support of CCE construction efforts. This includes targeted WMBE and small business pre-bid
job walkthroughs for better understanding of project efforts, prior to upcoming bids.
Current WMBE contractual commitment:
1. Designer: 12%
2. GCCM: 12% (The GCCM goal may be modified as design progresses and the scopes of
work are further developed.)
3. Program Management and Construction Management: 20%
4. Commissioning Agent: 15%
The project is anticipated to provide approximately 28% in Airport Construction Disadvantage
Business Enterprise (ACDBE) post-construction ADR opportunities.
COMMISSION AGENDA – Action Item No. _8f___ Page 4 of 6
Meeting Date: July 26, 2022
Template revised June 27, 2019 (Diversity in Contracting).
DETAILS
These additional early work packages will include
(1) Structural steel
(2) Vertical circulation
(3) Exterior wall
(4) Additional opportunities identified by the project team
Schedule
Commission design authorization
Design start
Commission construction authorization early
work packages
Construction start early work packages
Commission construction authorization
In-use date
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – No early work packages
Cost Implications: Cost will be further impacted by inflation and material supply issues
Pros:
(1) No risk that early work scope will not be fully coordinated with remainder of the
design package.
Cons:
(1) Project will be completed later.
(2) Cost to execute contracts will be subject to inflation
(3) Material supply chain issues could impact project schedule
This is not the recommended alternative.
Alternative 2 – Execute early work packages
Cost Implications: Materials will be locked in at the 2022 cost
Pros:
(1) Price certainty for the project on accelerated packages
(2) Accelerates construction completion and opening of the building
Cons:
(1) Remainder of the design is not complete and could impact early work packages
This is the recommended alternative.
COMMISSION AGENDA – Action Item No. _8f___ Page 5 of 6
Meeting Date: July 26, 2022
Template revised June 27, 2019 (Diversity in Contracting).
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$331,776,000
$8,224,000
$340,000,000
Transfer to Baggage Optimization
P
rogram
($15,500,000) $0
($15,500,000)
Revised Estimate Range
TBD TBD
$340,000,000 -
$420,000,000
AUTHORIZATION
Previous authorizations
$86,174,000
$7,926,000
$94,100,000
Current request for authorization
(Concourse C Expansion)
$71,000,000
$0
$71,000,000
Total Auth, including this request
(Concourse C
Expansion)
$157,174,000
$7,926,000
$165,100,000
Remaining amount to be authorized
(Concourse C Expansion)
TBD
TBD
$174,900,000 -
$254,900,000
Annual Budget Status and Source of Funds
This project is included in the 2022-2026 capital budget and plan of finance with a budget of
$340,000,000. The capital budget decrease of $8,224,000 would be transferred to the
Aeronautical Allowance CIP C800753. The expense budget would be included in the Aviation
Division’s annual operating expense budget. The funding sources will include the Airport
Development Fund and future revenue bonds. This project was approved by airlines through a
Majority-In-Interest (MII) vote in April 2021.
Financial Analysis and Summary
Project cost for analysis
$340,000,000*
Business Unit (BU)
Terminal Building
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)
PV (40 years) for non-aero $44.5 million
CPE Impact
$0.68 in 2028
* Financial implication for this project has not changed, but the $15.5 million is being
transferred to the Baggage Optimization project for enabling work to relocate baggage handling
system transfer lines in conflict with the CCE project. Authorization and transfer for this work
was authorized by the Commission on April 26, 2022.
COMMISSION AGENDA – Action Item No. _8f___ Page 6 of 6
Meeting Date: July 26, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Future Revenues and Expenses (Total cost of ownership)
As presented on April 27, 2021, when completed the project will generate incremental non-
airline revenues of $12 million by 2028 and over $15 million by 2031. Aeronautical revenues
will also increase as the allocated operating and capital costs (debt service) are included in
airline terminal rate base.
ATTACHMENTS TO THIS REQUEST
(1) Presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
• April 26, 2022 – C concourse Expansion Budget Authorization and Transfer
• April 12, 2022 - C Concourse Expansion Briefing
• March 8, 2022 – Authorization to execute a Service Agreement for a third-party
Commissioning Agent
• April 27, 2021 – C1 Building Project Additional Design and General
Contractor/Construction Manager Early Work Authorization – Special Inspection and
Testing Authorization
• May 26, 2020 – C1 Building Project Design and General Contractor/Construction
Manager Authorization
• March 10, 2020 – C1 Building Project Briefing and Introduction
• June 26, 2018 – C1 Building Project Authorization for Planning Funds