Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
10a
ACTION ITEM
Date of Meeting
July 25, 2023
DATE: July 13, 2023
TO: Stephen P. Metruck, Executive Director
FROM: Eileen Francisco, Director Aviation Project Management
Richard Duncan, Director Aviation Business and Properties
SUBJECT: C Concourse Expansion Program Update and Long Lead Equipment and Materials
(CIP# C800845)
Amount of this request:
$20,000,000
Total estimated project
budget range:
$405,000,000-$420,000,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to authorize $20,000,000 of the
program budget for long lead electrical, mechanical, and curtain wall equipment and other long
lead materials.
EXECUTIVE SUMMARY
The C Concourse Building Expansion (CCE) program was created to address shortfalls in Airport
Dining and Retail (ADR) capacity, 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.
The project is also programmed to provide public amenities including new restrooms, a
meditation room, a sensory room, a nursing room, and an “outdoor” public lookout.
The C Concourse Expansion Program is working to accelerate delivery of the project to 2026. To
support this effort the project team would like to procure long lead materials and equipment
now, ahead of authorization for the final Maximum Allowable Construction Cost (MACC) and the
rest of the program budget. Ordering the equipment and materials now would supplement
previous authorizations and efforts that allowed the project to accelerate the design and
relocation of current tenants, accelerate the design and procurement of structural steel, and to
accelerate the design and procurement of vertical circulation.
COMMISSION AGENDA – Action Item No. 10a Page 2 of 5
Meeting Date: July 25, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Program Budget Update
The design is 100% complete and the GCCM contractor is soliciting subcontractor bids. After bids
are received, the contractor will submit the final MACC proposal. Port staff will review the
proposal, negotiate the final number, and then return to the Commission in September or
October of 2023 for authorization to execute the final contract.
The current authorization request amount was developed by the Exterior Wall, Electrical, and
Mechanical subcontractors already under contract. Pricing for the long lead equipment and
material was quoted by suppliers to the subcontractors.
Below is an overview of the C Concourse Expansion program’s current budget:
MII Approved Budget
$340,000,000
Transfers: Bag Ops, RMM, TRA
($16,200,000)
Trends
Discretionary Scope Changes
$ 225,000
Non-Discretionary Scope Changes
(ex: emergency power requirements)
$ 17,200,000
Escalation and Design Development
(ex: lighting requirements, final detailing)
$ 53,800,000
Risk Contingency
$ 10,000,000
July 2022 Range
$340,000,000 - $420,000,000
Current Range
$405,000,000 - $420,000,000
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.
This authorization will allow the project to procure the following long lead items:
-Air Handling units
-Electrical equipment (switchgear, panels, sub stations)
-Curtain wall materials
-Other miscellaneous long lead items
All these materials and equipment are experiencing industry wide impacts. The project team
would like to order these now or obtain production slots so that we can deliver the full project
on our accelerated delivery timeline of 2026.
COMMISSION AGENDA – Action Item No. 10a Page 3 of 5
Meeting Date: July 25, 2023
Template revised June 27, 2019 (Diversity in Contracting).
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%
(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.
DETAILS
The project will order:
(1) Air Handling Units
(2) Electrical Gear / Equipment
(3) Curtain Wall Materials
(4) Other materials identified by GCCM as the project progresses.
Schedule
Commission design authorization
Design start
Commission construction authorization early
work packages
Construction start early work packages
Commission construction authorization
Commission MACC authorization
In-use date
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Procure Long Lead Equipment and Materials with the final MACC contract.
Cost Implications: $20,000,000 plus potential escalation
Pros:
(1) Additional funds are not committed prior to having a final contract amount.
COMMISSION AGENDA – Action Item No. 10a Page 4 of 5
Meeting Date: July 25, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Cons:
(1) The ordering of long lead equipment will be deferred and could impact the completion
date of the project.
This is not the recommended alternative.
Alternative 2 – Procure Long Lead Equipment and Materials
Cost Implications: $20,000,000 of authorization of approved budget
Pros:
(1) Allows project to order long lead equipment needed for the building.
(2) Allows the project to procure production slots for long lead equipment.
(3) Assists project in its goal of a 2026 project delivery.
Cons:
(1) This action would commit additional funds to the project without a final project cost
being established.
This is the recommended alternative.
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 Program
($15,500,000)
$0
($15,500,000)
Revised Estimate Range
TBD
TBD
$405,000,000 -
$420,000,000
AUTHORIZATION
Previous authorizations
$157,174,000
$7,926,000
$165,100,000
Current request for authorization
(Concourse C Expansion)
$20,000,000
$0
$20,000,000
Total Auth, including this request
(Concourse C Expansion)
$177,174,000
$7,926,000
$185,100,000
Remaining amount to be authorized
(Concourse C Expansion)
TBD
TBD
$219,900,000 -
$234,900,000
Annual Budget Status and Source of Funds
This project is included in the 2023-2027 capital budget and plan of finance with a budget of
$316,276,000. 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
COMMISSION AGENDA – Action Item No. 10a Page 5 of 5
Meeting Date: July 25, 2023
Template revised June 27, 2019 (Diversity in Contracting).
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)
NPV (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 was transferred to
the Baggage Optimization project for enabling work to relocate baggage handling system transfer
lines in conflict with the C Concourse Expansion project. Authorization and transfer for this work
was authorized by the Commission on April 26, 2022.
Future Revenues and Expenses (Total cost of ownership)
As presented on April 27, 2021, when completed the project will generate incremental nonairline
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
• July 26, 2022 – C Concourse Expansion Structural Steel Package
• 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