Project Management Institute

The keys to the airport

how to jumpstart a capital improvements project

Many major cities are struggling with airport expansion projects. Here are some of the specifics airport project managers need to know.

by James Goetz, PMP

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RUNWAY EXTENSIONS, new aprons, increased electrical service capacity, new terminals, new concourses, replaced baggage equipment, parking decks, elevated roadways, people movers, graphics, seismic retrofits, and general renovations … the typical capital improvements program of an airport consists of so many separate project components that it is easy for the program to get into trouble. And airport improvement projects are under way almost everywhere you turn these days (see sidebar). Here are 13 key elements common to the success of airport projects.

The Program Statement. Far too often, long-term capital programs get out the door and down the road without a complete written description. This document should identify the various projects and costs expected to be covered in the program. But don’t stop there. The goals and objectives of the owner should be spelled out as well. Use, performance, longevity, capacity, and the level of quality expected should also be included in the statement. The master planning effort typically performed will raise many of these issues. The program statement is the place to capture them. This should be a dynamic document that is updated and refined as more and more information is accumulated. Remember that the designers working on the individual projects will use this information to develop their work, so you want them to be on the same page as you are from the start. This will avoid false starts with conceptual designs and will translate into a saving that may be needed elsewhere.

Independent Estimate Crosscheck. As your designers develop their projects they will be required to work within a given budget. As the designs progress, reviews of the documents are necessary. As these reviews are done, usually at the 50 percent, 65 percent, 95 percent, and 100 percent completion levels, detailed estimates of them should be required from the designers. As a rule, designers are not heavily focused on the estimating side of projects. On many occasions it has proven cost effective to engage a specialty consultant to develop cost estimates to crosscheck at the various levels of completion. These professionals have a handle on local market costs and can help in making decisions related to quality by identifying opportunities to place your money in materials and systems that best meet your goals. This crosscheck also serves to identify value engineering opportunities at the earliest stage, thereby allowing you the control to keep your program on track.

The “Front End” Documents. The general and special conditions, often called the “front end” documents, are critical to controlling the individual projects through the construction and closeout phases. Most airport programs will have a logistically complex network of overlapping work packages. Each contract package that will overlap another must have strong and specific language addressing the requirements for coordination with all other contracts and entities. It is rarely strong or clear enough. For example, the contract package should include clarifications on what is and is not covered in the overhead for changes. Also, phasing requirements, temporary signage, temporary utilities, scheduling, procedures, assignment of other contracts, contract change procedures and the chain of command should all be spelled out in detail. Inclusion of a clause for the removal of unsatisfactory employees hired by the contractors will help in the resolution of certain personality conflicts that may arise. We tend to think that the contractors will be big boys and will work together given the circumstances. They eventually will, but you will pay if you aren’t careful. In some cases, coordination and phasing costs charged to the owner accounted for over 50 percent of all change costs for the project. With the correct controls in place you can virtually save millions of dollars. Whether you choose to use the controls afforded in the general conditions or not depends upon the situation. However, if the conditions are not set in place in the beginning, you will not have that option.

When the tiny “Spirit of St. Louis” approached Paris in the pre-dawn hours of 24 September 1937, it was No. 1 for landing. No need for circling around the city. No waiting for a gate.

Today, after bitter battles waged by environmentalists and nearby residents, two additional 11,000-foot runways are being built as part of a half-billion-dollar renovation of the Paris-Charles DeGaulle Airport.

Paris is a reluctant joiner to the airport upgrade business. But with both its airfields operating at capacity around the clock, the slightest glitch in any one schedule, a mechanical malfunction, or bad weather leads to long delays for travelers and frustration for airline planners. The condition of the Paris airports threatens its position as a world transportation hub, its tourist trade and the economic future of the region.

Around the world, airport renovation and construction is a thriving, albeit complex and risk-filled, business.

The obstacles of constructing or renovating facilities with miles of concrete, capable of withstanding the constant pounding of 500,000-pound aircraft, and buildings that won’t crumble if a powerful jet blast is misdirected are great. Not to mention the hazards surrounding storage and movement of millions of gallons of jet fuel daily and the need for workable connections to urban transportation systems.

And there are the customers—hundreds of thousands of them each day, speaking many languages, in varying health, some traveling for fun and some on company time—who need to navigate their way through massive terminals with as little help and in as much comfort as possible.

Parisians can look to any corner of the world for lessons.

In Northern Virginia, the 57-year-old Ronald Reagan Washington National Airport, a $1 billion renovation project, is nearing completion and already winning accolades from travelers, architects and urban planners alike. Located on a bend in the Potomac River, with expansive views of Washington D.C., a new 60,000-square-foot main terminal features over 60 shops and restaurants and has more than 10,000 employees.

But not all of the project is glitzy. More than half of the billion-dollar price went into new roads, two new garages, a tank farm, a new chiller plant and an almost seamless connection to the region's urban rail system.

So far, the project is on schedule and within budget—a difficult achievement in itself—but consider that the airport, which sits on just 90 acres of land surrounded by a park and a river, has remained fully operational, handling about 45,000 passengers a day, throughout the construction.

Meanwhile in Denver to say “the jury is out” is not just a cliché.

Denver International Airport is the first major airfield to be constructed in the United States in more than 20 years. Its gala grand opening in November 1993 included the U.S. secretary of transportation, the governor of Colorado, the mayor of Denver and 3,500 invited guests. But it was another 16-months and $3 billion in cost overruns before the first passengers used the airport.

It is a case where everything that could have gone wrong did. Books and memoirs have been written, with more to come no doubt, dissecting the project and in some cases just plain pointing fingers.

The big winner, so far anyway, is a great irony: Colorado Springs Airport.

Ticket prices at Denver International come with up to a $40 surcharge to defray some of its $4.2 billion price tag. Many from Denver, and particularly people flying into Denver and traveling on to nearby resorts, find the 80 extra miles to Colorado Springs worth their while.

Oh yes, about the jury. The project generated several civil suits and spawned investigations by the FBI, Securities and Exchange Commission, and the Denver and Colorado District Attorney's offices into allegations of fraud and public corruption.

Across the Pacific, the Kai Tek airport in Hong Kong is considered by many aviation experts to be the most dangerous of any major airfield in the world. “White-knuckle landings” can't describe the feeling of flying into downtown Hong Kong, literally between skyscrapers and mountains, to land on a single runway. Once there, passengers are faced with an aging, overcrowded terminal. For the Hong Kong economy to continue to thrive, the airport had to be replaced. But there is no suitable land left to build on near the city. The solution: build a 3,000-acre island in Victoria Harbor and construct a state-of-the-art airport that, when fully operational, will be capable of handling up to 87 million passengers annually.

The terminal of Hong Kong's new airport is one of the largest freestanding structures in the world. Passengers move through the nearly mile-long building on a driverless, computer-controlled rail system. Outside the terminal a high-speed rail system carries travelers across two new bridges linking islands along the southern China coast and then dives through a tunnel beneath Victoria Harbor into downtown Hong Kong.

At press-time, however, the new $20 billion facility was in chaos. After opening on 6 July, a series of mishaps including crashing computer systems, broken escalators, and a total breakdown of cargo- and baggage-handling systems left food rotting, newspapers and magazines undelivered, markets running short on supplies and air cargo companies heading back to the old airport.

And just one week after the opening, 12 people involved in construction of the airport's transportation system were arrested on suspicion of bribery, corruption and using substandard materials for the construction of a station on the airport's rail system. Hong Kong's Airport Authority, headed by Hank Townsend, a former executive with the Bechtel Corp., has declined to predict how long it will take to iron out all the problems.

There are also those cases, of course, when the project managers do everything right, on time and within budget, but other factors lead to outright failure. In Kasaoka, Japan, a $4.96 billion airport, built primarily for shipping of agricultural products, lies all but unused. Completed in 1991, six years later the facility was handling just four metric tons of goods, less than 1 percent of projected goals, according to government statistics. Poor data on actual need and marketing of the facility are to blame. At least, there, all the fingers are pointing in the same direction.

The challenges and rewards to contractors in this precise industry are great. In the United States, although there are no new airports being built now, the renovation and expansion business is booming. Airport operators estimate $60 billion will be needed for major projects through 2002. While, according to a Government Accounting Office study released in March, the Federal Aviation Administration estimates it will spend $32.7 billion through its Airport Improvement, Program grants between now and the end of 2000. Add to that the money raised from bonds issued by municipalities' local airport authorities, which in 1996 was nearly four times greater than federal funding, and one can begin to see the size of this industry.

These will be hard-earned dollars though, considering the risks involved, the number of stakeholders and the overwhelming concern for the safety of the traveling public. ■

—Contributed by Mark Parker, Staff Writer

Expeditious Submittal Review. Throughout the life of the program, the projects will require many submittals to be sent in for the consideration of the engineers and designers. Typically, mechanical, electrical, sprinkler, security, life safety, and plumbing disciplines contain the submittals that are most prone to impact the progress of the program. By requiring the contractor to allow for a four-week review period in his schedule, while simultaneously requiring the designers and engineers to turn them around in two weeks, you can control much of the inherent conflict that usually evolves.

Cost-Loading the Schedule. This refers to the application of a monetary value for each activity in the required schedules. Other controls should be used as well to control the size and malleability of the schedule, but cost-loading should be required at all schedule levels. Your architects and engineers will typically resist the use of hard schedules and cost loading for their work, but the benefits to you are worth the requirement. It ties the work and the deliverables to the checkbook. By using a sophisticated scheduling program such as Primavera P3, pay applications are as easy as running a computer-generated Earned Value Report. Arguments and questions over pay quantities and completeness are lessened. If there is no progress on an item, there is no payment for that item. This again allows you control over your programs funding and will make cash flow projection information more accurate and reliable.

Multilevel Status Reporting. Each program has to contend with the problem of reporting the appropriate information to the appropriate levels. Owners will have to make informed, timely decisions in order to keep the program on track. Typically, three levels of reporting need to be addressed: the executive level, management level, and the project level. The type of information reported is the status of the projects with regard to cost, schedule information, and specific issues that require the owner to make a decision or to be aware of an issue. Usually, reports can assimilate existing formats and information so as not to be confusing to the reader. The trick here is to develop a system that rolls up from the lowest work breakdown structure element (usually the project-level cost-loaded schedule) to the highest executive level. It might sound simple but no software yet has been found to do this for large programs without major adjustments being required. The complexity is caused by formatting requirements and differentials in the timing of update information. Proprietary software from the consultant is often a problem of upkeep and use after they have gone off site. Depending on the size of your program, you may do well to allow a program to be written in Visual Basic or Access as opposed to continuously manipulating canned software.

Reader Service Number 5095

The “Action Items” List. How can we possibly keep up with all the details of the various project action items and who is supposed to do what? By having your people use the same simple database type of spreadsheet on each project at each phase of development, you can have control of all those items. Used consistently, when each item identified is assigned a specific commit date, responsible party, description, and status, you can have real-time reporting on the status of any project, group, or work package. Several management consultant firms have begun to use this technique as a standard practice. The real key here is how it is used. Be specific with your item identification. Always request a commit date for the next step. Be able to recognize when one issue is done and the next has begun. You will find that this type of recording will replace lengthy editorial note-taking during meetings. It can also be used for the agenda of the next progress meeting.

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Allowances and Contingencies. No, they are not the same. Many agencies and organizations feel that allowances in contracts are just “slush funds.” With descriptive language in the contract and project-level controls, allowances can save time and money. Many agencies have elaborate processes to go through to execute change orders for their contracts. It is not unusual for this process to take upwards of 45 days before direction can be given to a contractor. This type of delay puts great pressure on a project. In most complex programs this would also create a domino effect, causing harm to other related projects. By providing allowances for specific items, even though the complete scope is not known at bid time, the project managers have avenues available to them to resolve time conflicts and maintain schedules without delay. Contingencies should be kept to the budgeting arena. Contingencies should also be maintained in each phase of the program, but in the appropriate magnitude to allow for the type and completeness of the project. It does not enhance the program to maintain too much contingency for too long.

Documentation and Communication. This is a claims avoidance tool. In projects we are often required to respond to questions of additional scope posed by contractors and consultants. By being able to quickly access documentation and information, you can respond to the issues in their proper context from an empirical basis and with complete confidence. This helps all parties understand the issues better, resulting in a resolution at its lowest possible level. An open line of communication is also a powerful tool in avoiding claims. People at each level of the program should have specific instructions on how to resolve issues and who to go to when they reach an impasse. Frequently people at the next level can resolve the issues through simple negotiations, thereby avoiding a claim situation. The key here is to have all levels of management buy into and understand the procedure.

Mobilize Concessions Early. Concession operators tend to wait until the last days before the opening to the public to begin their construction programs. This is understandable from the perspective of not wanting to lay out capital until a return can begin to be realized. However, overlooking the time needed for the concept review and submittal stages usually required by the owners often creates problems. With the current emphasis in the industry in having “mall-like” concessions available, owners are scrutinizing service mix, locations, architectural finishes, furnishings, utility loads, merchandise, menus, and delivery access like never before. This can become a very lengthy process, with several rounds of submittals and resubmittals to gain the desired results. In a new structure, most required concessions can be constructed in the four months just before opening. However, the time required in getting to that point can easily be in the four- to six-month time frame. It is recommended that no less than eight-to-ten months before construction is expected to begin on your concessions program that you have regularly scheduled meetings with the concessions groups to bring them up to date on the status of the structure and the requirements they are expected to comply with.

Assist the Airlines and Help Yourself. No doubt your group of airlines played an integral part during the conceptualizing of the program and the development of the operational considerations needing to be incorporated. As the program progresses past the initial stages we may tend to relax the flow of information to the airlines as it is not yet critical for their operations. About the same time frame in which you address the concessions, you need to re-engage the airlines in the information flow. With most airlines having several departments required to participate in the space build-out and move, it takes some time for them to filter the information through their corporate channels and get lined up for the effort. The monthly Airline Technical Meeting is usually a good forum for the delivery of this status and requirement information. Having the project manager or managing consultant come in, share the information, field questions, and then be excused from the meeting has worked well in the past. Also, doing a survey of the current electrical requirements, communication requirements, counter positions, square footage of various spaces, FIDS/BIDS (Flight Information Display System/Baggage Information Display System) requirements, backwall needs, counter signage, and other items for the airlines will help all parties to understand what is required for a minimum one-for-one replacement of the current operation. This will also establish a baseline to use should improvements be requested from the airlines that need to be quantified by the owner.

Organize the Move Well in Advance. This is a project in itself. Volumes can, and have, been written about the intense planning required to ensure a smooth transition. A couple items of particular concern have been identified through past experiences: communications with all parties must be clear and frequent (staff, tenant, FAA, CM, operations and maintenance, PR, etc.); telephone and data systems must be tested out early; it's best to use an experienced “relocation manager” as a single source of control; plant and operations staff should move early to get used to new technology and run the “bugs” out; and if possible, use of a single large moving contractor is recommended. It is also essential to have the required FAA certifications on systems in place early; re-badge all employees before the move (especially if new technology has been installed); use “airport ambassadors” to help passengers during the first few weeks. There are obviously many more issues to consider, but emphasis on these items will put you ahead of the curve.

Training and Startup. The proper training of personnel is key to the operational success of any program. Airline staff has to be trained on the operation of new equipment and systems such as the paging system, baggage-handling devices, FIDS/BIDS, ramp operations, and mail sort systems. Pilots need to be informed of new instrument upgrades or new approach conditions. Firefighting crews need to be familiar with locations and operation of life safety systems and hydrant locations. Airport staff needs to receive training on building systems such as the electrical system, power monitoring and control systems, boiler and chiller plant operations, security, CCTV systems, and life safety. Much of the required training will be available from the manufacturer via the construction contracts. Make sure an adequate amount of onsite training is included in the specifications before the projects are bid.

THE ITEMS PRESENTED here are but a few of the key areas where you have the opportunity to make a difference in your airport program—the final key is in the application. Vigilant attention and support is needed throughout the program in order to make your program succeed. ■

James E. Goetz, PMP, is the program director leading the Sacramento International Airport construction program. He is a certified architectural engineer with over 21 years of experience and has worked on many of the county's largest and most successful airport improvement programs. He can be reached at 770/667-9371.

Reader Service Number 5079

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • September 1998

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