"Sea-Tac project costs: Up, up, up"

Tuesday, October 23, 2007

Airport project costs: Up, up, up
Baggage system is $92 million over budget and 2 years behind schedule
By KRISTEN MILLARES YOUNG
The Seattle (WA) Post-Intelligencer


Tack on another $34 million. 

The cost of a Sea-Tac Airport project -- a new baggage conveyor belt system
designed to meet post-9/11 security requirements -- has skyrocketed from
about $139 million to $231 million because of fallout from a dispute between
the Port of Seattle and a subcontractor.

The port blamed the project's complexity for the rising costs and delays,
which it says were exacerbated by missteps by Tavares, Fla.-based G&T
Conveyor Co. G&T says the port is at fault because of its shoddy design,
poor construction management and constant stream of changes.

On Tuesday, port staff members will ask the five-member board of elected
commissioners to authorize $34 million more to fix the problems plaguing the
construction of its baggage system -- just over a year after the commission
approved an additional $24 million for the same purpose. 

Port of Seattle Commission President John Creighton referred questions to
port staffers Monday. The last time staff asked the commission for more
money for the project it passed unanimously with little to no public
comment.

That request came nine months after the commission authorized an additional
$25 million to pay for changes requested by the airlines and the federal
government. 

Federal grants are expected to reimburse the port for $113 million of the
now-$231 million project, the port must cover the remaining $118 million.

The port said it and its contractor, Turner Construction Co., signed a
"non-disparagement agreement" last summer to settle with G&T so it could
hire another subcontractor to finish G&T's $25 million part of the project
faster.

But changes to the baggage system's configuration, including accommodating
Alaska Air Group's new kiosk check-in system, have more than doubled the
price tag of that work to $58 million. The project, which was supposed to be
finished by late 2006, is now due to wrap up by fall 2008. 

G&T said the fault lies with the port and its bumbling attempts to offload
the costs of the more than 200 change notices and construction bulletins it
issued for just G&T's part of the baggage system. 

"They are poor managers of projects, to say the least, and they find
themselves in trouble all the time but continue to shed blame or divert
blame," said Mike Malkowski, the president and chief executive of the Five
Star Airport Alliance, G&T's parent company. 

"It is hurting the general public, which is paying a high price for
mismanagement of projects, and companies such as ours, which are also paying
a very high price."

Some of the issues G&T raised -- the port's ambiguous estimates and inept
tracking of project costs and change-order impacts -- were identified in a
port-commissioned, independent auditor's report released in May.

The port, however, said G&T's inability to stay on schedule is the root of
the problem. G&T, which has expanded rapidly to build similar systems at
airports across the country, has successfully completed other jobs for the
airport.

"We didn't feel they were making adequate progress," port project manager
Larry Lanier said. "We couldn't get the info from them that we wanted, and
then we decided that we may never get the work done" if they didn't hire
another company to finish it.

It would have been easier to stay on track, G&T director of project
management Tim Berndt said, if the port had not given it a shoddy design --
which required major changes beginning more than five months after the bid
was awarded in August 2004. 

The port, Berndt said, had bid out the project when it was only 60 percent
designed, but promised to send over a detailed list of changes within two
months of awarding the contract. 

Typically, Berndt said, when changes are made to a project, they are
highlighted on the project's drawings and annotated in the specifications.

That was not the case with the port, he said, which continued to make major
changes late in the process. 

Lanier, when asked how many changes were made during the project, said, "It
could be dozens or hundreds -- I really don't know." 

Lanier said the changes improved the flexibility and functionality of the
labyrinthine baggage system, which is designed to comply with post-9/11
Transportation Security Administration rules that airports must screen 100
percent of checked baggage for explosives.

But the installation of 11 miles of conveyor belts in the bowels of Sea-Tac
to carry bags from the ticket counters to planes is a headache, mainly
because the airport has to keep functioning throughout the process. 

Though the port spent more than $20 million to design the baggage system,
major holes remained when G&T began work, Berndt said.

One example: The port had not calculated whether the baggage well -- the
level beneath ticketing that is unseen by passengers -- could support the
weight of all the equipment G&T had to install. It couldn't, the
subcontractor said.

"We were told to remove the stuff we had already put in because they had to
reinforce the bagwell with structural steel," Berndt said.

G&T said it priced out all the port's changes and said they couldn't make
them for less than $9.8 million, not including what Alaska had agreed to pay
for its part of the system. The port balked, went to Alaska to see whether
the projects -- initially separate -- could be combined, and settled with
G&T for a multimillion-dollar sum both declined to name. A year later, the
cost for the combined project has more than doubled to $58 million. 

Vanderlande Industries, the new subcontractor for the two miles of belt that
G&T was responsible for, is also having contract troubles. The port says
Vanderlande can't access the places it needs to work on, resulting in
further delays.

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