Developer Claims DIA Terminal Change Orders Will Cost $151M
DENVER (CBS4)- The developer of Denver International Airport's Great Hall Project says in confidential documents obtained by CBS4 that change orders covering everything from toilet partitions, to wall coverings and escalator relocation will account for an additional $151 million in costs. That is nearly half of the projected $311 million cost overrun on the project.
Up until now, the City of Denver has emphasized delays and increased costs for the project emanated mainly from terminal concrete that was found to be weaker than expected. But now it appears change orders are shaping up as an equally costly line item, at least according to the developer.
CBS4 has previously reported that Great Hall Partners, a consortium of developers and construction companies, led by international airport developer Ferrovial, told the city last month the project will likely cost $311 million more than the initial $650 million price, a 47% increase. GHP has also told the city the project, which was supposed to be completed in 2021, may not be fully finished until 2025, more than three-and-a-half years behind schedule and with a price tag of around $960 million.
In a confidential 216 page claim given to the City last month, and viewed by CBS4, Great Hall Partners outlines why it says costs of the renovation have dramatically increased and why it says the city should pay.
Asked about the claim document, Stacey Stegman, Vice President of Communications for DIA, said, "I can't confirm or deny the existence of any documents/information."
A spokesperson for Great Hall Partners, Alana Watkins, said "We are unable to provide any additional details about this issue at this time" citing pending confidential negotiations.
The developer contends that the airport and city have issued 28 change directives for the Great Hall renovation- not a large number for a project this size- but affecting 75% of the Great Hall's footprint.
"…The changes directed within these Change Directives covers a significant area and were issued at times when the design of the Project had already progressed to a point that significant changes such as these were not able to be incorporated without causing major time and cost impacts."
The report says the requested changes "impact large swaths of the terminal."
The terminal redevelopment began in 2018 with the intent of increasing terminal capacity, redesigning security, improving passenger flow and creating more retail space in the Great Hall.
In one section of the claim, the developer wrote, "The requested relief for the Change Directives includes Direct Costs and delay costs (totaling $151,771,456.98 inclusive of 12% Mark-up) as well as a schedule extension in the amount of 704 calendar days."
Great Hall Partners also asks for interest on top of those costs.
However, DIA contends only $8.4 million in change orders have been approved, suggesting the GHP estimates are exaggerated and inflated. The vastly different numbers also indicate how far apart the two sides seem to be in an increasingly contentious project.
The claim document reviewed by CBS4 also details the timeline surrounding DIA's terminal concrete issues. The developer says that after the project was underway, in the summer of 2018, it took four concrete core samples in the terminal.
"Surprisingly, none of these initial concrete core samples had strengths sufficient to match the design strength shown in the Owner's documents; they were all weak."
Spooked by what they were finding, structural steel work in the terminal was halted for months "because without full knowledge of the extent of the low concrete strength none of the parties felt comfortable with placing additional loads of up to 250 psf live loads on the concrete."
"One would expect concrete to get stronger with time, not weaker," stages the GHP claim. "So, questions began to arise whether the concrete was just weak from the beginning… or whether the concrete was not weak originally but contained an "illness" that had made it weaker over time…"
Subsequent testing by an engineering consultant hired by the City of Denver has suggested the terminal concrete is safe to build on but that additional testing should be conducted on other areas of the airport. Denver Mayor Michael Hancock has said that the project is safe.
Hancock told CBS4 last month, "This is a one sided perspective you are looking at."
He said airport officials and consultants were in the process of examining GHP's claims and would respond. Hancock said he was well aware of the pricey claims surrounding change directives and said, "I'm well aware of their thoughts around change orders. It's a part of major projects like this but we have our opinion of how significant they are or are not. We're not done with our analysis."
Great Hall Partners is due to release a public update on its construction progress around June 15. That report will likely contain some previously confidential information that has been reported by CBS4.
At the same time, the City of Denver and GHP are scheduled to enter mediation this month to see if they can resolve their differences over delays and additional costs of the redevelopment project.
