6b
PORT OF SEATTLE MEMORANDUM COMMISSION AGENDA Item No. 6b ACTION ITEM Date of Meeting November 6, 2012 DATE: October 29, 2012 TO: Tay Yoshitani, Chief Executive Officer FROM: David Soike, Director, Aviation Facilities and Capital Program Wayne Grotheer, Director, Aviation Project Management Group SUBJECT: North Satellite Refurbish Baggage System (CIP #C800555) Amount of This Request: $3,760,000 Source of Funds: Airport Development Fund, Future Revenue Bonds Est. State & Local Taxes: $1,374,000 Est. Jobs Created: N/A Total Project Cost: $22,000,000 ACTION REQUESTED: Request Commission authorization for the Chief Executive Officer to proceed with the North Satellite Refurbish Baggage System project; direct staff to prepare design documents; and use Port crews to support site investigation needed to develop the contract documents. The total amount of this request is $3,760,000, and the total projected cost is $22,000,000. SYNOPSIS: This baggage system is now being used by United Airlines, but, as part of the Airline Realignment, Alaska Air Group (AAG) will displace United and move to the North Satellite (NSAT). This project will refurbish existing baggage systems in support of AAG's expanding operations at NSAT and continued use of Concourse D. AAG's baggage volumes are an estimated five times greater than United's requirements. The work will extend the service life for portions of the C92 systems, C88 North Satellite systems, and C88 tunnel systems. This project is a component of the North Sea-Tac Airport Renovation (NorthSTAR) program and is included in the 2013-2017 capital budget and plan of finance. The project will replace aging conveyor belts, motors, drives, and controls of the existing systems, as required to improve reliability and full functionality. The project will speed up the tunnel conveyors, if further analysis during design shows that this would provide significant operational benefits. To minimize project costs and component replacements in refurbishing the systems, the Port and AAG worked together to develop the design criteria and clear metrics to determine whether components need replacement. Risk and lifecycle cost analyses will be developed using maintenance data. Airport staff and representatives from AAG collaborated and COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer October 29, 2012 Page 2 of 6 refined the scope of the project during the planning phase and will continue to do so during the design phase. BACKGROUND: As part of the Airline Realignment, United Airlines' relocation from the North Satellite to Concourse A, AAG's baggage handling consultant evaluated the existing systems and conditions and prepared a detailed analysis of each system's performance requirements to meet future baggage volumes. These volumes are based on AAG's future growth projections. The scope of work planned under this project is a result of AAG's previous study and Port staff input. It represents a critical component in providing improved baggage handling systems for AAG. AAG prefers to continue all baggage makeup operations on the C92 system under Concourse D to allow for early completion of the North Satellite baggage refurbishment prior to its use. The C88 system will be shut down during construction to allow for early completion of the refurbishment. The typical (or standard) design life of a baggage system is 15 years. The current C88 tunnel systems and C88 North Satellite systems are nearly 25 years old, and the current C92 system is nearly 20 years old. The longevity of the current system can be attributed to: 1) the current running speed of the conveyors is relatively slow, resulting in minimal wear on the conveyor components; 2) the current low demand on the system, is approximately 3,000 bags per day on a system designed for up to 15,000 bags per day; and 3) the maintenance program of the existing system is proactive and extensive. PROJECT JUSTIFICATION: Once AAG's relocation to the North Satellite is complete, the volume of AAG's projected baggage will tax these systems. The conveyor speed may be increased, which will increase the wear and tear on the conveyor components. The baggage volume on the systems will be increased, which will increase the running time as well as the resistance on the motors. Finally, the operating time of the systems will be increased, which will decrease the available maintenance operation window. Port Maintenance has statistical data metrics that tie passenger traffic to critical failure of conveyors. Although the data cannot quantify impacts to airline operations, it shows that with increasing bag traffic, there is increased critical failure of components. Currently, at peak loads the system has a critical failure once every three days. This peak load is AAG's baseline. If refurbishment of the conveyors is not completed before the increased demand, it is reasonable to expect there will continue to be a critical failure at least once every three days at baseline levels, with an increased frequency of critical failures during AAG's peak loads. Another problem addressed in this project is the congestion of the C1 sortation loops. Currently, all transfer bags are conveyed through the central C1 sortation loops. These loops get congested and may cause delivery times to increase during peak operations. The proposed mini-sort system will read bags at the C92-TX1 transfer input belt and divert most of them to the appropriate sortation systems before they enter the C1 loops, creating baggage sortation efficiencies. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer October 29, 2012 Page 3 of 6 Project Objectives: 1. Improve the long-term reliability of the baggage conveyance systems. 2. Increase the overall speed of the conveyors, but not the overall baggage capacity (unless necessary). 3. Reduce baggage volume pressure on C1 sortation loop. 4. Extend the service life of the systems. PROJECT SCOPE OF WORK AND SCHEDULE: The C92 systems between the C1 sort loops and the C92/C88 connection, the C88 tunnel systems, and the C88 North Satellite systems will be refurbished and/or overhauled. A mini-sort system will be installed to presort transfer bags at the C92 transfer input to sort bags directly to the C92 and C88 systems, instead of sending them to the C1 sortation loops, which will reduce C1 sort-loop bag volume pressure. The scope includes the following elements: 1. Refurbish North Satellite tunnel and pier conveyor: Replacement or refurbishment of motors, gears, conveyor belts, and support equipment. 2. Replace pushers: Total replacement of all internal pusher hardware and components in the C88 system. 3. Add mini-sortation conveyor system at C92-TX1 transfer input to presort transfer bags. 4. Upgrade / replace programmable logic controllers (PLCs) at C92. 5. Refurbish C1 to the C88 cross-over: Replacement or refurbishment of conveyor sections, motors, gears, belts, and support equipment. 6. Upgrade of all C88 computer systems and programmable logic controllers (PLCs). 7. Replace automatic tag readers (ATRs) at C88 North Satellite systems and C1 system. Suggestions for possible addition to the scope include the following improvements. These will be prioritized during design and added only if justified based on the criteria and metrics, the benefit to the systems, and the availability of funds within the current budget: 1. Add photocells in C88 sortation 2. Add a C1 recirculation automatic tag reader (ATR) 3. Replace motor control panels (MCPs) for C88 sortation system 4. Refurbish the C92 sortation system conveyors 5. Refurbish the C92 sortation system pushers 6. Refurbish the C92 recirculation system conveyors Following design, the future construction authorization request will include the final list of project scope items. Schedule: Commission Authorization of Design November 6, 2012 Design Start November 2012 Commission Auth. of Construction July 2013 COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer October 29, 2012 Page 4 of 6 Construction Start September 2013 Construction End October 2014 FINANCIAL IMPLICATIONS: Budget/Authorization Summary: Capital Expense Total Project Original Budget $22,000,000 $0 $22,000,000 Revised Budget $0 $0 $0 Previous Authorizations $0 $0 $0 Current request for authorization $3,760,000 $0 $3,760,000 Total Authorizations, including this request $3,760,000 $0 $3,760,000 Remaining budget to be authorized $18,240,000 $0 $18,240,000 Project Cost Breakdown: This Request Total Project Construction Costs $0 $14,463,000 Port furnished equipment $0 $0 Sales tax $0 $1,374,000 Outside professional services $2,169,000 $2,169,000 Aviation PMG and other soft costs $1,591,000 $3,994,000 Total $3,760,000 $22,000,000 Budget Status and Source of Funds: This project, CIP #C800555, is included in the 2013-2017 capital budget and plan of finance. Funding for the project will include existing revenue bonds and future bonds. As disucussed at the plan of finance briefing on October 23, 2012, the Port plans to issue revenue bonds in 2013 or 2014 to fund a number of projects in the 2013 2017 capital budget. Financial Analysis and Summary CIP Category Renewal/Enhancement Project Type Terminal Infrastructure Risk adjusted Discount rate N/A Key risk factors N/A Project cost for analysis $22,000,000 Business Unit (BU) Terminal Effect on business performance NOI after depreciation will increase IRR/NPV N/A CPE Impact $0.11 increase in 2015 Lifecycle Cost and Savings The addition of the mini-sort system will increase the amount of equipment that must be maintained and repaired. As such, it is estimated that the additional annual costs for maintenance COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer October 29, 2012 Page 5 of 6 and repair of the conveyor systems will increase by an estimated $48,000 annually, including labor and materials. STRATEGIC OBJECTIVES: This project contributes to the Port's Century Agenda Goal to "Meet the region's air transportation needs at Sea-Tac Airport for the next 25 years." ENVIRONMENTAL SUSTAINABILITY: This project demonstrates environmental sustainability by improving existing Port assets and better utilizing existing resources. This project will utilize Energy Star and systems/equipment with increased efficiencies, resulting in less demand on Port utilities. BUSINESS PLAN OBJECTIVES: The anticipated growth in domestic and international enplanements will require additional capacity in baggage processing for all airlines. This supports the Aviation Division's strategic goal of "Operating a world-class international airport by anticipating and meeting the needs of our tenants, passengers, and the region's economy." ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: Alternative 1 - This alternative involves a four-bay North Satellite expansion that increases the number of gates from 15 to 19. In this alternative, AAG would take over all 11 existing baggage sortation piers on the apron level. This would provide 66 cart positions of the 80 necessary to support today's operation levels. The remaining 14 carts would be made-up on two new flat plate make-up devices located in the building expansion footprint. This is not the recommended alternative. Alternative 2 This alternative involves using the existing building footprint to maximize baggage operations in the North Satellite. All existing conveyors in the North Satellite would be demolished and replaced with new main lines, manual encode, recirculation, and eight new flat plate make-up units to support 80 cart positions necessary for both low and high growth. The existing pilot's lounge would be demolished to accommodate all necessary make-ups. This is not the recommended alternative. Alternative 3 This alternative uses an efficient cost approach for the baggage handling system as a result of the AAG's relocation plan. The work is limited to refurbishment of the baggage handling system to increase system reliability. Complete refurbishment of the North Satellite tunnel conveyors will ensure reliability for the major portion of Alaska's sortation system. In this alternative, AAG would take over all 15 existing North Satellite gates and utilize all 11 existing baggage sortation piers on the apron level. This would provide 66 cart positions of the 80 necessary to support today's operation levels. The remaining 14 cart positions would be located in Concourse D using three existing sortation piers. This is the recommended alternative. OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST: Airport Overall Baggage System Map COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer October 29, 2012 Page 6 of 6 PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: June 26, 2012 - The Port Commission was briefed on the North STAR program. April 10, 2012 - The Commission authorized the execution of consultant contracts for the NorthSTAR program, including design and construction support services; program management services; and the completion of site surveys for regulated materials management, in the amount of $1,200,000.
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