5d memo
PORT OF SEATTLE MEMORANDUM COMMISSION AGENDA Item No. 5d ACTION ITEM Date of Meeting February 25, 2014 DATE: February 18, 2014 TO: Tay Yoshitani, Chief Executive Officer FROM: Michael Ehl, Director, Airport Operations Wayne Grotheer, Director, Aviation Project Management Group SUBJECT: Federal Inspection Services (FIS) Short Term Improvements project at Seattle- Tacoma International Airport (CIP #C800426) Amount of This Request: $208,000 Source of Funds: Airport Development Fund Total Authorized Project $1,912,000 Cost Including this Request: Est. State and Local Taxes: $90,700 ACTION REQUESTED Request Commission authorization for the Chief Executive Officer to 1) increase the budget for the FIS Short Term Improvements project by $208,000 and 2) execute a major public works construction contract with the low responsible bidder, notwithstanding the low bid exceeding the engineer'sestimate by more than 10 percent. The new authorized total project cost will be $1,912,000. SYNOPSIS The Commission authorized advertisement for bids for the FIS Short Term Improvements project on December 10, 2013 and recently authorized an increase to this project's budget on January 28, 2014 to account for higher than anticipated project costs identified late in design. However, when the five contractor bids received were opened on January 29, 2014, the lowest responsible bid, from Skanska USA, exceeded the engineer's estimate by nearly 20%. This represents a bid irregularity requiring further Commission action prior to contract award in accordance with Section 4.2.3.4 of Resolution No. 3605, as amended by Resolution No. 3628. The additional authorization of $208,000 represents the difference between the engineer's estimate and the lowest bid, plus sales tax, construction contingency amounts, and added staff costs. Port staff has carefully reviewed the project scope in light of these increased costs and has determined that this project remains critical to effective management of international air operations until the new International Arrivals Facility is built in 2018. Recent installation of Automated Passport Control kiosks have increased throughput for Customs Declaration Template revised May 30, 2013. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer February 18, 2014 Page 2 of 6 processing, but this has moved the bottleneck down to the FIS exit. The Airport's current Federal Inspection Services (FIS) facility will still exceed capacity in Summer 2014. The wayfinding walls, queue management and public address system installed as part of this project will help mitigate some capacity issues by moving passengers more efficiently as they exit the facility. BACKGROUND On July 24, 2012 the Port of Seattle Commission authorized design of the FIS Short Term Improvements project with a total budget of $1,041,000. On December 10, 2013 the Commission authorized construction and a revised total budget of $1,141,000. Budget changes between these two actions were the result of scope revisions and updated estimates based on design progression. On January 10, 2014 the project was advertised for construction bids based on a 90% design estimate in an effort to accelerate the project for a pre-Summer rush completion. A pre-bid meeting and site tour was held on January 16, 2014 with several prime contractors in attendance. On January 28, 2014 the Commission authorized an additional $563,000 for additional direct construction costs and soft costs identified in the final estimate received while bid documents were being prepared. Five construction bids were received and opened on January 29, 2014 with Skanska USA identified as the apparent lowest responsive bidder with a bid of $614,000. The Port's engineer's estimate for the project was $513,000. The difference between the engineer's estimate and the low bidder exceeds 10%, necessitating this Commission authorization request. The remaining four bids received ranged from $711,000 to $860,000. Adding sales tax and construction contingency to the difference between the engineer's estimate and the low bidder plus associated project management and construction management soft costs brings the request to $208,000. Port estimating staff have reviewed the engineer's estimate and identified some factors that may have contributed to the bid difference, including, but not limited to, underestimated costs for: 1) demolition work in a confined, below-grade area of the South Satellite, 2) custom wall panel fabrication, and 3) contractor mobilization and de-mobilization associated with closing up and protecting the work area after each shift since the work occurs in an active area of the airport. In light of the number of bids received (five bids represents a significant response from the construction "marketplace") and the range of their prices, Port staff believes the bid price received from Skanska USA to be fair and reasonable. Staff also considered whether any scope could be deleted or if all bids should be rejected, but has determined that all scope will be critical to effective management of international air operations starting in Summer 2014 and that the bids received accurately reflect the cost of the work. PROJECT JUSTIFICATION AND DETAILS The Port Commission recently authorized additional funds for project costs that were not adequately represented in the construction authorization approved by the Commission in December 2013. Now that construction bids have been received the project team now believes that our January 28, 2014 request did not include sufficient direct construction costs for COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer February 18, 2014 Page 3 of 6 demolition work, custom wall panels or daily contractor mobilization and de-mobilization. The lowest responsive bid received by Skanska USA is the basis of this request for additional authorization. Project Objectives The project scope has not changed since it was advertised for bid and includes minor facility improvements at the FIS international corridor, passport control and baggage claim levels of the South Satellite to increase throughput and improve conditions for waiting passengers. Major Contract Scope of Work Improvements to way-finding and passenger traffic control in the bag claim level of the FIS at the secondary inspections exit to the TSA checkpoint and the Satellite Transit System. Improvements include new and revised exit path guide walls with exiting graphics, a new ceiling soffit and lighting additions along the exit path. Small Works Scope of Work Installation of fixed-to-floor stanchions throughout the international corridor; Installation of a new public address system in the international corridor and an upgrade of the existing public address system in the passport control area; Addition of minimal seating or a leaning rail in the international corridor for waiting passengers. Schedule Begin Design 3rd Qtr 2012 Begin Construction 1st Qtr 2014 Small Works Construction Completion 2nd Qtr 2014 Major Contract Construction Completion 3rd Qtr 2014 Project Close Out Completion 1st Qtr 2015 FINANCIAL IMPLICATIONS Budget/Authorization Summary Capital Expense Total Project Original Budget $31,700,000 $0 $31,700,000 Previous Budget Decrease ($30,559,000) $0 ($30,559,000) Previous Budget Increase $470,000 $93,000 $563,000 Current Budget Increase $208,000 $0 $208,000 Revised Budget $1,819,000 $93,000 $1,912,000 Previous Authorizations $1,611,000 $93,000 $1,704,000 Current request for authorization $208,000 $0 $208,000 Total Authorizations, including this request $1,819,000 $93,000 $1,912,000 Remaining budget to be authorized $0 $0 $0 Total Estimated Project Cost $1,819,000 $93,000 $1,912,000 COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer February 18, 2014 Page 4 of 6 Project Cost Breakdown This Request Previous Total Project Authorization Construction $146,000 $994,000 $1,140,000 Construction Management $30,000 $160,700 $190,700 Design $0 $275,000 $275,000 Project Management $19,000 $188,000 $207,000 Permitting $0 $8,600 $8,600 State & Local Taxes (estimated) $13,000 $77,700 $90,700 Total $208,000 $1,704,000 $1,912,000 As originally envisioned, this project would have expanded the capacity of the existing FIS in order to bridge the gap unti1 a new international arrivals facility could be built at some time in the future. Because the Airport's new International Arrivals Facility will be completed more quickly than first anticipated, the need to expand the existing FIS has diminished. Therefore, the scope of this project has been reduced to include only elements deemed absolutely necessary to expand throughput of the existing facility while the new facility is built. Previous authorizations included approval of design fees on a scale for a larger ($37 million) project that will not be necessary for this much smaller project. Budget Status and Source of Funds The FIS Short Term Improvements CIP #C800426 was included in the 2014-2018 capital budget and plan of finance with a budget of $1,141,000. A budget increase of $208,000 (in addition to the previously approved increase of $470,000) is necessary due to higher than anticipated construction bids for major contract work. The budget increase will be transferred from the Aeronautical Allowance CIP #C800404 resulting in no net change to the Airport capital budget. The funding source for this project is the Airport Development Fund. Financial Analysis and Summary CIP Category Renewal/Enhancement Project Type Renewal & Replacement Risk adjusted discount rate N/A Key risk factors N/A Project cost for analysis $1,912,000 Business Unit (BU) Federal Inspection Services (FIS) Cost Center Effect on business performance NOI after depreciation will increase IRR/NPV N/A CPE Impact CPE will increase by $.03 in 2015. All costs will be recovered through increased FIS rate paid by airlines using FIS facility. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer February 18, 2014 Page 5 of 6 Lifecycle Cost and Savings The improvements will be amortized over a relatively short period (four years) reflecting a 2018 completion date for a new International Arrivals Facility (IAF). These improvements will not result in any significant changes to ongoing maintenance costs. ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1) Re-bid the project as currently scoped. Port staff's analysis of the engineer's estimate and the five bids received indicate that it's likely we'd receive similar high bids if the project was advertised for bid for a second time. Re-bidding the project would also further delay completion beyond the end of the busy 2014 summer season. This is not the recommended alternative. Alternative 2) Reduce project scope to meet previously authorized budget. Project staff reviewed all aspects of the project scope after the high bids were received and determined that, although there were a few scope areas where efficiencies could be gained, the project as currently scoped represents the minimum improvements needed to facilitate efficient international air operations until the new IAF can be built. The team will carefully monitor budgets and soft costs as work progresses. This is not the recommended alternative. Alternative 3) Authorize an additional $208,000 and award the major construction contract to Skanska USA, the lowest responsible bidder. This alternative preserves all necessary project scope and best facilitates the project schedule. This is the recommended alternative. ATTACHMENTS TO THIS REQUEST None. PREVIOUS COMMISSION ACTIONS OR BRIEFINGS January 28, 2014 Additional authorization and $563,000 in funding for the FIS Short Term Improvements project. December 10, 2013 Authorization to advertise a major contract for the FIS Short Term Improvements project November 5, 2013 Automated Passport Control (APC) Kiosks project authorization July 23, 2013 Sea-Tac International Airport International Arrivals Facility (IAF) Preliminary Authorization for $3,500,000. July 9, 2013 Sea-Tac International Airport IAF Briefing. July 9, 2013 Alternative Public Works Contracting Briefing. April 9, 2013 Sea-Tac International Airport IAF Briefing. July 24, 2012 Authorization of Short Term FIS Improvements design for $284,000. June 26, 2012 Airport Terminal Development Challenges at Seattle-Tacoma International Airport. June 14, 2011 International Air Service Growth and Future Facility. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer February 18, 2014 Page 6 of 6 January 25, 2011 Authorization of planning, pre-design work and execution of a design contract for the FIS Mid-Term Improvements Phase 1 for $475,000. February 2, 2010 Briefing on South Satellite Passenger Growth and Facility Considerations, Delta's Proposed Airline Lounge and Other Possible Future Aviation Projects.
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