COMMISSION 
AGENDA MEMORANDUM                        Item No.          7b 
BRIEFING ITEM                             Date of Meeting     September 11, 2018 
DATE:        September 7, 2018 
TO:           Stephen P. Metruck, Executive Director 
FROM:       Dave Soike, Chief Operating Officer 
SUBJECT:     International Arrivals Facility Program update including the Guaranteed
Maximum Price and the Independent Executive Review Panel Recommendations 
Executive Summary 
The purpose of this briefing is to: 
1.  Briefly explain of the progressive design build project delivery model; 
2.  Summarize Commission and Executive Director actions to date; 
3.  Summarize current status of the project and context of necessary changes and
challenges associated with the project; 
4.  Identify the proposed guaranteed maximum price and time schedule of the project; 
5.  Allow for a presentation by an independent Expert Review Panel retained by the
Commission to consider the project; and 
6.  Allow for a discussion between the Commission and design builder and port staff.
On the same day as this briefing, the Commission's Executive Review Panel, hired to provide an
independent review of the project, will provide the results of its work including any
recommendations.

1.  The Progressive Design Build Project Model 
The Port contracted a Design-Build team, Clark/SOM, to design and construct a new
International Arrivals Facility (IAF) at Seattle-Tacoma International Airport (the Airport) using a
Progressive Design Build (PDB) project delivery model. S imply stated, in progressive design
build, the construction of the project begins during preliminary design and continues while the
design progresses.  During this period, the project is guided by a target budget and target
schedule. When the design is sufficiently complete to identify and allocate cost and schedule
risk, the owner and the design-builder negotiate a guaranteed maximum price (GMP) for the 
work along with a final schedule. On the IAF project, the scope of the project has increased and
the project has been negatively affected by other factors, all of which have increased the

Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. 7b                                  Page 2 of 7 
Meeting Date: September 11, 2018 
project cost and lengthened the schedule, as well as delaying the expected agreement on the
GMP Amendment. Currently, the majority of the project is at approximately 100% design and
the construction is approximately 20% complete.

2.  Executive Director and Commission Actions: 
In Spring of this year, Commissioners grew concerned that the project was encountering
significant problems.  As a result, they retained an independent Executive Review Panel (ERP)
to, among other things: 
Evaluate the project; 
Recommend to the Commission whether to continue to move forward with the
project as currently contracted with Clark/SOM; 
o   if so, provide recommendations for the project; 
Provide recommendations to prevent future large projects from encountering
similar problems.
The ERP has interviewed the key personnel from all of the major project participants (Port,
Clark, SOM, etc.) involved in various aspects of the project, and has thoroughly reviewed
pertinent documents relating to the project.
The Executive Director simultaneously took early actions relating to the project. He engaged
with the President of Clark Construction and held an in person meeting in Seattle. He assigned
the Port Chief Operating Officer to personally take on the project along with Clark's Vice
President of Operations in order to find a solution to the ongoing problems. Subsequently new
leadership was inserted at the top of the project for both parties.  Port staff changed existing
IAF subcontracts to allow financial portability among various subcontractor contracts to provide
flexibility among contingencies to speed payment processes to ensure timely material ordering
and site progress. Construction progress with growing stability was a key goal of the Executive
Director along with a requirement that the parties reach a long awaited GMP and committed
timeline to enable a quality facility to be delivered in the fastest, least costly, and safest manner
possible.

3.  Summary of Project Status and Project Changes/Challenges:
The project has encountered time delays and cost increases in both design and in construction.
The dynamics of the growing airport have increased needs that necessitated significant design
and construction scope additions to the project. For example additional basement level space
was added to accommodate baggage operations while making necessary space available for US
Customs and Border Protection staff.  Two additional aircraft gates capable of allowing
international arrivals were added early in design due to growing numbers of international

COMMISSION AGENDA  Briefing Item No. 7b                                  Page 3 of 7 
Meeting Date: September 11, 2018 
airlines  arriving  at  Sea-Tac.   More  recent  design  additions  included  outbound  baggage
carousels, conveyor systems, and federal inspection machines to speed the delivery of bags
from the IAF to connecting passengers next aircraft along with life safety refinements to the
design related to fire systems and emergency electrical generators.  All scope additions will
allow the completed IAF project to perform better for the airport operators and for passenger
benefit in terms of their processing speed and convenience moving through the airport. 
Recent changes have also affected construction cost and schedule. Examples include a robust
long-term baggage system rather than an interim system and an emergency generator scope
addition noted above. That necessary change was made relatively late in design and affected
the ongoing construction work because additional underground vaults and conduit for electrical
power had to be installed that delayed or impacted building foundation work that was already
in progress. In addition contaminated soils were discovered in the areas of foundations and
underground utilities, and as a result delayed foundations and steel framing above.  These
construction impacts were compounded by a tight construction site squeezed on three sides by
existing buildings and road and train infrastructure that limited construction access to only one
narrow site road. Another recent but minor example of a change was to add steel framing and
decking for an escalator to complement future customs processing to eliminate waiting delays
for passengers at peak times.
These recent scope additions have been necessary and wise to help make this signature airport
facility efficient for airlines, federal partners, and travelers over its estimated 30-50 year life.
Changes made later in design have a compounding effect upon schedule. As a result necessary
changes have contributed to lengthening the construction portion of the schedule for the main
part of the facility by 8 months from September 2019 to May 2020.   Two additional
international capable gates will reach construction completion 6 months later in November
2020.  Additional time to complete projects requires  additional time from site workers,
equipment, suppliers, office staff, etc. that all drive costs to rise. Added schedule time driven 
by subcontractor concerns and contamination found on site and design refinements continued
to drive up costs in the last several months.
The exceptionally busy Seattle construction market has also affected costs. The Seattle market
is the busiest construction area in the US for the last three years as evidenced by leading the
country in the number of construction cranes.  This, combined with the security and other
challenges associated with performing construction at an operating international airport, led to
fewer bidders on each particular construction package bid for the project. At times 4 to 6 firms
would show interest in a package, but it was not uncommon to only have 2 bidders, sometimes
only 1. This is because contractors are very busy and other faster time-cycle projects on less
restrictive sites (without security badging requirements, etc.) can be viewed as more attractive.
This is such a competitive market that in the last 4 months, additional cost requests from IAF
subcontractors totaled over $8 million.

COMMISSION AGENDA  Briefing Item No. 7b                                  Page 4 of 7 
Meeting Date: September 11, 2018 
Port staff and the design builder have been working to reach a final cost and schedule
commitment (in the form of a GMP Amendment to the base contract) as construction has
gotten underway.  The project on-site construction is approximately 20% complete and
construction activity is gaining speed as underground and foundation work is completed. Most
designs are nearly 100%; however, the baggage handling system design is approximately 85%
complete.  Renewed emphasis on negotiations to move the project forward in the last few
months, along with design and construction progress yield a cost and schedule picture that has
allowed a GMP with accompanying schedule to be set. An agreement framework was reached
July 24th after lengthy negotiations between Port and design builder leaders.

4.  Guaranteed Maximum Price and Schedule: 
The proposal for Commission consideration from the design builder and Port staff is,  a 
Guaranteed Maximum Price, GMP, for the construction elements at $773,945,385 with a
substantial  completion  of  construction  work  on  May  30,  2020.   Following  substantial
completion, Operational Readiness and Activation Testing will commence, and contingency
time reserved for any issues unforeseeable at this time, are expected to take up to 60 days to
ensure the entire 537,062  square feet physical facility  is functional, all port and federal
employees are trained, and all building systems are robustly tested to ensure 24/7/365
operational uptime. This culminates in a projected in-service opening date for airline customer
operations of July 30, 2020.
This in-service date includes three major components of the project: 
First, the IAF landside grand hall that houses baggage reclaim, US Customs and
Border Protection customs and immigration functions, and US Transportation
Security Administration checkpoint and baggage functions.  The lower level of the
grand hall includes operational space and equipment for combined airport and
airline baggage operations.
Second, three flexible airside swing-gate structures that allow both domestic and
international airlines to share and operate on the aircraft gates depending upon
their time-of-day operations.
Third, the pedestrian overhead walkway that links the South Satellite gates to the
airside international swing gate overhead walkway corridor and on to the IAF grand
hall where traditional baggage claim and passport control occur.
A long-planned,  separate,  and later substantial completion of construction work date is
November 20, 2020 for the fourth major portion of the project that is comprised of three swing
gates that includes two international swing-gates and one domestic gate.  This completion
would be followed by similar necessary activation and readiness testing work that leads to an
in-use date for airlines and travelers of December 31, 2020.

COMMISSION AGENDA  Briefing Item No. 7b                                  Page 5 of 7 
Meeting Date: September 11, 2018 

The overall program budget requested for the IAF program is $968,445,000 to administer the
entire program.
The GMP Amendment itself was the result of substantial negotiation between the Port and
Clark/SOM, with the assistance of senior leaders of both the Port and the design builder,
outside counsel for both parties, and many contributing team members.  Generally speaking,
and if the Commisison approves its execution, it will reset the project as of the date of
execution of the GMP Amendment.
FINANCIAL IMPLICATIONS 
The GMP as presented in this memo would increase total program cost from $790,000,000 to
$968,445,000. This program cost includes the following: 
Description                                    CIP #            Cost 
International Arrivals Facilty                   C800583        $931,445,000 
International Arrivals Facility - Expense           N/A           $13,000,000 
SSAT Narrow Body Gates                    C800781         $5,500,000 
Outbound Baggage                        C800836       $18,500,000 
Total                                                           $968,445,000 
The funding plan for the IAF includes $200 million of cash (Airport Development Fund), $100
million of Passenger Facility Charges (PFCs) with the remainder funded by revenue bonds. 
Financial Analysis and Summary 
The costs of the IAF will be included in the Federal Inspection Services (FIS) cost center. All
costs are recovered from the airlines that use the FIS based on a per passenger charge. In order
to reduce the FIS cost, the $200 million of cash to fund construction costs will not be amortized
in the airline rate base (per provision in the Signatory Lease and Operating Agreement).
Additionally, as with all PFC funded projects, the $100 million of capital costs funded with PFCs
will be excluded from the airline rate base.  The funding plan also includes the use of PFCs to
pay some level of ongoing revenue bond debt service.  Debt service paid by PFCs is also
excluded from the airline rate base. The amount of PFCs applied to this project will vary over
time depending on availability of PFCs each year (e.g., 1998 PFC backed bonds will be fully
amortized in 2023, thus freeing up considerable capacity), rate management decisions (i.e.,
allocation  of  PFCs  among  airfield,  terminal  and  FIS  cost  centers),  and  other  FIS  rate
considerations (e.g., O&M costs, FIS passenger volume, FIS rates at competing airports).
Consistent with the commission funding motion of May 26, 2015 and the funding plan update 
presented on May 17, 2016, the Port's goal is to maintain a competitive FIS rate compared to
peer airports.  To the extent possible, and considering other rate management priorities,
sufficient PFCs will be used to pay ongoing revenue bond debt service to manage the FIS rate
base, and thus the FIS rate, to a competitive level.

COMMISSION AGENDA  Briefing Item No. 7b                                  Page 6 of 7 
Meeting Date: September 11, 2018 

Assuming that $300 million of construction costs are excluded from the airlne rate base ($200
million cash and $100 million of PFCs as described above), the project would add approximately
$2.08 to the Airport's passenger airline cost per enplaned passenger (CPE) in 2021. 
Potential Future Request:
Following todays briefing, the Commission will consider the information in the briefing. Should
the Commission deem it wise to continue with the project GMP proposal as identified, then
staff would return with a request in the future requesting authorization for the unfunded
balance offo the program, extension of the completion date, approval by the Executive Director
of a contract amendment with both the design builder and necessary consultants to support
the program in order to complete the entire program. 
ATTACHMENTS TO THIS REQUEST 
(1)   Presentation slides 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
March 20, 2018  The Commission was briefed on IAF progress. 
November 14, 2017  The Commission was briefed on 3rd quarter 2017 progress. 
August 15, 2017  The Commission authorized the balance of IAF funding in a joint request
with the NSAT project. 
March 28, 2017 - The Commission authorized additional IAF funding. 
October 11, 2016   The Commission authorized IAF to add balance of Phase 2 for
accelerated execution. 
September 27, 2016  The Commission was briefed on IAF reconsidering phasing and
project update. 
September 13, 2016  The Commission authorized IAF FAA reimbursement agreement. 
July 12, 2016  The Commission authorized IAF to add Phase 2 scope to meet continuing
rapid growth. 
June 28, 2016  The Commission was briefed on two additional international aircraft gates
at IAF to meet continuing rapid growth briefing. 
May 17, 2016  The Commission was briefed on Plan of Finance update. 
April 26, 2016  The Commission was briefed on IAF 1Q2016 update. 
February 9, 2016 - The Commission was briefed on IAF 4Q2015 update. 
December 8, 2015   IAF guaranteed maximum price (GMP) Development Period
authorization (presented in combination with NSAT authorization request). 
November 10, 2015  The Commission was briefed on IAF update. 
August 11, 2015   The Commission lead a special meeting, roundtable with airline 
representatives. 
July 28, 2015  The Commission lead an IAF forum. 
July 14, 2015  The Commission lead an IAF forum. 
June 23, 2015  The Commission authorized execution of the IAF Design-Build Contract.

COMMISSION AGENDA  Briefing Item No. 7b                                  Page 7 of 7 
Meeting Date: September 11, 2018 
May 26, 2015  The Commission approved IAF preliminary funding plan motion.
April 28, 2015   The Commission authorized a service agreement for Commissioning
Services. 
April 28, 2015  The Commission authorized execution of a lease agreement with SEATAC
VENTURES 2010 LLC for IAF program management office  space near Sea-Tac
International Airport. 
February 24, 2015  The Commission authorized a service agreement for IAF consultant
program leader. 
January 27, 2015  The Commission was briefed on IAF funding plan. 
January 27, 2015  The Commission approved IAF request for proposals advertisement. 
January 13, 2015  The Commission was briefed on IAF update. 
December 2, 2014  The Commission was briefed on IAF scope and budget update. 
October 28, 2014  The Commission was briefed on IAF 3Q2014 update. 
August 19, 2014  The Commission was briefed on IAF 2Q2014 update. 
August 5, 2014  The Commission authorized IAF request for qualifications advertisement. 
July 22, 2014  The Commission was briefed on IAF progress. 
June 10, 2014  The Commission was briefed on IAF 1Q2014 update. 
May 6, 2014  The Commission was briefed on IAF project delivery. 
April 22, 2014  The Commission was briefed on capital program. 
March 11, 2014  The Commission authorized IAF master planning. 
February 25, 2014  The Commission was briefed on IAF program. 
November 19, 2013  The Commission authorized IAF construction management, testing
and inspection; surveying and locating and safety service agreements. 
July 23, 2013  The Commission authorized IAF project and program support; and price
factor design-build methodology. 
July 9, 2013  The Commission was briefed on IAF. 
July 9, 2013  The Commission was briefed on alternative public works contracting. 
April 9, 2013  The Commission was briefed on IAF. 
June 26, 2012  The Commission was briefed on airport terminal development challenges at
Seattle-Tacoma International Airport. 
June 14, 2011  The Commission was briefed on international air service growth and future
facility. 
February 2, 2010  The Commission was briefed on South Satellite passenger growth and
facility  considerations, Delta's  proposed  airline  lounge  and  other  possible  future
aviation projects.