Denver Airport terminates P3 contract for Great Hall project

13 August 2019 - 12:00 am UTC

Denver International Airport (DEN) announced on 13 August that it is terminating its contract with Great Hall Partners (GHP) for the Denver Airport Great Hall (Jeppesen Terminal) P3 project.

 

In the statement, DEN said “many factors contributed to the airport and city’s decision.” The notice established the effective date for the termination as of 12 November 2019.

 

The city noted that in November 2018 there were issues with the “compressive strength” of the airport’s original concrete, which required additional testing. This caused construction to come to a halt.

 

GHP, the Ferrovial-led consortium, has been unable to obtain the necessary permits to keep the project on schedule, according to the statement. DEN and GHP have been in mediation “but have been unable to reach agreement on the cost and schedule impacts of these issues.”

 

While GHP has been given 90 days to vacate the project site, DEN officials plan to use that time to select a new contractor to complete construction, according to the statement.

 

“DEN will be assuming greater control of the project, and will be prioritizing passenger flow, minimizing the impact of construction on the traveling public, airlines and other tenants,” according to the statement.

 

Unlike the agreement with GHP, the new contractor will be responsible for construction only and not for operations, maintenance or commercial aspects. DEN will operate any commercial development and will retain 100% of the revenues, according to the statement.

 

Payment terms of the termination agreement with GHP are generally based on the following: GHP’s portion of the funding it contributed to the project, approximately 25% of the design and construction cost, contract breakage costs that are a result of GHP’s other contractual relationships and the lost return on investment based on the amount of equity it contributed to the project.

 

DEN will also reimburse GHP for any other outstanding incurred costs related to construction and design work completed to date, according to the statement.

 

The project’s design and construction cost will remain at the original budgeted amount of USD 770m, which includes a USD 120m contingency. DEN will own all design work and construction performed to date.

 

The 34-year DBFOM project reached financial close in December 2017. The project was to have consolidated TSA checkpoints and airline ticket lobbies; and improve food, beverage retail and services to passengers in the post-security area of the airport. 

 

The city and county of Denver named GHP preferred bidder for the project in June 2016. Ferrovial, JLC Infrastructure and Saunders Construction are equity providers in the consortium. Other consortium members are Anderson Mason Dale, Harrison Kornberg Architects and Luis Vidal + Architects. 

 

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