Denver airport's P3 terminal remodel delay gets longer

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A $650 million remodeling of Denver International Airport’s terminal faces delays of at least 18 months as contractors seek solutions to concrete deficiencies in the original structure, officials said.

The anticipated delay disclosed in an April 14 construction update on the Municipal Securities Rulemaking Board’s EMMA website is about eight months longer than anticipated when the concrete problem was first announced.

A finding in November that existing concrete used to build the original terminal falls short of the standards needed to proceed with construction brought most work to a halt just four months after it began.

Great Hall Partners, a consortium of financial, engineering and construction firms led by international airport developer Ferrovial, disclosed the “relief event” in its December progress report.

“It is too early to determine final and specific impacts on the project,” the report said.

In the April 14 update, GHP announced that the delay would be longer than first estimated.

“The addition of 167 Working Days / 241 Calendar Days between the January to February schedules stems from estimated changes in the construction methodology and potential related timing impacts,” the statement read.

The discovery of the substandard concrete requires further analysis before the design and construction team decides how to solve the problem and how much it will cost.

“Additional potential schedule impacts are possible,” the April report notes.

Stacey Stegman, senior vice president of marketing and communications, told the local CBS News affiliate that the airport does not know the potential financial impact of the latest delays in the expansion.

Originally designed to be finished by 2021, completion of the Great Hall Project will now take until at least 2023.

“The projected schedule represents the contractor’s estimates but does not include the airport’s review and analysis,” said Stegman.

The delays are expected to add to the costs of the project, but the City of Denver and its private partners are expected to negotiate which party will bear the cost. P3 projects are generally designed to shift construction risk to the private partner.

"While full information is not yet available, the delays to DIA’s Great Hall Project highlight the increased risks to projects with significant amounts of inherited assets compared to a new build or greenfield project," said Earl Heffintrayer, transportation analyst at Moody's Investors Service. "Utilizing the public-private partnership model to procure projects can only attempt to mitigate, not eliminate, these risks."

"With the Great Hall Project, the weaker-than-expected strength of the existing concrete is a risk retained by DIA because the private sector cannot always efficiently price the risk of differing conditions going into a project, depending on the amount of information available upfront, so this risk typically remains with the public sector," Heffintrayer added. "DIA’s awareness of its retained risk allowed it to build adequate contingency and capacity at the beginning of the project in order to mitigate the adverse effects of any events that provide relief to the private party."

In 2007, DIA replaced nearly $11 million worth of slabs on one of its six runways afflicted with ASR or alkali-silica reactivity. The condition known informally as concrete cancer, involves a chemical reaction between silica in the aggregate, or rock, in the concrete and alkalis in the cement.

The chemical reaction creates a gel around the aggregate. When the gel absorbs water, swelling and cracking follows.

Great Hall Partners said a consultant reported that the inadequate concrete used in the terminal appeared resistant to ASR based on the first tests.

“There is no indication that it’s anything close to what occurred with the runways,” Stegman said.

Bill Davenport, spokesman for the American Concrete Paving Association, said that standards and concerns about ASR have heightened in consultation with the Federal Aviation Administration since DIA was completed in 1995.

“People think of concrete as one size fits all. But the reality couldn’t be farther from the truth,” he said. “There’s a lot of material science that goes on.”

S&P Global Ratings rates bonds used to finance the Great Hall project at BBB-minus, the lowest rung of investment grade, with a stable outlook.

“We could lower the rating if construction is substantially delayed or the project incurs significant cost overruns that project liquidity cannot support,” S&P warned in its 2017 report.

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