Denver's Development Delayed

August 14, 2019

 

When Denver International Airport (DEN) opened it was a unique airport and in many ways, still is. Despite difficulties prior to going into use, the airport has become a place to connect with family, friends and loved ones as well as the people and cultures around the world. Unlike many US airports it has just one terminal, albeit a very large one, which not only handles ever-increasing numbers of travellers but also numerous events year round. In doing so, DEN has become the state of Colorado’s primary economic engine, generating more than $26 billion a year for the local economy, employing over 30,000 workers and supporting another 155,000 indirect jobs. But that economic engine is aging and is experiencing growth that has surpassed the capacity of the now nearly 25-year old facility. In fact, passenger traffic has also grown exponentially in recent years, from 52.8 million passengers in 2011, to 64.5 million in 2018– an increase of 22 percent. Additionally, international passenger traffic has increased a staggering 76.4 percent since 2011.

Above left: DEN's passenger bridge

 

United(right) and Southwest are major operators at DEN

 

In order to keep things running smoothly, DEN has continued to invest in the airport’s infrastructure and that has included the Great Hall redevelopment project. The Great Hall is the central part of the terminal, most noted for its roof, which represents the peaks of the nearby Rocky Mountains.

  When first opened it was a spacious area through which both passengers and other visitors could pass freely. Since then however, increased security requirements, among other things, has affected its use and it now can get crowded at peak times. Consequently a redevelopment project was initiated.

 

Apart from the Great Hall, Concourses and gate areas have steadily expanded (left), along with runway and taxiway improvements.

 

The main goals of the Great Hall project are to enhance security, increase capacity, update what has become ageing infrastructure and create a better passenger experience.

 TSA Security lanes in the Great Hall have become very crowded

 

The airport approached the project through an innovative public-private partnership with Great Hall Partners, not for the money, but for their expertise and to transfer the risk of constructing within and operating 24-7 facility. However, during the first year of construction, some challenges were encountered, including an issue with the original concrete (testing determined the concrete to be safe), potential construction delays and ongoing impacts to passengers.

  After eight months of negotiation and mediation regarding the construction delays and schedule, DEN felt that this partnership was no longer in the best interest for both the airport and community. As a result, the airport’s management has terminated the contract and will be approaching the project in a more traditional manner going forward, which will allow DEN to regain control of the project.

  Great Hall Partners will receive a termination payment that has yet to be negotiated. As is outlined in the development agreement, the payment terms of the termination are generally based and include payment to GHP for the following:

 

  • GHP’s portion of funding they contributed to the project – approximately 25% of the design and construction cost

  • Contract breakage costs which are the termination costs related to GHP’s other contractual relationships

  • GHP’s lost return on investment based upon the amount of equity they committed to the project

 

DEN will also pay GHP for any other outstanding incurred costs related to construction and design work completed to date.

  In addition to the termination payment, DEN will pay to complete the project with a new contractor. The design and construction cost of the project will remain within the original budgeted amount of $770 million including contingency. DEN will own all design work and construction performed to date and well as purchased but not yet installed materials. 

The Great Hall's spectacular roof

 

Most importantly, DEN is taking the responsible and appropriate steps to protect the future of the airport, the community and the area's economy.

  Since those well-documented delays in its early building work and subsequent opening, Denver has gone on to become an extremely efficient airport and the growth experienced is a testimony to that. There is however, something a little ironic that an airport that was beset by delays and budget overruns in its early days, is now undergoing a similar experience. Nevertheless, DEN has a very capable team behind it and while it has encountered some bumps along the way, it is a team that knows redeveloping the Great Hall is necessary for the future growth and success of DEN. 

 All photographs courtesy of Denver International Airport

 

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