We need a new airport!!!

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flyingember
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Re: We need a new airport!!!

Post by flyingember » Fri Nov 09, 2018 4:12 pm

beautyfromashes wrote:
Fri Nov 09, 2018 2:38 pm
Why do governments bid when they don’t know exactly what they want? It seems that would cause massive increases in price. If you contracted with a house builder and then added a bedroom midprocess they would hit you with a “it’s gonna cost ya” mega increase for sure.

Why didn’t we reopen the bid process when we learned we needed 20%+ increase in the size of the airport?
People won't vote for anything except for rosy projections. It's not much more complex than that. That's the simple answer at least.

It's actually well known this is on purpose and the prices are rarely real. Government knows that business is under pricing projects to make bids.
Pay attention to the type of project governments are undertaking.

P3, CM@Risk projects with private financing and maximum guaranteed rates means that the company getting paid is now incentivized to have realistic costs. So you'll see the costs up front rather than as change orders. They all go over their bid price once the project matures. I'm 100% convinced that the price they come up with will come very close to the final price that all the contractors would have charged and they will make their deadline, maybe even months early.

Look at who makes a payment guarantee. The city TIF bonds for the convention hotel make no guarantee beyond the TIF. If the hotel doesn't bring enough people into the restaurant and rooms they're out of luck. Since there's no extra money there was an incentive to move fast to keep inflation from eating into profits and build it quickly with labor being a huge part of the cost. In the airport project they're private bonds with revenue coming only from the airport. So the construction company has an incentive to have realistic costs that there's revenue coming to pay off. If ticket prices go up too much people won't fly as much so the airlines and contractor and city all feel the prices are realistic still.

Look at where design is at. This is a design-build project. A traditional designed project will come with more risk in that a project can't be as flexible to change costs but the cost is more likely to be accurate up front with design build while traditional unknowns increase costs later. For a huge project like the airport there's no way we would want to have a final price before the public can even see the project. All the large companies can design a final project and get within a ballpark cost on a city scale and they weren't expected to at the point of bid.

Now the real question after all of that is did B&M have a better idea on the final cost than Edgemoor? That's really hard to answer with hindsight. Maybe their prices would have jumped similar amounts once the changes started coming in?

Would city residents have voted for this project if it had started out higher? It's possible the only way to get the project through was to pick the lowest price with everyone in the city knowing they would all end up at about the same place. Notice this very thread is complaining about the cost being so high from a group better educated on the subject and knowing most big projects go up in cost.

We're seeing more projects look more expensive when really this is about reducing budget busting overruns that became the norm.

What needs to come next is for government to include a bid requirement for more projects that bids have cost risk assessments done to quantify their costs, like my final price will be $1.0-1.2 billion based on certain factors and then include a legal acceptance that they cannot go over their listed high price to do work listed in the bid and have bonuses for coming in low, like if the cost is $1 billion there's a $250 million performance bonus that's pure profit. Push cost assessment on both sides back to pre-bid rather than letting design-build be a reason everything goes up. Instead only unknowns can be a reason. Like if the bid document says to dig out clay and lay footers and they bid accordingly they get more money for the extra labor to remove limestone. But if they say they can provide tile and granite in a bathoom for $x and they dramatically underbid they can't charge more later unless their bid risk assessment says their price could be $x + 10%

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beautyfromashes
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Re: We need a new airport!!!

Post by beautyfromashes » Fri Nov 09, 2018 6:02 pm

I’m just saying it’s easier to negotiate price when you have a complete idea what you want. That way, you cannot prices against each other. If you choose a contractor before you even have a idea what you’re building, the contractor has all the power on price. You can’t price against someone else at that point.

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im2kull
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Re: We need a new airport!!!

Post by im2kull » Sat Nov 10, 2018 12:59 pm

flyingember wrote:
Fri Nov 09, 2018 1:56 pm
im2kull wrote:
Thu Nov 08, 2018 6:45 pm
Didn't Burns & McDonnell offer up a nice, new airport solution to the city well before the voter referendum and heavily criticized bidding process began? Did we just burn that bridge for a wishful (promise) lie that we could get an airport sooner, and for cheaper if we went with ______ company?
You're dreaming if you think it would have been cheaper.

Under the bid proposals Edgemoor was originally at $1 billion which was up to $2.2 billion with financing costs included. (35 years)
B&M's no bid proposal was $2.9 billion with financing costs included.

Their No bid cost was 130% of Edgemoor's bid cost. That's without the size increase.
At the end of the day the size increase would have seen everyone's price go up. But B&M was already at 130% the price and no one had the tariffs in play when they bid.

Their plan, except for the shape, was the same basic design (this article has the same costs as the link below)
https://www.kshb.com/news/local-news/ma ... al-airport

*maybe* we could have got more per dollar but that's wishful thinking at best. And one key piece had the financing as different. Edgemoor had the only 100% privately financed bid and they're responsible for cost overages.

What you're seeing right now is planning up front under this risk profile. They can't pass on cost increases and extra labor for additional days through change orders. They need to identify the total price up front. Once the agreement is finalized they will hit both cost and date targets because their profits are on the line if they don't. The streetcar used a similar overage risk model with success.

For comparison this is B&M's LAX project. They went 66% over budget.
https://www.dailybreeze.com/2015/09/17/ ... udit-says/

The first scope of


Source for costs.
https://www.bizjournals.com/kansascity/ ... loper.html
I'm not sure how you misinterpreted what I wrote, but you did.

What I meant was that we were led to believe by Edgemoor that we'd be getting something drastically different, for less cost than our current reality by going with Edgemoor. That's called a lie in my neck of the woods.

B&M had a slightly more expensive proposal as you pointed out. But, they began these talks and were the only company originally offering a solution. We turned our backs on their hard work and upfront honesty and have ended up with an over budget, delayed, new airport design that is still stuck on conceptual renderings, is cutting out features left and right, and has yet to break ground or gain any major approvals. THATs what going with the "Lowest Bidder" gets you. Clearly, not very forward thinking. This monstrosity will end up being everything we didn't want, at a cost that exceeds what we did want. That's my point.

Should have never had the public airport vote and bid. This was as bad a deal as the one the council made when playing political theater with the Three Light approval. Burned bridges and cost us everything. World Cup aspirations... pretty laughable at this point.

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Re: We need a new airport!!!

Post by flyingember » Sat Nov 10, 2018 2:22 pm

A public bid would have come after a lawsuit. The city can’t do a project like this without having a bid process.

Three light was about getting lower cost options downtown with a private project. They’re nothing alike.

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beautyfromashes
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Re: We need a new airport!!!

Post by beautyfromashes » Sat Nov 10, 2018 6:09 pm

flyingember wrote:
Sat Nov 10, 2018 2:22 pm
A public bid would have come after a lawsuit. The city can’t do a project like this without having a bid process.

Three light was about getting lower cost options downtown with a private project. They’re nothing alike.
They bid before they even knew what they wanted. Lost all leverage on cost. Of course, the council doesn’t really care about the price. It’s not coming out of any fund they care about. No one is representing the desires of the people.

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Re: We need a new airport!!!

Post by flyingember » Sun Nov 11, 2018 9:58 am

beautyfromashes wrote:
Sat Nov 10, 2018 6:09 pm
They bid before they even knew what they wanted. Lost all leverage on cost. Of course, the council doesn’t really care about the price. It’s not coming out of any fund they care about. No one is representing the desires of the people.
They did YEARS of studies to figure out what they wanted. There's documents covering studies going back to 1995 on this page.

https://www.flykci.com/newsroom/terminal-master-plan/

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beautyfromashes
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Re: We need a new airport!!!

Post by beautyfromashes » Sun Nov 11, 2018 10:02 am

flyingember wrote:
Sun Nov 11, 2018 9:58 am
beautyfromashes wrote:
Sat Nov 10, 2018 6:09 pm
They bid before they even knew what they wanted. Lost all leverage on cost. Of course, the council doesn’t really care about the price. It’s not coming out of any fund they care about. No one is representing the desires of the people.
They did YEARS of studies to figure out what they wanted. There's documents covering studies going back to 1995 on this page.

https://www.flykci.com/newsroom/terminal-master-plan/
Then why did they had to adjust the size 20%+ larger and add gates? If they had done research correctly they would have known the proper size for the market.

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Re: We need a new airport!!!

Post by flyingember » Sun Nov 11, 2018 10:12 am

beautyfromashes wrote:
Sun Nov 11, 2018 10:02 am
flyingember wrote:
Sun Nov 11, 2018 9:58 am
beautyfromashes wrote:
Sat Nov 10, 2018 6:09 pm
They bid before they even knew what they wanted. Lost all leverage on cost. Of course, the council doesn’t really care about the price. It’s not coming out of any fund they care about. No one is representing the desires of the people.
They did YEARS of studies to figure out what they wanted. There's documents covering studies going back to 1995 on this page.

https://www.flykci.com/newsroom/terminal-master-plan/
Then why did they had to adjust the size 20%+ larger and add gates? If they had done research correctly they would have known the proper size for the market.
If I told you that downtown growth would add double the number of jobs in five years than professional studies say would I be taken seriously? Their *17 year* estimates were already looking wrong five years in and the airlines wanted more gates. It was a professional decision, not one coming from lack of data.
City and airline officials announced Thursday that the new facility will open with 39 gates rather than the 35 originally planned. They said the expanded design reflects faster-than-forecast growth in passenger traffic.

Original plans for the new terminal were based on long-term estimates of passenger traffic made in 2013. They showed traffic growing 1.9 percent annually through 2030.

Since 2013, however, annual growth has averaged 3.9 percent, lifted by the addition of new air carriers serving KCI and the overall improved health of the airline industry. In 2017, 11.5 million passengers traveled through KCI, according to city figures.
https://www.kansascity.com/news/local/a ... 23554.html

35 gates is more than is in use today.

Kansas City International Airport Has Third Busiest Year in History
https://www.flykci.com/newsroom/news-re ... mber-2017/

Kansas City International Airport Records Busiest September in its History
https://www.flykci.com/newsroom/news-re ... r-traffic/

"Our 31st consecutive month of traffic growth..."
https://www.flykci.com/newsroom/news-re ... mber-2016/

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beautyfromashes
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Re: We need a new airport!!!

Post by beautyfromashes » Sun Nov 11, 2018 2:48 pm

flyingember wrote:
Sun Nov 11, 2018 10:12 am
Their *17 year* estimates were already looking wrong five years in and the airlines wanted more gates. It was a professional decision, not one coming from lack of data.
Original plans for the new terminal were based on long-term estimates of passenger traffic made in 2013. They showed traffic growing 1.9 percent annually through 2030.

Since 2013, however, annual growth has averaged 3.9 percent, lifted by the addition of new air carriers serving KCI and the overall improved health of the airline industry. In 2017, 11.5 million passengers traveled through KCI, according to city figures.
Then why were they using data from 2013?!? Again, our aviation department should have known what was needed before the bid. And using 5 year old data for such a major purchase shows utter incompetence.

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Re: We need a new airport!!!

Post by flyingember » Sun Nov 11, 2018 3:04 pm

It wasn’t 5 year old data, it was supposed to have a 13 year lifespan left as a long term predictive model. They don’t make new growth assessments every year, they’ll probably start on a new one in 5+ years when the terminal opens and they need to assess expansion needs.

Deciding to grow the terminal size took a bunch of people deciding to delay the project and increase the cost. To say they made a wrong decision because their growth numbers were wrong took guts.

That’s the opposite of incompetence.

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beautyfromashes
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Re: We need a new airport!!!

Post by beautyfromashes » Sun Nov 11, 2018 5:09 pm

You’re building a new airport for the next two generations. Get the most recent projections you can, not something 5 years old, even if it was to have a 13 year long projection. They did this...just after the time when they bid on the airport and began planning for its construction. This seems to be the standard for Klein and our Aviation Department. We’re always behind the game where even the council members have to prompt action from people who should know what is going on and getting ahead of the game. Implemention so far has been wholy inadequate.
Last edited by beautyfromashes on Mon Nov 12, 2018 8:00 am, edited 1 time in total.

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Re: We need a new airport!!!

Post by mean » Sun Nov 11, 2018 8:42 pm

I think part of the problem here is that this is government we're talking about. They do growth projections and build models and then do studies based on those models, and by the time the projections and models and studies are all finished, reality has happened and some of the flaws in the models and projections and studies are exposed, at which point they can decide to start all over, incorporating the new data into new refined projections and models and studies. Then when those are completed and reality has happened again and exposed additional flaws which need to be incorporated, they can start over, ad infinitum... or rather than do all that, they can take the first round and say "ok, that was then, this is kinda what it looks like now, do this instead," which is just as flawed for probably just as many--and many of the same--reasons, but at least it gets you an airport eventually.

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Re: We need a new airport!!!

Post by flyingember » Mon Nov 12, 2018 9:16 am

mean wrote:
Sun Nov 11, 2018 8:42 pm
I think part of the problem here is that this is government we're talking about. They do growth projections and build models and then do studies based on those models, and by the time the projections and models and studies are all finished, reality has happened and some of the flaws in the models and projections and studies are exposed, at which point they can decide to start all over, incorporating the new data into new refined projections and models and studies. Then when those are completed and reality has happened again and exposed additional flaws which need to be incorporated, they can start over, ad infinitum... or rather than do all that, they can take the first round and say "ok, that was then, this is kinda what it looks like now, do this instead," which is just as flawed for probably just as many--and many of the same--reasons, but at least it gets you an airport eventually.
This is a good point, and it shows why complaining about actually using a model that we have doesn't help. At some point the city had to move forward even if the model is flawed.

This is a design-build project, right now is the time to make decisions and change things like the size. The main argument that's fair right now is that the design is uninspired. Increasing the size, not expecting cost increases as they get actual bids in place, all should be expected as they actually did real design beyond a concept this year.


I was recently trying to make this same "don't need a study" point around in street bollard + paint low-cost bike/scooter parking. It was like pulling teeth that a marked no parking zone next to two bike lanes near a bunch of buildings where there's a bcycle stand might be a good place for more bike parking. We don't need another study just put it in.

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Re: We need a new airport!!!

Post by mykem » Wed Nov 14, 2018 6:54 pm


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normalthings
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Re: We need a new airport!!!

Post by normalthings » Wed Nov 14, 2018 8:08 pm

The Use and Lease agreement is negotiated between the airlines and the city.

Tomorrow's meeting is a public comment meeting. The article notes that the airlines plan on providing a statement. I don't remember SWA having an announcement that they would specifically be attending the meeting.

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Re: We need a new airport!!!

Post by mykem » Wed Nov 14, 2018 9:21 pm

normalthings wrote:
Wed Nov 14, 2018 8:08 pm
The Use and Lease agreement is negotiated between the airlines and the city.

Tomorrow's meeting is a public comment meeting. The article notes that the airlines plan on providing a statement. I don't remember SWA having an announcement that they would specifically be attending the meeting.
So, Edgemoor is not in immediate danger of being fired from this project? I'm asking because, B&M think they can come in right now and save this project a billion dollars over 30 years. Are they still working on this behind the seen? How can they determine that?

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Re: We need a new airport!!!

Post by beautyfromashes » Wed Nov 14, 2018 10:19 pm

It’s time to hire a real airport construction project manager to replace Klein and move to B&M. The longer you take to bite the bullet, the longer the delays on opening. If it wasn’t a mayoral election season, I think we would have already made the move.

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Re: We need a new airport!!!

Post by WoodDraw » Wed Nov 14, 2018 11:48 pm

I don't think people really understand what is causing these delays.

Also, I'll eat my shoe if b&m would agree to a fixed cost contact at that price. It's easy to talk when you're not doing anything.

I was in the aecom corner, but I don't doubt the competency of people involved, even when I disagree. Klein should go though, yeah.

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Re: We need a new airport!!!

Post by normalthings » Thu Nov 15, 2018 8:31 am

mykem wrote:
Wed Nov 14, 2018 9:21 pm
normalthings wrote:
Wed Nov 14, 2018 8:08 pm
The Use and Lease agreement is negotiated between the airlines and the city.

Tomorrow's meeting is a public comment meeting. The article notes that the airlines plan on providing a statement. I don't remember SWA having an announcement that they would specifically be attending the meeting.
So, Edgemoor is not in immediate danger of being fired from this project? I'm asking because, B&M think they can come in right now and save this project a billion dollars over 30 years. Are they still working on this behind the seen? How can they determine that?
No. Edgemoor and the city are already in the process of getting the final developer agreement signed. The article focuses on an issue that is entirely between the city(aviation department) and the airlines.

It is easy for B&M to throw out blanket statements and numbers without backing. Not having a good grasp on financing is one of the reasons B&M lost in the first place.

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Re: We need a new airport!!!

Post by WoodDraw » Thu Nov 15, 2018 8:34 am

I'll spell correct for you and say that it is easy. They were the most incompetent of the group.

They were the woefully unprepared for this project. I'd project costs higher with them already.

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