Bob Hope Airport officials missed by millions when they estimated the costs of a proposed four-story transportation hub because of unrealistic expectations, last-minute design changes and unaddressed inflation concerns, according to contractors who sought the job.
General contractors who qualified to bid for the airport’s Regional Intermodal Transportation Center said uncertain costs for 15,000 tons of extra-strength steel and a flurry of last-minute design alterations prompted them to either walk away or submit bids 40% to 60% above what the airport had hoped for. Bids came in $47 million to $75 million above the projected $112 million price tag for construction of a one-stop hub for train, taxi, bus and rental car travelers.
Others said the airport simply miscalculated.
“From a design perspective, I don’t see anything they did wrong,” said Steven Riggs, executive director of project development for Santa Ana-based Bayley Construction, which also withdrew from the bidding process. “I think the only thing they did is, they were too optimistic about what the marketplace is like.”
The airport turned to Anil Verma Associates as chief architect and gkkworks/STV Construction Management as project managers. Officials hoped to issue between $90 million and $100 million in bonds and start construction this summer while interest rates are low and contractors are hungry for work. Airport officials estimated that construction would take about a year.
Plans called for the center to be located in an airport parking lot near Hollywood Way and Empire Avenue, not far from the airport Metrolink station. It is slated to house seven rental car offices and fleets, and a bus and taxi station. It will be linked, via a walkway, to airport terminals.
Contractors said high costs were driven in part by the extensive use of specially reinforced steel to ensure a high level of earthquake safety, and the need for galvanized rebar and a water-impermeable layer of material on floors where rental car companies would wash vehicles.
The special steel cost between $800 to $1,200 per ton more than steel typically used in construction, according to Airport Executive Director Dan Feger.
“The overall design was fairly exotic, with unusual materials or special materials,” said Steve Pellegren, vice president of construction at L.A.-based Bernards Bros. Inc., which submitted a $178.5 million bid for the project.
Contractors expect steel prices to rise in coming months, which made it difficult to calculate final bids. All the bids came in just a minute or two before the deadline of May 25 at 2:05 p.m., Feger said, as contractors worked the phones to seek reduced prices from steel suppliers.
“They were caught in a [materials] market that looks like it is going up,” Riggs said.
Contractors also said they were thrown by a flood of changes — known as addendums — that came in a few days before the original May 11 bid deadline. The addendums included more than 400 pages of changes, according to several contractors, prompting their subcontractors to question the reliability of the design plans, and driving the price tag up.
“I would characterize that process as very chaotic,” Pellegren said. “It takes time to digest all that information and relay that to the team working on the bid. With that short a time period, a smart person is not going to make a mistake, and will err on the side of caution. You don’t want to get that job that puts you out of business.”
The airport extended the deadline to May 25, but by that time, contractors already sensed their estimates would be above the airport’s expectations.
Overall, 19 companies pre-qualified for the project, but only eight submitted bids. The high bid came from Boston-based Suffolk Construction, at $187.4 million. The low bid came from Los Angeles-based McCarthy Construction Co., at $159.8 million.
Airport spokeswoman Lucy Burghdorf said water-resistant materials were required on all floors because the airport plans to house seven rental car firms in the building.
“You can’t put them all on one floor,” she said.
Feger told members of the Burbank-Glendale-Pasadena Airport Authority on Monday that high-grade steel is needed because the airport is designated to serve as an emergency response center in a major earthquake.
Feger also said that architects may lop off one floor, reduce the amount of reinforced steel and make other changes in order to meet the original budget. He also suggested more than doubling the size of a separate and simpler parking structure to be built nearby, from 375 spaces to 850, and to use the ground level of the transit center for rental car firms. That level was to remain public parking.
The $112-million construction budget is based on realistic projections of rental car-related revenues in the coming years, and that remains the working budget, Feger added.
“We’re going to be doing our best to keep it under that number,” he said.
Airport officials said they hope to submit new project designs in about three months and plan to complete the project in mid-2013, four to six months behind the original timeline.