Program Management Enhances Airport _Expansion Success By Perry L. Gross, Tampa, Florida 1-813-207-2979, gross@pbworld.com and Arnold I. Rosenberg, Cincinnati, Ohio 1-513-639-2102, rosenberga@pbworld.com Program management is more than just the collective management of numerous design and construction contracts. It focuses on meeting challenges and mitigating risks. It recognizes those contracts as a unified program and puts in place a high level of communication, coordination, and control over all program activities. Program management provides airport management with the level of control it wants at an acceptable level of risk. Program management is more than just the _collective management of numerous design and construction contracts, it focuses on meeting challenges and mitigating risks. It recognizes those contracts as a unified program and puts in place _a high level of communication, coordination, and control over all program activities. Program _management allows the airport to have the level of control it wants and the level of risk with which it is comfortable. With passenger demand for air travel planned to increase constantly over the foreseeable future, nearly every commercial airport in the world finds itself in need of expanded facility capacity—on the airfield, in its terminals and for its landside access. Airports are faced with the significant challenge of implementing the planning, design and construction of multiple projects amounting to hundreds of millions of dollars in cost in as short a time as possible, all while maintaining full operations in the face of greatly increased activity. In the last ten years alone, we have seen scores of such large capital programs undertaken and planned at airports around the world—London (Heathrow), New York (John F. Kennedy), Miami, Washington, Austin, Madrid, San Francisco, Detroit, Atlanta, Houston, Hong Kong, Newark and Dublin, just to name a few. Yet, worldwide aviation associations still estimate that U.S. $80 billion in new facilities and expansions is needed by the world‟s airports to meet current demand projections. Those airport programs that have been deemed successful by both the aviation industry and the traveling public are typically those that employed the program management (PM) process to guide them along their way. PM has been defined as “the systematic management of all aspects of a multiple-project capital program.” More than just the collective management of design and construction of what may be hundreds of individual projects in a program, the PM approach recognizes those many projects as a unified program and applies its management processes over all program development activities. The Challenges—and Risks—in Airport Capital Expansion Airports are high profile facilities, so it is no surprise that large airport construction programs will continually be in the spotlight to the local community, the user community and the world aviation community. Because of their sheer magnitude and visibility, the major programs provide opportunities for great achievements, but they also present significant challenges and risks for all participants, including the risk of not:
( Thoroughly identifying what the airport needs, and wants, to build. There is a great risk in opening a new terminal, runway/taxiway system, or parking garage that is immediately termed “already obsolete,” impractical for certain users, below capacity, or just not what the owner envisioned. ( Accurately identifying program costs from early concepts. Too many programs have been under-funded from the beginning. No airport wants to have to go back to its authority or City Council and request further funding. ( Phasing and packaging the projects beneficially. If projects are not packaged and phased efficiently, the airport risks increased costs, impacts to operations, safety and security violations, lengthy low levels of service, and missed revenue. ( Designing what was planned and at the budget established. Designs and costs can stray off course without adequate controls and processes. ( Keeping the program popular. Many of us have seen what can happen when a program develops a bad reputation. It may come from increased traffic back-ups, airfield delays, missed deadlines, reports of cost escalation, ineffective involvement of the community, or poorly functioning systems. ( Enabling all program participants to be successful. One mark of a successful program is that designers, contractors and businesses of all sizes can make a fair profit and grow professionally from the experience. The PM process focuses on meeting these and other challenges and mitigating the associated risks. It puts in place the necessary personnel and a high level of communication, coordination and control over all program activities. It begins in the earliest steps of concept definition, continues through design, manages construction, and helps to ensure _on-time opening. PM can help to make the program _and all participants successful. Implementing Program Management It is important that PM be understood as a responsibility of the owner, the airport. PM is continually dependent upon the owner knowing its needs, making timely _decisions and remaining in charge. Although PM is an owner responsibility, rarely does an airport have the staff to take on all the responsibilities of a PM team. Often, an airport will contract with a _PM consultant firm to extend its capabilities, and the combined personnel of the airport and the consultant make up the PM team (Figure 1). Typically, the PM team comprises the following functional groups: ( The program manager ( Planning and design management ( Project management and controls ( Contract administration ( Construction management. A close look at the activities of the PM team will reveal how the PM process functions, and how its various _component groups support each other (Figure 2). The Program Manager. The program manager serves as the leader and manager of the _PM team and as a single point-of-contact for airport senior management. Typically the _program manager answers directly to the airport manager for the progress and success _of the overall program.
The Planning and Design Management Group. This group is responsible for starting a program correctly—with the involvement of all stakeholders—and with thoroughness and accuracy in facility planning and programming, cost estimating, packaging and scheduling, and design. Facility Planning and Programming. This group first ensures that individual facility _programming is completed early and accurately. Correcting major omissions in facility programming later on in the project, both in terms of needs and “wants,” is costly and time consuming. Once programming is completed, the PM team can make its first _estimates of project and program costs. Cost Estimating. The PM team should have the ability to estimate project construction costs accurately from programmed concepts. Often, PM consultants may team with local construction firms to assure the airport of having current knowledge of construction costs and local methods. In addition to hard costs for construction, there are other costs, such as those for financing and professional fees, land acquisition, and contingencies to accommodate evolving design features or unforeseen conditions during construction. Financial Feasibility. With all construction estimated and all other (soft) costs identified, the PM team can make an accurate determination of program financial feasibility. Upon agreement, the PM team can finalize the concepts for the development of the airport. Packaging and Scheduling. Configuring program concepts into separate construction packages requires a thorough knowledge of construction practices and airport operations. A PM team approach brings the level of expertise and control needed to configure efficient work packages and to minimize construction impacts to operations. At this point, the master plan gets refined into specific projects. With work packaged, experienced construction managers and schedulers consider every _project in relation to every other project, and develop the individual project schedules and the program master schedule. They make certain that the available funding stream and local design and construction community can keep pace, and that construction causes minimum impact on airport capacity and level of service. The master program budget can now be developed also, specific project design directives can be prepared, and design firms can be contracted. Designs can now proceed with confidence that budgets are realistic and general levels of quality and function are approved. Design. The design management component of the PM team takes over at this point. In general, it establishes program-wide design criteria, selects design consultants, manages the design schedule and quality, and supports construction in the field. The objectives of design management are very specific and essential to effective program development. They are to assure that: ( Planning output is translated accurately into cost-effective, buildable designs ( Prescribed quality level is specified, and the airport still gets the most project for the budget ( Prescribed standards and criteria are adhered to by all design consultants ( Bid documents cover the entire scope of the work and are easily understood by bidders
( Completed designs are bid within the project budget ( Designs allow construction to start quickly and proceed smoothly without changes, _delays and claims. As the designs progress, the PM design project managers continually monitor design firm progress and conduct reviews to confirm compliance with design directives, complete coverage of scope, and accuracy of drawings. The construction management group supports the effort with schedule and constructibility reviews and cost estimates to confirm budget status and reveal systems that may be candidates for value analysis. Airport and airline technical committees and other stakeholder groups should also contribute with their special reviews and approvals. This design management process as part of overall PM allows design packages to be completed in accordance with the construction delivery methods selected and allows the maximum involvement by the airport. An airport capital program will move into construction with a high probability of success if the airport‟s true facility needs have been identified and accurately conveyed to design consultants, sufficient funds are in place, all stakeholders are on board with the program, and complete, coordinated and reviewed contract documents are available to bidding contractors. The _“systematic management” aspect of the PM effort becomes more obvious as we move forward. The Construction Management Group. The senior positions of the construction management group of the PM team mobilize early in the planning phase to support construction planning, scheduling, packaging, constructibility and cost estimating tasks. Additional resident engineers, inspectors and office and field engineers join the group as construction actually begins in the field, and their numbers adjust in size to match the level of project activity. The construction management group is supported by the entire PM team during construction in the areas of project controls, safety management, contract administration and design support. It is this construction management component of the PM team that allows the airport to select a broad combination of construction delivery methods that fit its requirements for involvement and risk management. A summary review of a number of well known construction contracting methods illustrates how risk during construction can be managed and how certain methods have some hidden risks of their own. Traditional Lump Sum General Construction. Designs are completed to the 100 percent level; firm, fixed-price bids are taken in a competitive forum and the lowest responsible bidder is awarded the job. It seems too simple to be still effective after all the use it has gotten, but designs produced under the PM design management effort have a good opportunity to yield bids that cover the scope fully, are competitive and allow construction to occur with a minimum of changes and delays. This method is true minimization of owner risk, and it gives the contractor the best opportunity to complete the project _successfully at a fair profit. Multiple Prime-Trade Contracts. When beneficial, a project can be broken into multiple prime-trade contracts, each designed fully and under which each bid is submitted and contracted directly to the airport on a lump sum basis. With the PM team in place, a general contractor is not as essential as in a true design-bid-build for one project. Designs for various trades or major components (e.g., excavation,
steel fabrication, precast elements, people mover systems, etc.) can be completed individually, thereby allowing contracts to be let in a phased, fast-track manner that accelerates completion and occupancy. This method does require more coordination, but that‟s what PM is there for. Guaranteed Maximum Price Contracting and Construction Management at Risk. These two _methods, which are virtually the same, certainly sound good because we all like a guarantee and want someone else to hold the risk. In fact, both processes have benefit; however, neither offers the perfect world. They are used often when early completion and _occupancy is the chief goal and the developer needs an early maximum upset price in order to secure early funding. Under either method, the project can be fast-tracked as described above. The owner generally overpays in exchange for early cost commitment, however, and early completion. In some jurisdictions, these processes are not allowed for public-sector construction. Agent Construction Management. This method is an excellent contracting option for a single, stand-alone project, but it has some disadvantages under PM. The construction manager contracts to the owner as the owner‟s “agent” to deliver the project for a professional fee. Construction contracts are held by the owner, and the process allows for phased, fast tracking. This method, like multiple primes, offers the probability of yielding the lowest construction bids and gives the owner maximum involvement. The problem is that hiring a construction manager under a PM team introduces redundant costs because the _construction management functions are already provided for by the PM team. Design-Build. The design-build team contracts directly with the airport. It consists of a general contractor leading a group that includes the design firm and all necessary subcontractors. The design-build contractor gives an early fixed price for project delivery, advances the detailed design as far as the contractor believes is necessary, and builds the project. Design-build is a practical process for straight-forward projects, like metal buildings for hangers or air cargo, or roadway projects. For complex buildings, however, such as terminals, design-build functions in direct contrast to PM. The contractor is often not eager to involve the owner in the design review process and begins construction long before design is completed. The process has the potential for yielding exactly what the owner believed he was avoiding—frequent changes, delays, conflicts and cost overruns. Design-build is not allowed by certain public agencies. Whatever mix of construction contracting a program chooses, the owner‟s PM team continues its careful coordination, communication and control over all the work. Once construction begins in the field, that control is aimed at: ( Keeping the airport fully operational and safe for all users ( Managing construction quality, progress and cost ( Opening all facilities as scheduled. Advantages and Effectiveness of Program Management Recalling the challenges and risks defined above, PM represents the most appropriate method of effecting accurate project definition, predicting and managing cost, achieving schedule _milestones and, therefore, keeping the program popular with all involved. More specifically, _the advantages include:
( Having Sufficient Staff. When using a PM consultant firm, the PM process gives the _airport additional resources and experience to carry out coordination, communication _and control, and to have the information needed to make optimal decisions. ( Building What is Needed and Envisioned. When translated to the design process by formal directives and established standards, a thorough planning and programming effort results in contract documents that reflect the owner‟s and user‟s concepts for the program, far fewer owner changes and, thus, fewer delays and claims during construction. ( Managing Costs and Schedule. This advantage results from beginning with a thorough identification of facilities needs and accurate estimation of costs from concepts. Then, “designing to budget” results in predictable construction bids. ( Making all Participants Successful. PM allows the airport to get the facilities it needs and wants and all stakeholders to participate fully; and the extensive attention to design and construction management provides designers and contractors with the best opportunity for success. ( Keeping the Program Popular. With the stakeholders involved, their needs met, and a program that progresses with certainty, speed, safety and attention to maintaining level of service, the user public can feel involved and positive. Perry Gross is Director of Marketing over Buildings and Airport programs and projects for PB Construction Services, Inc., in the Southeast Region. Arnold Rosenberg is a Principal Professional Associate within PB, and is the Manager of Projects for PB Aviation in Cincinnati. He has served as program manager for the large and highly acclaimed expansion programs at Reagan National and Dulles International Airports and the new Austin-Bergstron International Airport. [Note: This article was adapted from a paper published in the annual conference issue (Nov. 1999) of Passenger Terminal World, UK and International Press.] [Ed. note: Arnie Rosenberg has written many articles for PB Network, including “Austin-Bergstrom International Airport: Total Quality Based Program Management,” in Issue #33, Winter „95/96, pp. 23-24, and the introduction to that same issue, p.3.] Author‟s Note Post 9/11: This article was written prior to the terrorist attacks of September 11, 2001, when passenger demand for air travel was growing like never before. Prior to 9-11, the industry projected that annual passenger levels would reach 1 billion by 2005, but as of this writing in July 2002, has only recently begun to recover significantly, and the 1 billion annual passenger level is now expected by 2008. Assuming that air travel will recover fully and resume its pre-9-11 growth rate, the need for new and expanded airport terminals, runways and landside access programs will also recover, and program management as a delivery and management process will continue to be as viable and beneficial to airport owners and managers as ever. Please read this article with that recovery in mind.