Denver International Airport fired Great Hall Partners, a consortium that was renovating the airport's main terminal. Construction in the area known as the Great Hall began in July 2018.

The airport said that in November 2018, issues were found with the compressive strength of the original concrete, placed in 1991, which required additional testing. In addition, the contractor allegedly was unable to obtain the necessary permits to keep the project on schedule.

The airport and its contractor had been in mediation but were unable to reach agreement on the cost and schedule impacts of these issues, the airport said in a statement.

The disputed project includes renovating the Great Hall area, located beneath the terminal structure's iconic tent-like roof. Credit: Wikimedia.The original project was a public-private partnership with Great Hall Partners, comprised of Ferrovial Airports, JLC Infrastructure and Saunders Concessions. The 34-year agreement called for Great Hall Partners to design and construct all improvements, followed by 30 years of operations and maintenance within specific commercial areas of the terminal.

The total cost to design and build the project was estimated at $650-$770 million, which included a $120 million airport-controlled contingency.

Fitch Ratings said that the termination "will not adversely affect either the airport's ratings or those tied to the project itself." The agency said that the airport has a "strong financial position and demonstrated market access" to defray the termination obligation.

First PPP

In August 2017 Denver's City Council approved the $1.8 billion, 34-year public-private partnership contract. It was Denver city government’s first major public-private partnership at a city-owned building.

Plans call for relocating all security screening and modernizing the checkpoints with faster technology. The project also calls for consolidating ticketing areas — shrinking as airlines rely more on self-check-in kiosks — into smaller spaces.

When the contract was approved, airport officials said the roughly 15,000-page agreement offered assurances that the renovation would be delivered on time and on budget. They said that it provides a reliable partner at a time when the airport also was preparing separate projects for gate expansions and other changes, which could include adding a seventh runway.

In 2016, passenger traffic through the airport reached 58.3 million. The planned projects were expected to expand the airport's capacity to 80 million a year. The airport ranks as the fifth busiest airport in the U.S.

Shown the door

The airport has given Great Hall Partners 90 days to vacate the project site. During that time, the airport said it will find a new contractor to complete construction. The airport also said it will take greater control of the project and will "prioritize passenger flow" in an effort to minimize the impact of construction on travelers, airlines and other tenants.

At its website, Great Hall Partners expressed disappointment that it and the airport were unable to find a "mutually acceptable resolution to the serious issues" that have impacted the project. It said those issues include the discovery of weak concrete in some areas of the terminal and "more than 20 large in scale, badly timed and unnecessary change directives" issued by airport officials to the design that had previously been approved.

"Since November 2018, we have made good faith attempts to reach a mutually acceptable resolution" with the airport and the mayor's office. "It has always been our strong desire to resolve these issues in order to deliver the project."

Once selected by Denver airport officials, the new project contractor will be responsible for construction only and not operations and maintenance or the commercial program as was the case in the first contract. The airport said that it will operate any commercial development and will retain all of the revenues.

Separation terms

The airport said that payment to Great Hall Partners based on terms of the agreement include:

• Roughly 25% of the design and construction cost that Great Hall Partners contributed
• Contract breakage costs which is a result of Great Hall Partner's other contractual relationships
• The lost return on investment based upon the amount of equity they committed to the project

The airport said it will also pay Great Hall Partners for any other outstanding incurred costs related to construction and design work completed to date.

The design and construction cost of the project will remain at the original budgeted amount of $770 million with contingency.