Guidebook for Considering Life-Cycle Costs in Airport Asset Procurement (2017)

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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP RESEARCH REPORT 172 2017 Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation Guidebook for Considering Life-Cycle Costs in Airport Asset Procurement John Fortin Laith Alfaqih CH2M HILL Boston, MA Pamela Bell CIsMatICa Bellevue, WA

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans- portation of people and goods and in regional, national, and interna- tional commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal responsibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Cooperative Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). ACRP carries out applied research on problems that are shared by airport operating agen- cies and not being adequately addressed by existing federal research programs. ACRP is modeled after the successful National Cooperative Highway Research Program (NCHRP) and Transit Cooperative Research Program (TCRP). ACRP undertakes research and other technical activi- ties in various airport subject areas, including design, construction, legal, maintenance, operations, safety, policy, planning, human resources, and administration. ACRP provides a forum where airport operators can cooperatively address common operational problems. ACRP was authorized in December 2003 as part of the Vision 100— Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Associa- tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academy of Sciences formally initiating the program. ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research organi- zations. Each of these participants has different interests and responsibili- ties, and each is an integral part of this cooperative research effort. Research problem statements for ACRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel appointed by TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport professionals, the intended users of the research products. The panels prepare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing coop- erative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended users of the research: airport operating agencies, service pro- viders, and academic institutions. ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties; industry associations may arrange for workshops, training aids, field visits, webinars, and other activities to ensure that results are implemented by airport industry practitioners. ACRP RESEARCH REPORT 172 Project 09-13 ISSN 1935-9802 ISBN 978-0-309-44628-0 Library of Congress Control Number 2017935102 © 2017 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FRA, FTA, Office of the Assistant Secretary for Research and Technology, PHMSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Published research reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to http://www.national-academies.org and then searching for TRB Printed in the United States of America

The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. C. D. Mote, Jr., is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.national-academies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to increase the benefits that transportation contributes to society by providing leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied committees, task forces, and panels annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.

C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under ACRP Project 09-13 by CH2M HILL (CH2M) and Cismatica. CH2M was the main contractor for this study and Cismatica was the subcontractor. John Fortin, LEED AP, was the principal investigator. Dr. Laith Alfaqih, P.E., was the deputy principal investigator and project manager. The ACRP Project 09-13 research team would like to acknowledge the contribution of the following personnel, airports, and other organizations for their assistance with this project, for participating in case studies, being a part of the focus group, responding to surveys, testing the total cost of ownership tool, or contributing content to the guidebook. Case Studies—Atlanta Hartsfield–Jackson International Airport (Aaron Davis), Phoenix International Airport (Jennifer Maples and Bobbie Reid), Toronto Pearson International Airport (Michael Riseborough, Marc Turpin, and Tulio Bernales), Network Rail (Andy Kirwan), and KONE (Andy Banks). Focus Group—Airports Consultant Council (Matt Griffin), Atlanta Hartsfield–Jackson International Airport (Aaron Davis, Justin Deadwyler, and Tanita Tatong), Baltimore/Washington International Thurgood Marshall Airport (Wayne Pennell), Charlotte Douglas International Airport (Chris Hazen and Mark Wiebke), Edmonton International Airport (Nick Jensen), Greater Orlando Airport Authority (Joe Furnari and John Newsome), Kansas City Missouri Aviation Department (Ian Redhead), Houston Airport System (Jesus Saenz), Lee County Port Authority (Emily Underhill), McGhee Tyson Airport (William Marrison), Metropolitan Nashville Airport Authority (Stan Vanostran), Minden Tahoe Airport CRP STAFF FOR ACRP RESEARCH REPORT 172 Christopher J. Hedges, Director, Cooperative Research Programs Lori L. Sundstrom, Deputy Director, Cooperative Research Programs Michael R. Salamone, Manager, Airport Cooperative Research Program Marci A. Greenberger, Senior Program Officer Karen Neeley, Program Coordinator Eileen P. Delaney, Director of Publications Natalie Barnes, Senior Editor ACRP PROJECT 09-13 PANEL Field of Maintenance Wayne G. Sieloff, Capital Region Airport Authority, Lansing, MI (Chair) Curt G. Castagna, Aeroplex/Aerolease Group, Long Beach, CA John Hayden, Sheltair Aviation Services, Fort Lauderdale, FL David L. Jones, Jacksonville Aviation Authority, Jacksonville, FL Jennifer L. Mims, Jacobs Engineering, Seattle, WA Chris R. Read, Aviation Department, City of Scottsdale, AZ Renee Hendricks, FAA Liaison Christopher J. Oswald, Airports Council International–North America Liaison Christine Gerencher, TRB Liaison (continued on page vi)

Airports, as well as other governmental entities, usually are required to take the lowest bid when procuring assets. This approach tends not to take into consideration the life-cycle costs, such as the operation and maintenance costs, which can result in higher than anticipated costs from the operations and maintenance (O&M) budget. Since the purchase of assets is allocated from capital funds that are managed by a person typically different than the person responsible for the day-to-day management of O&M funds, there can be a disconnect on what is considered “better” when considering two bids. Taking a life-cycle, also known as total cost of ownership (TCO), approach to the initial procurement can ensure a more fiscally responsible use of all funds. This guidebook will help airport staff learn about other industries’ use of TCO, and how to integrate it into their procurement practices. The TCO Tool that was developed is available on the TRB website (www.trb.org) on the summary page for ACRP Research Report 172. In addition, five instructional videos have been developed on how to use the TCO Tool; they can be found on the Vimeo site for the National Academies of Sciences, Engineering, and Medicine (vimeo.com/academies). TCO is an alternative method to procuring assets that has been successfully used in other industries. It allows organizations to have a more systematic approach to both capital and operating funds. TCO considers the initial acquisition costs, ongoing O&M costs, deprecia- tion, and disposal of the asset at the end of its useful life. Understanding TCO can also be useful when soliciting and negotiating service agreements so that service-level requirements (e.g., access control must have an uptime of 100%) can be thoughtfully integrated into the terms of the agreement as it may correspond to preventive maintenance, capital investments, and improvements by the vendor. Under ACRP Project 09-13, CH2M HILL was selected to develop a guidebook and a tool to assist airport operators in understanding, integrating, and evaluating the total cost of ownership in their procurement of assets. The research included case studies of organiza- tions within and outside the aviation industry who have successfully integrated TCO into their asset management and procurement programs. This guidebook and tool will assist airport staff at all levels in all functions as to how they can integrate TCO into their asset management and procurement practices. F O R E W O R D By Marci A. Greenberger Staff Officer Transportation Research Board

(Bobbi Thompson), Morristown Airport (William Barkhauer), Northwest Arkansas Regional Airport (Charles Butcher), Raleigh–Durham Airport Authority (Bill Sandifer), Reliabilityweb.com (Terrence O’Hanlon and Maura Abad), Southwest Florida International Airport (Ethan Croop), Ted Stevens Anchorage International Airport (Tim Mearig), Texas Gulf Coast Regional Airport (Jeff Bilyeu), and International Association of Baggage System Companies (Marco Oropeza). Survey and Tool Testing—Addison Airport, Atlanta Hartsfield–Jackson International Airport, Asheville Regional Airport, Austin–Bergstrom International Airport, Baltimore/Washington International Thurgood Marshall Airport, Boise Airport, Camarillo Airport, Oxnard Airport, Centennial Airport, Charlotte Douglas International Airport, Chicago Midway Airport, Dayton International Airport, Denver International Airport, Edmonton International Airport, El Paso International Airport, Elmira Corning Regional Airport, Eugene Airport, Fort Lauderdale Executive Airport, Gatwick Airport, General Mitchell International Airport, Greater Asheville Regional Airport Authority, Hector International Airport, Lee County Port Authority, LA/Ontario International and Van Nuys Airports, Minden–Tahoe Airport, Minneapolis–St. Paul airports (Airlake Airport, Anoka County–Blaine Airport, Crystal Airport, Flying Cloud Airport, Lake Elmo Airport, St. Paul Downtown Airport), Missoula International Airport, Morristown Airport, Nashville International Airport, Northwest Arkansas Regional Airport, Phoenix Sky Harbor International Airport, Port Authority of New York & New Jersey, Port of Seattle, Raleigh– Durham International Airport, Salt Lake City International Airport, San Diego International Airport, Santa Clara County airports (Palo Alto, San Martin, Mineta San José International), Sarasota Bradenton International Airport, Smith Reynolds Airport, Stillwater Regional Airport, Ted Stevens Anchorage Inter- national Airport, Texas Gulf Coast Regional Airport, Toronto Pearson International Airport, Washington Dulles International Airport, and Siemens Industry, Inc. CH2M Team – Sanjay Patel, Henry Mgbezeh, Jameson Morrell, Hinesh Mistry, John Turpin, David Pocock, Ian Miller, Joy Swenson, Paul Gibbons, and Michael Loftus. AUTHOR ACKNOWLEDGMENTS (Continued)

1 Chapter 1 Introduction 1 Project Background 2 Guidebook Content and Organization 4 Chapter 2 Asset Management Systems Implementation— A Catalyst for Life-Cycle Cost 4 Asset Management Defined: ISO 55000 4 Benefits of Asset Management 5 Organizational Impacts 6 Enterprise Asset Management Systems 10 Chapter 3 Procurement Best Practices and TCO Implementation at Airports 10 Introduction 12 Procurement Strategy 13 Procurement Best Practices 15 The Case for Using Total Cost of Ownership in Procurement 19 Implementing Total Cost of Ownership 20 Chapter 4 Incorporating Sustainability into Life-Cycle Costs in Airport Procurement 20 Sustainability Defined 20 Airport Sustainability Programs 27 Chapter 5 Building Information Modeling in the Asset Management Life Cycle 27 Building Information Modeling Defined 28 Whole-Life-Cycle Building Information Modeling 30 Case Study of Building Information Modeling on the Procurement Process 36 Implementing Building Information Modeling 38 Airports Implementing Building Information Modeling 38 Conclusion 39 Chapter 6 O&M Ready—Connecting Life-Cycle Elements 39 O&M Ready Defined 39 Benefits of O&M Ready 41 Implementing O&M Ready at Airports 42 Implementing O&M Ready 43 Chapter 7 Asset Commissioning and Turnover Process 43 Case in Point: Metropolitan Sewer District of Greater Cincinnati 43 Turnover Process 45 Results C O N T E N T S

46 Chapter 8 Case Studies 46 Airports 64 Non-airport Organizations 69 Discussion 71 Synthesis of Results 74 Chapter 9 Total Cost of Ownership Tool 74 Principles 74 Methodology 75 TCO Parameters 75 TCO Assets 75 System Requirements 79 Tool Instructions 80 Chapter 10 Procurement Best Practices Implementation 80 Introduction 80 Execution Process Methodology 81 Strategic Plan 83 Governance 84 Communication Plan 86 Chapter 11 Asset Management Future at Airports 88 Chapter 12 Final Words 89 Abbreviations, Acronyms, and Initialisms 91 Glossary 106 References A1-1 Appendix A1 Excerpts from a GTAA Bid Package A2-1 Appendix A2 GTAA Testing, Commissioning, Acceptance, and Turnover Standard B-1 Appendix B Example of Contract-Specific Requirements for the Design of Key Infrastructure for Network Rail C-1 Appendix C TCO Tool User’s Manual Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at www.trb.org) retains the color versions.