Legal Issues Related to Large-Scale Airport Construction Projects (2020)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Legal Issues Related to Large-Scale Airport Construction Projects Copyright National Academy of Sciences. All rights reserved. ACRP LRD 38 29 For most construction contracts, the contractor does not have any responsibility related to maintenance and operations aside from certain warranty obligations, unless the airport uses a delivery method other than DBB, CMAR, lump-sum DB, or progressive DB. In other types of PDMs—for example, a design– build–maintain, or a design–build–finance–operate–maintain PPP—the maintenance and operation tasks are outsourced to the private sector, who are held responsible for design, construc- tion, operation, and/or maintenance of the facility. A key element of most PPP projects (whether they are full privatizations, transactions where the parties share project- related revenues, or availability-payment transactions) is that the PPP developer is responsible for operating and/or main- taining the project. From a legal perspective, when compared to other PDMs, this approach allows for better ability to shift liability for design and construction errors to the private sector. This is because the PPP developer is responsible for addressing and correcting any design errors and faulty or non compliant construction, independent of whether such problems are read- ily apparent at the time of construction or only discovered years into operations. In effect, the PPP developer warranties the work for the full term of the project (e.g., a 30-year warranty for a 30-year agreement). Similar to other PDMs, under this approach, the owner can inadvertently nullify this warranty by overly specifying the design or otherwise directing the devel- oper to use specific means and methods. Accordingly, it is rec- ommended that airports carefully review their draft technical provisions for PPP projects to identify any such problems and to otherwise train their personnel to implement the contract as written, so as to avoid giving the developer the ability to shift liability for performance of the facility back to the airport. Another key element of the PPP PDM, especially for availability-payment design–build–finance–operate–maintain contracts, is that by making a single party responsible for de- signing, building, operating, and maintaining a project, that party must consider how the asset it designs and constructs will perform over the full term of the contract. A facility that is built to low standards will likely cost more to operate and maintain. Under DBB, progressive DB, lump-sum DB, and CMAR, this is not the contractor’s concern, provided that the contractor is otherwise meeting contract requirements. However, under a PPP, the developer must take into account actual life-cycle costs when designing the project. This aligns the developer’s inter- ests with that of the owner, who would otherwise be respon- sible for operation and maintenance costs. This is a particular benefit to owners because owners (and those that control their budgets) typically do not pay adequate attention to operation and maintenance costs when procuring design and construc- tion contracts. Even when owners using more traditional PDMs do focus on operation and maintenance costs, low-bid require- ments can undermine those efforts, especially when the low bidder is only the low bidder because it provided a lower quality solution. As one of the case study participants noted, “an avail- ability payment PPP is the only PDM I know of that adequately addresses a project’s life cycle costs.” such issues. As a result, in comparison to its use of DBB, the air- port found that the progressive DB process led to fewer disputes with concessionaires and a much smoother turnover process. Also related to handover, this project was the first for which the airport used a new—and much more comprehensive— commissioning and activation process. The airport learned about this process through an ACRP digest and hired outside consultants to implement it. The airport found this process to be very effective. Since then, the airport has used this process for several projects and has been able to eliminate the involvement of outside consultants based on its development of in-house expertise. C. Lump-Sum DB Case Study Results The contract for the central utility plant lump-sum DB proj- ect included a requirement for the designer–builder to provide an extensive amount of training for the airport staff who would operate the facility after handover. Like many airport facilities, central utility plants are complex facilities that require detailed knowledge for operation. The airport determined that the designer–builder, having both designed and built the plant, was in the best position to provide this training. In addition, and in conjunction with this training, the airport required the designer–builder to operate the new plant for sev- eral months after completion. One of the airport representatives interviewed for this case study felt that the designer– builder’s role in operating the new facility for this period was critical because it enhanced the designer–builder’s ability to train the new staff, and because the airport still needed to operate the old central utility plant at that time (leaving the airport with insuf- ficient staff to run both plants simultaneously). XIV. OPERATION AND MAINTENANCE PHASE The responsibility for operation and maintenance of air- port facilities lies largely with the airport. The FAA has issued guidelines covering airport operations (FAA 2009); however, these guidelines mostly cover airfield operations and mainte- nance and do not cover the operation of the airport buildings and other equipment inside the buildings. The ACRP developed a guidebook regarding the creation of a collaborative envi- ronment between airport operations and maintenance depart- ments, which often have overlapping responsibilities (Delong et al. 2013). In addition, this guidebook identifies and provides some tools, worksheets, and exercises that can be used by air- ports to improve collaboration between operations and main- tenance personnel. The AIA 201-2007 form of General Conditions of the Con- struction Contract, which airports may use for construction projects, does not include any provisions addressing the opera- tion and maintenance of the facilities after completion. Never- theless, how an airport designs and constructs a facility affects operations and maintenance. Consequently, it is critical that during design and construction, the owner involves and receives feedback from those who will ultimately operate and maintain the facility, so that the facility will meet the airport’s needs.