Evaluating and Implementing Airport Privatization and Public-Private Partnerships (2021) / Chapter Skim
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Pages 83-88
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From page 83... ...
83 C H A P T E R 9 Introduction A P3 does not end with the cutting of the ribbon on a new facility. It is typically a longterm relationship that includes the operation of the facility, maintenance, modernization, and handback requirements.
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84 Evaluating and Implementing Airport Privatization and Public-Private Partnerships Contract Management Over the project's term, the contract management process plays a key role in minimizing risks and ensuring that the relevant agreements are administered in accordance with the goals for the project that were conceived during procurement. Contract management refers to the procedures to ensure decisions made during the project accord with the terms and conditions of the applicable agreements, including the lease agreement with the private partner and those with oversight agencies and other third parties affected by the work.
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Contract Management and Oversight 85 project's application. Without dedicating a specific point person or team to manage the agreement, the contract suffers from multiple interpretations, many of which may be contradictory.
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86 Evaluating and Implementing Airport Privatization and Public-Private Partnerships contractor is not achieving the performance metrics required for full payment, such as when there is a dispute over whether the facility is sufficiently "available" to merit an availability payment. P3 agreements have procedures for addressing disputes that don't involve litigation, which can severely damage the relationship between the airport owner and private partner.
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From page 87... ...
Contract Management and Oversight 87 In August 2019, Denver International Airport terminated the Great Hall contract for convenience after schedule delays due to substandard concrete discovered in the existing terminal structure. The delays started 4 months after construction started when the developer discovered the concrete issues in the existing structure.
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From page 88... ...
88 Evaluating and Implementing Airport Privatization and Public-Private Partnerships The following checklist provides a guide for developing, procuring, and monitoring the P3 contract: • During the planning phase: – Determine internal capacity for oversight, review, and reporting – Come to a clear understanding of performance measures – Establish key performance metrics that align with the chosen payment mechanism, incentives/disincentives, and overall project goals • During the procurement phase: – Consider the selection of external advisors to ensure contract continuity and interpretation – Communicate expectations regarding oversight, reporting, and handback to proposers – Assemble internal contract management staff ready to begin after financial close – Determine a process for monitoring performance – Determine how payments and penalties for performance would be assessed – Design dispute resolution processes • After financial close: – Continued reporting by the private developer – Continued monitoring by airport – Continued dispute and negotiations over change orders, claims, and other ongoing issues Category Task Minimum Requirements Interval of Recurrence NonCompliance Deductions in $ Local Hire Requirement Meet the 30% minimum annualization of local workers required by Section 9.9.21 20 + 5 for every 1% below the requirement N/A $50,000 + $2,500 for every 1% below the requirement D&C Period Planned Lane Closure No lane shall be closed outside the time period detailed in the approved traffic control plan on World Way upper & lower levels 10 15 minutes $50,000 Pedestrian Walkways Moving walkway shall be repaired within 5 hours of initial failure 2 3 hours $2,500 Automated No automated people 80 + 6.7 every Refer to the $750,000 + People Mover Operating System Shutdown mover operating system shutdown greater than 6 hours but less than or equal to 24 hours hour shutdown continues beyond 6 hours up to 24 hours total formula points $125,000 every hour shutdown continues beyond 6 hours up to 24 hours total 1 See https://onlinepubs.trb.org/onlinepubs/acrp/InsightEvents/17-01/DevelopmentAgreements/LAX_RFP_APM.pdf Table 6. Non-compliance events for automated people mover project at Los Angeles International Airport.
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