Backers Seek Expedited Contracting for Airport Overhaul

Backers seek expedited contracting for airport overhaul
POSTED: 02:40 PM Wednesday, May 1, 2013
BY: Robin Shannon, Staff Writer
TAGS: Armstrong Airport, CM at-risk, Construction Manager at-risk, Edwin Murray, Ken Naquin, Louisiana Associated General Contractors, Mapp Construction, Mike Polito, New Orleans, Pearlina Thomas

In an effort to streamline and accelerate the proposed $826 million redevelopment of Armstrong Airport, the New Orleans Aviation Board and city officials hope to use the construction manager at-risk method of delivery when the project moves forward. But state and local construction industry leaders say the process must be transparent.

The construction of University Medical Center in Mid-City is being handled through a construction manager at-risk process, which places liability for cost overruns and time delays on the prime contractor. (Photo by Frank Aymami)

Pearlina Thomas, New Orleans district manager for Louisiana Associated General Contractors, explained that the method, which has grown in popularity nationally but is relatively new locally, allows the owner of a project to secure a lead contracting firm through an evaluation of criteria similar to a request for proposals.

The selected firm then commits to deliver the final project for a set maximum price and manages the rest of the construction process for the owner. Once the management team is selected, the project is still subject to public bid law.

“The project will still require public bidding, but in this case it will all be handled through the CM at-risk,” Thomas said. “The manager will also assume liability if the project goes over budget.”

The Louisiana Legislature must give its approval in order for Armstrong Airport’s expansion to use CM at-risk. State Sen. Edwin Murray, D-New Orleans, has authored a bill that would exempt the Aviation Board from state restrictions when it comes to hiring construction managers for public projects.

A similar bill was drafted to use CM at-risk for the $1.06 billion University Medical Center, as well as the new $130 million medical facility that replaces Methodist Hospital in eastern New Orleans.
Ken Naquin, executive director for Louisiana Associated General Contractors, worked with Murray on the bill. He said the method eliminates conflict and excessive planning changes.

“The owner picks a design professional through its own methods, and also picks a contractor to work with the design professional on constructability,” Naquin said. “As long as the process is completely open and competitive, we are all on the same page.”

Naquin said the city and the Aviation Board likely opted for CM at-risk due to the size and scope of the airport project and because a large amount of the money being used to finance the project will come from the airlines servicing Armstrong, a cost that is ultimately passed along to passengers when they buy a ticket.

In addition to a new $650 million terminal on the north side of the airport property, the plans also call for a $17 million privately financed hotel. Advocates for the project, led by New Orleans Mayor Mitch Landrieu, want it finished in time for the city’s 300th anniversary in 2018.

“Since private money is involved, the airlines likely want some kind of guarantee that there is not going to be some open-ended dollar amount,” Naquin said. “The scope of the project is so large that it is out of the range of most contractors in this region. It could set up a possible joint venture if the board chooses to go locally.”

Contractors who have used the CM at-risk method locally say it is a valuable tool when dealing with large-scale projects.

Mike Polito, CEO of Mapp Construction, which is part of the joint venture overseeing the University Medical Center build, said CM at-risk keeps the budget manageable and helps limit design changes once the project is under way.

“When you are the contractor at-risk, you can create a plan with the entire team, including the designer and the owner,” Polito said. “It leads to a non-adversarial relationship because it gives the contractor and the architect the opportunity to maintain the budget early in the process.”

Polito described open bidding on all phases of a project the size of the airport expansion as “a recipe for disaster.” He said it forces contractors to “plan in a vacuum” with limited knowledge. CM at-risk, he said, avoids these issues.

“Any time a contractor has time to plan, it increases quality control, improves the schedule and limits change orders,” Polito said.

With University Medical Center, Polito said the CM at-risk method has offered more opportunity for subcontractors because the management team has been able to break up the project into smaller packages.
“It opens the door to more participation on larger projects,” he said. “New Orleans is not a huge construction market, and there are not a lot of large construction companies… This method has given (smaller firms) the chance to get in on the work.”

Reporter Robin Shannon can be reached at robin.shannon@nopg.com.