County Could Cancel Airport Terminal Project Abreu Says
Written by Dan Dolan on December 21, 2006
By Dan Dolan
Faced with explosive cost overruns, county officials could pull the plug on Miami International Airport’s troubled $2.8 billion North Terminal project, Miami-Dade County aviation director José Abreu said this week.
But Mr. Abreu said renegotiating the airport’s contract with construction giant Parsons-Odebrecht Joint Venture to shift project financial risks away from government and to the builder would help head off a Doomsday scenario.
"We certainly don’t think it’s desirable to close down the North Terminal project, but it’s an option we have to consider," Mr. Abreu said. "Right now, we have a lot of risk and a lot of money on the line. We have to ask ourselves, "How much is too much?’ At some point, we just may have to walk away."
Mr. Abreu said that’s a last resort — and not likely to happen unless costs continue to spiral out of control. He said the county has approached Parsons-Odebrecht to renegotiate its multilayered $542 million deal inked after American Airlines ran away from the North Terminal construction in July 2005 and fired its builder, Turner Austin Airport Team.
When American Airlines and Turner Austin split amid rising costs and stalled work, Mr. Abreu said, about 48% of the project was complete — and, for the most part, construction has been stopped. The county hired Parsons-Odebrecht to figure out the best way forward, Mr. Abreu said.
Since then, construction schedules and the project have changed and the North Terminal’s price tag has jumped $772 million. Mr. Abreu said he’s not convinced the end is in sight.
"If we don’t find a way to cap our building costs, we may put Miami International Airport at a severe competitive disadvantage because these costs are eventually passed on to the airlines that use our facility," Mr. Abreu said. "The best way to avoid pricing ourselves out of the market is to get Parsons-Odebrecht to agree to assume the risk for any further delays and increased costs."
Aviation Department Assistant Director John Cosper, who heads the airport’s $6.2 billion capital improvement program, said the contractor is paid for overseeing design, planning and construction. He said Parsons-Odebrecht is also paid for completing work left unfinished by Turner-Austin and for administering payments to other contractors. To date, he said, Parsons-Odebrecht has received $27 million.
In essence, the county wants to scrap the administrative fees — which it pays regardless of cost increases or delays — and convert Parsons-Odebrecht to a lump-sum general contractor’s deal, where a final price would be set, he said.
The builder would have to eat any extra costs and the county would be off the hook, he said.
"We’re hopeful we can reach this kind of agreement," Mr. Cosper said. "We sent them an initial proposal this week, and they’re reviewing it. Our goal is to get this done by mid-January and present a new contract to the county commission by February."