APPENDIX E

Case Study: LAX Bradley West International Terminal

Los Angeles World Airports (LAWA) has constructed several major projects over the past decade as part of its Los Angeles International Airport (LAX) Capital Improvements Program (Program). The Program was designed to ensure LAX’s ability to continue to accommodate new generations of aircraft and improve the overall passenger experience at LAX. At the time the Program was initiated in 2007, it was the largest collection of public works projects in the history of the City of Los Angeles. Many of the projects were executed through some form of alternative project delivery.

The focus of this case study is the LAX Bradley West International Terminal (Bradley West) project, the first major project delivered by LAWA under the Program. The Bradley West project provides valuable insights for many reasons. Aside from being the first major project developed by LAWA since the 1984 Olympics, it was the first major project delivered by the City of Los Angeles under the construction manager at risk (CMAR) process. As a result, the Bradley West project provides important lessons for aviation agencies that are interested in using an alternative to their traditional capital project delivery approaches. The project also provides some excellent perspectives about what an aviation agency (large or small) might consider as it embarks on a new capital project, particularly if it has not undertaken a major capital project for a long period of time.

The information used as the basis of this case study was largely derived from the “Bradley West Development Program Lessons-Learned Report” (Lessons-Learned Report or Report) developed by LAWA following completion and closeout of the Bradley West Terminal project. LAWA commissioned the lessons-learned exercise to improve the performance of the other projects in the Program. The exercise had the participation of more than 30 individuals to evaluate project performance on: (a) procurement, contracts, and project controls; (b) project and design management; (c) construction management and inspections; and (d) stakeholder involvement, including facilities management, commercial development, and airport operations. The participants evaluated the areas that they thought “worked well” and those areas that needed improvement or “did not work well.”

The Project

The Bradley West project involved construction of two concourse facilities for the Tom Bradley International Terminal (TBIT). The project comprised approximately 1.3 million square feet of new construction at a capital cost of approximately $1.5 billion, with the following features:

• 18 aircraft contact gates, nine of which were Aircraft Design Group VI;
• A 150,000 square foot great hall;
• An integrated environmental media system (IEMS) with seven media features;
• An upgraded customs and immigration area sized to accommodate 4,500 passengers per hour; and
• Six new business and first class lounges.

For contracting purposes, LAWA broke the Bradley West project into two components:

• Gates. The gates component totaled 500,000 square feet and included the north and south gate concourses. The concourses were built immediately adjacent to the international concourses they replaced.
• Core. The core component resulted in the expansion and renovation of the existing TBIT central core. This component included approximately 500,000 square feet of new construction and expansion, along with approximately 300,000 square feet of renovation. The new construction portion included international services, baggage handling, airline operations, concessions, airline VIP lounges, and customs and immigration. The renovation portion included a baggage claim hall, the U.S. Customs and Border Protection area, a centralized security checkpoint, and airline support areas.

Several factors influenced the development of the Bradley West project. As noted earlier, LAWA had not undertaken a capital program of similar size since the work performed in support of the 1984 Olympics. As a result, LAWA did not have the necessary management organization or systems in place to implement this substantial program. Moreover, because of delays caused by community opposition to the Program and the pressing need to accommodate new Airbus A380 planes, LAWA did not have time to use a traditional design–bid–build delivery process. Speed of delivery was the driving reason LAWA decided to use a CMAR delivery process. This approach enabled construction to proceed on a phased basis, with early packages being awarded while the design process continued for the balance of the project.

LAWA started soliciting program management services at the same time it began the solicitation for engineering and architectural services in November 2007. As noted in the Lessons-Learned Report, this is different from how public agencies traditionally establish their program management office, where program management policies and procedures are developed before the procurement of engineering and architectural services is begun. Award of the program management, architect, and engineering contracts occurred in March and April 2008. In February 2009, after the design had advanced somewhat, LAWA started the procurement for the CMAR contractor. LAWA awarded the CMAR contract for the gates component to the Walsh/Austin Joint Venture in April 2009. In October 2009, it awarded the CMAR contract for the core component to the Walsh/Austin Joint Venture. The contracts were cost-plus contracts with guaranteed maximum prices (GMPs). Construction on both components was underway by August 2010 and completed in July 2013.

What Worked Well

The Lessons-Learned Report identified several areas that worked well in the development of the Bradley West project. The report concluded that these areas were a byproduct of LAWA’s need to establish a robust project management organization in a short period of time, which led to management systems and organizational processes that had to meet the demands not only of this project, but also of the other projects that were to be undertaken in the program. The areas noted in the report are as follows:

1. Executive management decision-making. The Lessons-Learned Report observed that one of the keys to successful execution of any major capital development program is the owner’s ability to make timely decisions. Given the magnitude of inherent costs associated with executing a major project, the cost of indecision and delay can be greater than the direct/material cost of the decision itself. To address this, the LAWA executive team met weekly to review, discuss, and address issues or questions related to the project. The report noted that, without this level of involvement and decision-making, the project would have taken much longer

1. and cost more and that the dividends of such frequent executive involvement far outweighed the cost of the executives’ time.
2. Los Angeles Department of Building and Safety satellite office at LAX. Early in the construction process, LAWA management met with the Los Angeles Department of Building and Safety (LADBS) to discuss the process by which the project could be processed through the required reviews and inspections in an accelerated manner. This resulted in LADBS establishing a satellite office at LAX to handle the LAX projects exclusively. This on-site involvement by LADBS not only ensured timely review of the construction plans and inspection of the work, but helped facilitate the interaction and communication between LAWA, LADBS and the design and construction teams to allow for timely resolution of code issues.
3. Focused huddle meetings. To meet the project’s schedule, construction was implemented on a work package basis, which necessitated the resolution of open details during the construction process. Because all code, design, and construction disciplines (including the Los Angeles Fire Department) were represented on-site, the project team established huddle meetings to address design issues. This reduced the time from issue identification to resolution and, according to the Lessons-Learned Report, helped establish a “building team” that was focused on issue resolution versus issue “policing.”
4. Off-site pretesting and component assembly for information technology systems. The Lessons-Learned Report concluded that the off-site assembly and pretesting of equipment for the information technology (IT) systems was a benefit to the project. Doing this major work offsite facilitated formatting, configuration, and testing and resulted in better quality control of the equipment. Working offsite also enabled the team to address any issues before they became critical. The project team essentially ran the system remotely before it was installed to create what amounted to a plug-and-play situation once the IT infrastructure was complete.
5. Airfield operational plan. The security and operational safety of an active airfield is paramount. The Bradley West Terminal was constructed in the heart of the LAX operational airfield. The Lessons-Learned Report noted that, early in the process, a thorough construction logistical plan was developed with strict protocols regarding the movement of large volumes of workers and construction-related vehicles in, out of, and through the active airfield. This contributed to a secure and safe airfield throughout the life of the construction process.
6. Budget and cost reconciliation with contractors. Those participating in the lessons-learned exercise concluded that the project team maintained very good budget and cost reconciliation records with the CMAR contractor and that their tracking methodologies were aligned. This helped eliminate disputes and enabled quicker agreement on cost-related issues.

What Did Not Work Well

The “What Did Not Work Well” section of the Lessons-Learned Report offers many useful insights into the challenges of building a major capital project with a new delivery process, particularly after having little experience in doing so for many years. In fact, the report concluded that most of the challenges could be traced to (a) the aggressive schedule required to complete the project, (b) the lack of institutional experience in the implementation of a large capital program, and (c) this being the first CMAR delivery project implemented by the City of Los Angeles. A summary of the issues identified in the report is presented below.

1. Challenges in project initiation. Because the project was initiated without the necessary management systems and organization in place, it created what was called a “triage environment” early in the project. As noted previously, the program manager (responsible for establishing the project management procedures and process) was selected in the same general time frame as the design team. This resulted in a cart-before-the-horse scenario, with management systems being developed and implemented while the project was underway, rather than at the outset. Likewise,

1. because LAWA made the decision to use CMAR after the design team was selected, it was not able to optimize the benefits from the system—especially contractor input and review during the design process.
2. Major design additions late in the construction process. Major owner-generated design changes and scope additions were made late in the construction process, which resulted in both redesign and reconstruction efforts that, according to the Lessons-Learned Report, taxed an already challenging environment. Examples of these design changes were (a) modifications to the concession program that caused significant changes to the structure and building systems and (b) the addition of an integrated environmental media system well after the project was under construction, which also caused significant changes to the facility.
3. Early bidding of incomplete design documents. Due to the aggressive schedule, many of the design documents were bid before they were complete. Subsequent “design bulletins” were issued with the intent of adding the incomplete portions of the design. While this situation was planned, the number of changes and the added requirement to address these changes in the field while construction was proceeding were greater than anticipated. This added yet another layer of complexity and increased the administration requirements of the project. Moreover, LAWA’s lack of understanding of the CMAR delivery process resulted in challenges addressing the CMAR contractor’s design development allowance to cover the unknown design changes that could result from the design completion. Because LAWA did not allow a design development allowance, the CMAR contractor specifically excluded the design completion costs from its GMP, which resulted in substantially more change orders than would otherwise have been required. Finally, the incomplete design documents created an additional challenge—how to maintain current design documents and deal with as-built changes. The Lessons-Learned Report stated that changes made in the field were not always reflected in the record drawings, and the field set of plans did not always reflect the final changes made in the office.
4. Project packaging strategies. Operation of the Bradley West Terminal required construction of several facilities immediately adjacent to the terminal, most notably, aircraft parking aprons, taxiways, and taxi lanes. The construction work was divided into several different contracts, and detailed phasing plans outlining shared laydown areas were developed to facilitate delivery of the separate projects. The packaging ultimately created contractor interface and design challenges. The Lessons-Learned Report noted that, in several cases, the same areas were being used by separate contractors for staging, laydown, and actual performance of work on the basis of individual phasing schedules. Consequently, delays on the delivery of one project had potentially significant impacts on the adjacent project. In addition to the construction issues associated with the packaging of contracts, some design challenges were created by having the design of certain packages divided between different design teams. This affected the speed in which these projects were delivered and resulted in differing design details for the same type of work. While many of the design detail issues were discovered during design, numerous issues were not found until construction, which had a negative impact on the program.
5. Lack of local knowledge of code and permit requirements. The Lessons-Learned Report concluded that, because of the uniqueness of Los Angeles’s building code and permit-related requirements, local knowledge of these requirements was as important as having the industry’s best design and construction expertise for a major, complex project such as Bradley West. LAWA’s selection process for the designers and CMAR contractor focused heavily on industry best design and construction experience and placed less relevance on local knowledge. Because the teams either did not have or did not use their local knowledge or local experience, particularly with respect to LADBS requirements, they went through a learning process that resulted in a number of design changes.
6. Lack of flexibility in the contract documents. The participants in the lessons-learned exercise concluded that, in a fast-track project, it is important to have flexibility within the contract documents to deal with the many relatively small issues that arise throughout the development

6. process. This includes having appropriate contract allowances to address these minor issues or the ability to have the CMAR contractor perform the work without the use of subcontractors. Because the CMAR contracts did not have this flexibility, change orders were needed to address the consequences of these issues. This added administrative load to an already stressed system.
7. Overtaxing of certain project administration/management processes. The impact of the aggressive schedule and the significant number of changes overwhelmed both LAWA and the CMAR contractor, as neither party was able to keep up with the administration of change orders. Likewise, the CMAR contractor’s schedule updating process was inadequate, which resulted in the lack of accurate schedule status and having a ripple effect throughout the project to many of the consultants and contractors.

Summary and Takeaways

Despite starting this time-sensitive project with virtually no management systems or organization in place, LAWA still accomplished the delivery of a successful project. The Bradley West Terminal won multiple awards and, as noted in the Lessons-Learned Report, compares favorably in terms of price and delivery schedule with some of the best international airport terminals constructed during the same period of time. Project executives interviewed on this project attribute this not only to the “what went right” elements in the Lessons-Learned Report, but also to the alignment of the political, executive management, and program management teams. This alignment recognized that LAWA was embarking on an ambitious project using a delivery method that had not been used by the City of Los Angeles. Problems were anticipated and addressed with a focus on solutions, and a “no blame attitude” in a collaborative effort to get to the finish line.

There are several other important takeaways from the LAWA Bradley West experience:

• Determine the delivery strategy early in the process. If an agency is to obtain the full benefits of an alternative project delivery system such as CMAR or design–build, it must decide early that it will be using that system and put in place the processes to extract those benefits. For example, one of CMAR’s great benefits is early contractor involvement in the design process. If the CMAR contractor is retained after the design is advanced, or if there is little time or budget for the contractor to conduct constructability or value engineering reviews, then the owner is missing an opportunity to eliminate some of the design coordination issues that can plague a project.
• Understand the delivery process and ensure the contract is compatible with it. Everyone involved on a project should understand the attributes of the chosen delivery method, as well as the administrative processes associated with it. On GMP and phased contracts, whether it be CMAR or progressive design–build, the contract and commercial terms must address the fact that pricing is based on incomplete design documents. Allowances and contingencies work well for this, as noted in the Lessons-Learned Report. Trying to do this through the change order process is a major challenge and can result in valuable project personnel spending substantial time administering the contract rather than solving problems.
• Have a project management approach and team developed before starting the project. Owners need to have a robust, knowledgeable project management team pulled together before a project starts. This team will help with thinking through procurement, delivery, and contracting issues, as well as dealing with some of the nuts and bolts needed for project controls.
• Change management is critical to success. It is well-known that making changes during construction creates substantial disruption and impact to the cost and schedule. Owners need to know how to control scope creep from their team members as well as to ensure that all key project needs are well understood early in the design process. This is particularly true for alternative delivery systems, for which stakeholders may think that the design process is never-ending. The impact on the CMAR contractor or design–builder can be substantial.

• Consider the potential obstacles and risks to the project and develop a strategy to address them. One of the things that LAWA did well was addressing how to handle the complexity of the Los Angeles building code requirements. Putting a dedicated code official onsite significantly improved the performance of the project, even though code challenges still existed during the project. Owners should conduct an early project risk assessment, determine what stands in the way of a successful project, and then develop processes to overcome those issues. For example, owners should think about how to address the legitimate needs of a code official who might have little (if any) experience in approving construction documents on a phased basis, where he or she will see only a component of the work, often well before completion of other elements of the design.

Finally, readers should note an important element of the LAWA experience that was not directly addressed in the Lessons-Learned Report. Limitations on authority can often be a major issue on a project, particularly when a new project delivery method is being used. This can have a major impact not only on project execution, but also marketability, as contractors may shy away from projects that have a cumbersome approval process, particularly for change orders. When the LAWA Bradley West contracts were issued to the CMAR contractor, the LAWA governance board granted broad change order authority to the executive director. Prior to the award of these contracts, the executive director’s change order authority was limited to $150,000. The LAWA governance authority (the Board of Airport Commissioners) extended that authority to $1 million, with the proviso that the executive director inform the board within 24-hours of approving any change order between $150,000 and $1 million. LAWA staff interviewed for this guide specifically noted that this change had a significant positive impact on LAWA’s ability to manage changes.