Change Leader: Pursuing P3 Partnerships
Skanska is a global construction and development company with a long history of public-private partnerships (P3) to design, build and operate large infrastructure projects. The company is working on the I-4 Ultimate Project in Orlando, Fla., which currently is the state’s largest transportation project, and recently opened the Elizabeth River Tunnels project underneath the Elizabeth River in Virginia. Most recently, the firm reached a financial close and executed a lease agreement with the Port Authority of New York and New Jersey for the redevelopment of LaGuardia Airport’s Central Terminal B in New York City as part of the LaGuardia Gateway Partners. Johan Henriksson, executive vice president of Skanska Infrastructure Development, North American Region, is leading that effort.
This public-private partnership includes taking over operations of the existing Central Terminal Building and designing, building, financing, operating and maintaining a new replacement terminal for a lease term through 2050. The agreement also includes construction work for supporting infrastructure and a new central entrance hall.
LaGuardia Gateway Partners is composed of Skanska, Vantage Airport Group and Meridiam for development and equity investment; Skanska Walsh as the design-build joint venture; HOK and WSP | Parsons Brinckerhoff for design; and Vantage Airport Group for management of operations. LaGuardia Gateway Partners is contributing more than $2 billion, and the Port Authority is contributing more than $1 billion to construct the airport and supporting infrastructure. This is the largest P3 project in the United States.
Skanska has 20 years of experience with P3 projects, starting in the United Kingdom and with completed projects in the Nordic countries, Europe, Africa, South America and now the United States.
“Many talk about P3 as a way of financing projects, but it’s actually more than that,” says Henriksson. “It’s about how to allocate risk on a project, with design risk, construction risk as well as risk over a longer operation period. Skanska has had success coming up with a good risk allocation, inviting the best partners to handle these risks, and we also take away risk from the public side.”
P3 projects are attractive because they take risk away from the public, but allow governments to keep control of the process and make sure their requirements are being met. The P3 structure includes a guaranteed price and completion date; if costs run over, the project doesn’t cost the public more.
The construction risk is significant in P3 projects and particularly so in a project like the LaGuardia Redevelopment.
“For LaGuardia, we are building a new terminal right next to the old one and ensuring that we don’t impact the operations of the airport,” says Henriksson. “It’s business as usual at the airport with flights going in and out. To build something complex, without disturbing the ongoing operations, that is a huge challenge.”
A model-based design approach is an important ingredient to ensure that the complex and accelerated project schedule is possible.
“BIM is very important for us in how we design and structure the project,” adds Henriksson. “In order to build a new terminal without disturbing traffic, you have to build it in phases. If we didn’t have BIM, we would not be able to phase this in an efficient way.”
Picking the Right Partners
With such a complex project and a need for a lot of interaction among disciplines, it’s important to have strong partners.
“We are construction people, and we don’t run airports for a living,” says Henriksson. “We are teaming up with Vantage Airport Group, which has great experience from the Vancouver Airport. They know how to run terminals; they know how to support the nice amenities of concessions and restaurants that are an important driver for the design as well as the operations of the terminal. They provide input to make sure there’s a nice experience for the passenger.”
An upgrade for LaGuardia has been discussed for decades, but not much has been done to the original structure since it opened in 1964.
“Combining the public need with private expertise is a great way of enabling projects like this to get off the ground,” says Henriksson. “Without the vision, support and courage of the Port Authority and Governor Cuomo, this would never have happened. I really hope we’ll see more courageous authorities across the country make similar bold decisions.”
Visit the LaGuardia Redevelopment project page (http://group.skanska.com/projects/169977/LaGuardia-Airport) for more details. And read the full interview on the Informed Infrastructure website.