Orange County Terminal : Consultant Errors Blamed for Airport Cost Overrun

One of Orange County’s largest architectural firms and its consultant made “an abundance of errors” in underestimating the cost of the new passenger terminal at John Wayne Airport by at least $15 million, according to an independent analysis ordered by the county.

Although the consultant, Lee Saylor Inc. of Concord, estimated that the new terminal designed by architects Leason Pomeroy Associates of Orange could be built for $40.8 million, the independent analysis said the terminal would have cost at least $55.8 million to build.

In fact, the lowest bid for construction of the terminal came in at $58.9 million.

Airport officials are now scrambling to cut costs by eliminating amenities included in the original plan, such as marble-covered floors and walls. Even with those changes the terminal, part of an airport expansion that is the county’s largest public works project ever, will cost at least $49 million.

The independent analysis, prepared by O’Connor Construction Management Inc. in Santa Ana, said that Lee Saylor’s cost estimate not only vastly underestimated prices for some materials, but in other instances failed entirely to count hundreds of thousands of dollars’ worth of materials called for in the architect’s plans.

In one case, Lee Saylor underestimated the amount of structural steel needed in the terminal by more than 1,000 tons, the analysis said. That error alone caused the estimate to be $4.5 million too low.

The O’Connor analysis is significant because for the first time it fixes blame for the erroneous estimates. Airport officials and their consultants had said the cause of the difference between the estimates and the bids was a mystery to them.

The O’Connor analysis, portions of which were obtained by The Times, was ordered by airport management because of the alarming disparity between the cost estimates and the bids.

Now, airport management says the analysis comes as an awkward surprise.

A purchase order for the study apparently languished in county offices for months while the new airport budget was awaiting approval from county supervisors. Meanwhile, airport officials reached an agreement with Leason Pomeroy under which the architect agreed to help trim $10 million from its plans.

After that agreement, airport management continued to discuss having a study done of what went wrong with the estimate, finally deciding that “it served no purpose,” said Assistant Airport Manager Jan Mittermeier. “But we forgot to rescind the purchase order.”

When the airport budget later was approved by the county, the purchase order was issued and the study was performed, apparently last month.

Airport officials said Thursday that they had not yet seen the study and would not comment on it. A Leason Pomeroy executive also declined to discuss the cost estimates.

Performance Praised

But the firm said in a statement: “We will not participate in any process which diverts energy from the common goal except to confirm our belief that overall the design team’s performance has been exemplary under the circumstances.”

The firm also said it “believes that all efforts in a public project of this scope, complexity and importance must be focused on the common goal of providing, in a timely manner, a quality facility. . . . We are proud of our efforts.”

Executives at Lee Saylor and O’Connor Construction did not return phone calls.

The original $40.8-million cost estimate submitted by Leason Pomeroy was reviewed by HPV, a consortium of engineering firms hired to manage construction at the airport. HPV increased the estimate by about $1.3 million before it went out to bid.

HPV and airport officials were astounded when the lowest bid came in nearly $17 million over the $42 million estimated by HPV.

“We were surprised; everyone was surprised,” said Richard J. Begley, project director for HPV. “None of us can explain it, and we’ve puzzled over it.”

The independent cost analysis prepared by O’Connor said the $58.9 million low bid was “not unreasonable” based on the architect’s plans for the building.

O’Connor said its own brief analysis showed that Leason Pomeroy and Lee Saylor had underestimated the cost of the building by at least $15 million.

It is extremely unusual for estimates of construction costs to be so far off the mark, said experts in the industry.

Low Bid Accepted

Nevertheless, in what some experts called an unusual move, the County Board of Supervisors accepted the low bid in late June instead of demanding that Leason Pomeroy submit new plans conforming to the budget.

The reason, said Airport Manager George A. Rebella, is that the erroneous estimate put the airport in a real bind: The terminal needs to be in operation by April, 1990, in order to generate revenue to begin paying interest on bonds the airport has issued and sold.

“I think we had no choice,” said Rebella. “A redesign would have taken 9 to 12 months, and we would have lost more in revenues (from delays in opening the terminal) and on interest payments (on the bonds) than we would have saved.”

Bids on other projects at the massive airport expansion have come in under budget, Rebella said, so the overrun on the terminal should not put a financial strain on the airport.

Meanwhile, because Leason Pomeroy has agreed to help trim costs from its plans, Rebella said he is reluctant to disturb the relationship now.

“It’s counterproductive to point the finger now, because we all have to work together,” Rebella said.

The winning bidder, Taylor Woodrow Construction California Ltd. in Irvine, began construction on the terminal in July.

The 338,000-square-foot, two-story terminal, part of a $300-million airport expansion, will replace a much smaller, 29,000-square-foot terminal built in 1967.

The project cuts include much of the expensive marble the architect envisioned covering many floors and walls. The marble is to be replaced with carpet on the floors and painted walls.

But shaving $10 million from a construction project while it is under way is not easy, said HPV’s Begley, who conceded that some of the features being omitted from the terminal may have to be added later at additional cost.

Other construction experts also said that making $10 million worth of changes could mean incurring more expenses later on.

While news of the inaccurate estimate did not create much of a flap when the bids were opened this summer, the O’Connor analysis may now make it an issue and create tension between the companies and the airport.

Fifth District Supervisor Thomas F. Riley, whose district includes the airport and who has been one of its biggest boosters, said he wasn’t aware that the airport had ordered a study on the estimate, and he was reluctant to criticize Leason Pomeroy or Lee Saylor.

The supervisors picked Leason Pomeroy for the estimated $3.4-million job of designing the building in April, 1987, although the architect had never designed an airport terminal before.

Because of the additional work Leason Pomeroy has had to do, it is unlikely that the firm will make any money on the project, said HPV’s Begley.

Lee Saylor, which specializes in estimating building costs based on architect’s plans, was hired by Leason Pomeroy as a consultant to make sure the plans would be within the budget.

Construction experts said that architects--even when they use consultants such as Lee Saylor, called “estimators”--are ultimately responsible for submitting architectural plans that can be built for close to the client’s budget.

An architect found to have been negligent in keeping track of the costs of his plans could be legally liable for any resulting cost overruns, according to David Perdue, associate general counsel for the American Institute of Architects.

Deputy County Counsel Daniel Didier said he has the contract with the architect under “precautionary review.”

“We have no intention of filing a lawsuit and have been given no direction to take legal action over this,” Didier said.

“We are merely doing what any prudent lawyer would do in this situation, and that’s to review the matter. But actually the architect is doing a fine job trying to correct these problems.”

According to the O’Connor report, the underestimated costs were evident even from the “limited review” it performed.

“We feel that with further examination of the documents,” the report says, “the remaining differences” that caused the low bid to come in at nearly $60 million “could also be uncovered.”

The report states that “quantities were measured wrongly or missed entirely due to human error.”

It also said that Lee Saylor relied too heavily on fixed price lists of materials that were “consistently low due to the inaccuracies . . . which did not take into consideration the uniqueness of this project.”

For instance, “the most obvious criticism” of erroneous pricing was concrete at $60 a cubic yard, a price O’Connor said was 35% to 40% low.

HPV, the consortium of engineering firms managing all construction at the airport, has the responsibility for protecting the county from such cost overruns.

HPV was picked for the job over 15 other firms by the supervisors in October, 1985, after heavy lobbying in which the firm used lobbyists who were relatives of aides to two of the five supervisors.

HPV is a consortium of three engineering firms, including Holmes and Narver Inc. of Orange, a subsidiary of Ashland Oil. The other two firms are engineering and construction giant Ralph M. Parsons Co. of Pasadena and the engineering firm Van Dell and Associates of Irvine.

The companies involved in the project are generally highly regarded in the construction industry, experts said. And Leason Pomeroy has won many awards for its designs.

SHORTCOMINGS IN AIRPORT COST ESTIMATES Here are some of the findings of an independent analysis by O’Connor Construction Management Inc. on what it said were shortcomings in the cost estimates of the county’s new terminal at John Wayne Airport. O’Connor said the costs of the architect’s plan were underestimated by at least $15 million. In one case, the architect’s consultant on costs, Lee Saylor Inc., underestimated the amount of steel needed in the terminal by more than 1,000 tons and the steel that was counted was underpriced. Altogether, the oversights accounted for nearly a $5-million error. Lee Saylor failed to count building materials included in architect Leason Pomeroy Associates’ plans. Seismic joints used to make the building resistant to earthquakes were omitted. Along with other omitted metal items, they accounted for a $500,000 error. On the roof of the building alone, Lee Saylor’s estimates were off about $4.6 million, or 66%. Estimates for the windows were off by 65%, according to the report, for a $500,000 error. On all the rest of the materials used in the building, Lee Saylor was off by 28%, the report says.

Times staff writer Jeffrey A. Perlman contributed to this report.