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HIGHER THAN EXPECTED: Bidders surprise gov’t with proposed airport cost; $185K already spent

BVI News Online - Thursday, July 25th, 2013 at 1:32 PM

TB Lettsome International Airport

The government is now trying to find a cheaper way of funding the proposed expansion of the Terrence B. Lettsome International Airport after reviewing the ‘higher-than-expected’ costs proposed by the three bidders.

Minister of Natural Resources Dr. Kedrick Pickering on Thursday told the House of Assembly that the proposed costs range from roughly $377 million to $415 million.

Sir Robert McAlpine (Holdings) Limited of Cayman put forward the lowest cost ($377,178,606), followed by the Walsh Group USA ($387,845,000) and China Communication Construction Company Limited ($415,545,159.37).

Dr. Pickering did not disclosed an estimate for the airport project.

Works Minister Mark Vanterpool told a press conference this week that he was not sure how much the airport project will cost, but he noted that the amount is expected to be in the area of $100 million.

Dr. Pickering, in the House of Assembly, noted that the amounts proposed by the the bidders are higher than expected.

“The results of the proposals and the overall higher than expected cost demonstrates the challenging financial issues to be overcome if this project is to be realized,” he said.

Dr. Pickering continued: “From a financial perspective, the current proposals for ten of the eleven components forming the airport development project are affordable; however, the piled runway component exceeded the project budget ceiling envisioned.”

Dr. Kedrick Pickering (file photo)

Runway cost

Dr. Pickering stated that there is particular concern about the proposed cost of the piled runway component of the airport expansion project.

He said the administration is exploring alternatives to secure a reduction in the runway cost, which he did not specify.

The minister further stated that, in an attempt to reduce the airport runway cost, the administration has been evaluating “an alternate value-engineering solution which involves a combination of embankment fill and piling to achieve this objective”.

He further stated that government recently issued a letter to the five originally shortlisted companies, informing them about the Addendum 15 that is expected to be issued in very short order.

Addendum 15, Dr. Pickering said, is essentially a Request for Proposal (RFP) for the runway component of the project.

Vigilance promised; $185K spent

Dr. Pickering, in the meantime, told the House of Assembly that the government intends to keep the airport cost relatively low; adding that just over $185,000 has been spent thus far.

“To date, the Government of the Virgin Islands has spent $185,113.58 on this project. This amount was spent on a variety of technical studies and consultancy services.”

Dr. Pickering continued: “The Government of the Virgin Islands has been and will continue to be vigilant regarding this and other developments as we do not wish for this to become an albatross around the necks of the people of these Virgin Islands.”

The minister further stated that, in June of this year, he engaged in “very useful discussions” with the Foreign and Commonwealth Office, legal firm Baker MacKenzie as well as the engineering consultant on the airport project, Consulmar.

“These discussions were very useful and were aimed at ensuring that we implement the project in the most efficient and cost effective way possible,” Dr. Pickering said, adding that the government will adhere to the Protocols For Effective Financial Management.

He said the design work for the runway extension is expected to be substantially completed by October 2013, hopefully facilitating the commencement of construction in the last quarter of 2013.

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28 Comments

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  1. Think
    July 27, 2013
    Like or Dislike: Thumb up 1 Thumb down 0

    The country is in a real dilemma since the departure of American Eagle. Ferries alone, even if they were done well, is not the full answer. Efficient airlift is also necessary, but clearly not the proposals currently being pushed.

    Why not make St Thomas the main airlift gateway for the BVI until things can get sorted out, if ever. With several flights every day into/out of STT by major US airlines (AA, Delta, Jet Blue, etc, etc)let Seaborne, etc do most of their trips to STT, perhaps with onward flight (no need to disembark) to/from PR.

    Reply to this comment
  2. White Elephant
    July 26, 2013
    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0

    I want my $200,000.00 back! The consultant that was hired just ripped off all of us. Why didn’t we get any bids close to what we were led to believe it was originally going to cost}?

    This was a poorly considered project from its inception. The govt kept us in the dark about the details, They led us to believe that this project would benefit the people. The only person this project has benefited is the consultant

    Let’s demand our money back and focus on something that will benefit the people!

    Reply to this comment
  3. .
    July 26, 2013
    Well-loved. Like or Dislike: Thumb up 9 Thumb down 0

    Not another penny of my money should be spent on this ridiculous idea, or any consults or studies to massage the figures. Take this idea out and shoot it and bury it.

    I am starting to think this whole ridiculous proposal is some kind of distraction. What is the government doing while we are all distracted by this airport nonsense?

    Reply to this comment
  4. X
    July 26, 2013
    Well-loved. Like or Dislike: Thumb up 5 Thumb down 1

    OK NDP. Enjoy your two last years

    Reply to this comment
  5. Education
    July 26, 2013
    Poorly-rated. Like or Dislike: Thumb up 1 Thumb down 5

    Hidden due to low comment rating. Click here to see.

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    • .
      July 26, 2013
      Like or Dislike: Thumb up 2 Thumb down 0

      Sorry, but you are an idiot. No logic what so ever.

      Reply to this comment
  6. NPolitico
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 23 Thumb down 0

    Th economy needs multi-modal transportation to spur and promote economic growth, development and sustainability. However, political legacy and “done deal” declaration aside, the VI has a big decision to make.

    The Majority of Virgin Islanders will have to weigh in and decide if it is good financial stewardship with limited resources to invest up to $415M on a runway that may be underutilized and may stand as a white elephant. The question is did an objective cost-benefit analysis support the runway extension?

    The project will have to be funded through a public private venture (PPV), for the VI does not have the cash on hand nor have the borrowing capacity to fund it. And if it did, it will come at huge opportunity cost; the project will be funded at the expense of other critical projects such as the hospital, secondary schools, roads, sewage, water, energy, public safety….etc. Well, if not the extension of TBL, what transportation mode should be invested in?

    Instead of investing so heavily on TBL the VI should strongly consider investing approximately 10% of the proposed airport extension cost on upgrading marine port facilities to modern standards. Additionally, St. Thomas is in close proximity and has an international airport. Why can’t the VI use it to effectively and efficiently move locals and visitors in and out the country. Of course, the level and quality of ferry service must be improved. Anguilla uses the proximity of St.Maarten International Airport to its advantage in moving residents and visitors in an out Anguilla.

    Moreover, the commercial aviation business is a capital-intensive business with huge operational cost. Each takeoff and landing entails huge fixed cost. Consequently, if airlines cannot consistent cover the available seat miles (ASM) with paying passengers, they will not start or continue a route; it is all about passenger load factor(PLF). TBL can have the longest runway and the most modern land side facilities in the region, direct flights to and from the US, Europe, Canada, South America or Asia will not be a reality if the passenger loading is not there.

    The VI needs to pause, analyze and review the cost-benefits of this expensive venture before leaping into this deep, wide ocean.

    Reply to this comment
    • RW
      July 26, 2013
      Like or Dislike: Thumb up 4 Thumb down 1

      I couldn’t have said it better myself. Sames like you know allot about airport operations. Have you also considered the possibility of placing the airport on Anegada. This may seam crazy but even nature agrees that the airport should be on Anegada. Why else would God put all that flat land out there. Just saying. :)

      Reply to this comment
      • NPolitico
        July 26, 2013
        Well-loved. Like or Dislike: Thumb up 7 Thumb down 0

        @RW, I’m not privy to the discussion on either expanding TBL nor siting a new airport on Anegada. However, it is likely that constructing an airport may have been one of the options presented to the decision makers. You asked I had considered the possibility of siting an airport on Anegada, the second largest island in the VI group.

        Well, though Anegada is flat, it is a long shot in siting an airport. First, by VI standards it is relatively remote from the prime business, finance, commerce, entertainment, shopping….etc centres, as well as the seat government.

        Secondly, arriving and departing passengers will still have to flown or ferried to Tortola, Virgin Gorda, Jost Van Dyke, Peter Island….etc.

        Thirdly, though Anegada is relatively flat(highest point 28′ above mean sea level), it may appear that civil work will be less and less costly. Well, not necessarily. The underlying soil/base for any airport must be capable of facilitating the weight of the runway and weight of the plane landing on the runway. Airports are typically design for a finite number of landings as roads are designed for so many ESALs(Equivalent Single Axle Load).

        Fourth, Anegada is extremely low lying and with an approaching tropical system( hurricane..etc the airport would have to be closed early due to storm surge and perhaps evacuate residents and workers. Further, global warming may exacerbate rate of sea level.

        Fifth, an international airport in addition to the runway, requires other air and land side support facilities,i.e, terminal, towers, maintenance hangers, refueling, mechanics….etc. None of these are available on Anegada and will have to be imported. True, the same can said about Beef Island.

        Finally,Anegada is in a similar situation to St. Croix in the USVI. They are both flat and relatively remote from the prime financial, business, commercial,shopping, and entertainment centres. Further, Anegada is blessed with 9 miles white sand beaches and fauna and flora. However, all the other major archaeological, historical, cultural, environmental attractions and entertainment are on located Tortola and elsewhere.

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  7. Joseph
    July 25, 2013
    Hot debate. What do you think? Thumb up 6 Thumb down 4

    The BVI Government should ask Cuba to assist it with its airport expansion, with Her Majesty’s Government’s permission.

    Grenada and St. Vincent did, as nations. And their airports were constructed much cheaper!

    Reply to this comment
    • .
      July 26, 2013
      Like or Dislike: Thumb up 1 Thumb down 3

      What da..???? Why Cuba? Why would Cuba be interested? Why would Cuba be any different than any other lender?

      Kill this foolish foolish idea.

      Reply to this comment
      • Joseph
        July 27, 2013
        Like or Dislike: Thumb up 0 Thumb down 0

        It was merely a suggestion.

        Perhaps BVI leadership could consult Grenada and St. Vincent Governments about that possibility, their experience and the approach involved.

        “No kill me.”

        Reply to this comment
  8. Electric Shock!
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 19 Thumb down 0

    8-O 377 million to 415 million and even more!!!! and when people say their opinion to Pickering about not going through with that white elephant he get vex and say “it will bring more people in the country”. Dr. Pickering you are a fool. The BVI don’t have the hotel room capacity to even hold these so call “more arrivals”.

    So how in the hell, we can have the “more arrivals” just because we expanded the airport?

    Reply to this comment
  9. That's all folks
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 16 Thumb down 0

    Gov’t needs to cut their losses at the 185K number and throw money into in the ferry system. The $377 Million doesn’t even touch the ctul cost,just look at the hospital.

    Reply to this comment
    • Good Book
      July 26, 2013
      Well-loved. Like or Dislike: Thumb up 5 Thumb down 1

      I don’t see how they need both the airport and the cruise. Better they try the airport first OR the cruise and then observe. This country gonna end up in more debt than ever imagined.

      Reply to this comment
  10. July 25, 2013
    Well-loved. Like or Dislike: Thumb up 12 Thumb down 1

    This is way too much money to spend right now; you might as well build a hold new Airport and terminal. Re-aligning the runway to go through the exiting road going to the east may be a better idea
    Filling up the Ocean will eat up most of this Cost.

    Reply to this comment
  11. DEPRESSING
    July 25, 2013
    Poorly-rated. Like or Dislike: Thumb up 1 Thumb down 18

    Hidden due to low comment rating. Click here to see.

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  12. lol
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 15 Thumb down 0

    dead on arrival

    Reply to this comment
  13. bam see
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 11 Thumb down 0

    I done see this airport aint going no where fast.

    Reply to this comment
  14. .
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 12 Thumb down 0

    Sheer madness!

    Reply to this comment
  15. obvous
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 26 Thumb down 0

    Flight to Miami from EUS $1200, flight from STT $340. Even locals dont use EIS anymore (LIAT anyone?). FORGET this elephant, invest in a superb ferry terminal and faciities with trasnfer to STT. Speak to US admin so ferries run 5.00am to 10.00pm.

    Seriously $400,000,000 – for a longer runway/bgger airport?

    Reply to this comment
    • GOSH
      July 25, 2013
      Like or Dislike: Thumb up 3 Thumb down 1

      You have a point, but you get me upset by the mere mention of LIAT. That need to crash financially

      Reply to this comment
  16. sunny day
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 22 Thumb down 1

    If they charge $25 per person leaving the airport it will take over 15 million passengers travelling through Beef Island to BREAK EVEN. So if 300k people come through the airport a year – it will take 50 years to Break even. I am no genius but even I can see that this is the biggest white elephant anyone could ever hope to build! The gvnt are FOOLS!

    Reply to this comment
    • my my
      July 25, 2013
      Like or Dislike: Thumb up 3 Thumb down 1

      Airport departure tax is $40 per person, it is $20 for tax and $20 for development fee however it goes the present tax to depart this airport is $40 per person $20 by that window and $20 is in your ticket no matter what carrier you depart on.

      Reply to this comment
  17. THE OBSERVER
    July 25, 2013
    Well-loved. Like or Dislike: Thumb up 9 Thumb down 1

    Dr. Pickering did not disclosed what was Government’s estimate for the project but Mark did at his press conference. He clearly stated that Government’s estimate was in the area of $100,000,000 million. Pickering did say that with some “slight adjustments” himself and Wilson will get the figures back on track. 8)

    Reply to this comment
    • Pretty
      July 26, 2013
      Like or Dislike: Thumb up 2 Thumb down 0

      He love to throw out figures and projects. This man aint easy at all :lol:

      Reply to this comment