Airport to cost well over minister’s $100M claim

| 09/11/2020 | 88 Comments
  • Cayman News Service
  • Cayman News Service

(CNS): Tourism Minister Moses Kirkconnell told Finance Committee last month that the total cost for the terminal and airfield work at the Owen Roberts International Airport (ORIA) would be $100 million. But a press release from the Cayman Islands Airport Authority (CIAA) has revealed that the minister is off by well over $17 milllion. Airport officials said the external work alone is on track to cost over $47.2 million, which, coupled with the estimated $70 million for the terminal, puts the total at more than CI$117 million.

The total cost for the airport terminal at ORIA remains under wraps because officials continue to claim that they are in dispute with various contractors. However, estimates based on a redacted report by the Office of the Auditor General and other sources close to the project that have been circulating for more than a year suggest that the final cost will be well over CI$70 million, a figure that has not been disputed by officials.

That is an increase of around $CI20 million on the original $51 million budget.

Meanwhile, the original budget for the external airfield work was less than $26 million. But even before a tender had been awarded, that budget increased to over $34 million.

In a press released issued late Friday afternoon, as Cayman began preparing for Tropical Storm Eta, CIAA officials laid out the costs of the airfield works, the budget and details of a loan the authority is taking to help cover the costs. It does not, however, refer to the overall estimate for both sides of the project: inside and outside.

The release follows a confusing session of Finance Committee on 26 October. But in one moment of clarity at that meeting, when opposition MP (formerly MLA) Chris Saunders (BTW) asked the minister a direct question about costs and he gave a direct answer, which in light of the information supplied in the press release cannot be true.

“At the end of the Owen Roberts project what will be the total costs when everything is all said and done, like done finished, airport, runway, everything?” Saunders asked the tourism minister

Kirkconnell then stated very clearly, after several minutes in consultation with his staff, “One hundred million.” In the press release, however, it is clear that $100 million falls far short of what will be the final price tag.

With potential overruns, change orders or other additional costs not yet factored in, it appears that when it is completely finished, the airfield work will be much closer to $50 million. Coupled with the airport terminal cost of at least $70 million, the total price tag for the airport upgrade could ultimately be in excess of $120 million.

In an effort to explain the increased price tag for the external work, CIAA CEO Albert Anderson said this project, separate from the ORIA terminal rebuild, was first identified in the Airport’s Master Plan published in 2014, when the original costs were estimated.

He explained that the initial Master Plan estimate was around $25.8 million, but after the design and tender process was considered, a business case was approved by Cabinet for $34 million. Anderson claimed that the original budget had underestimated the cost because it did not include design, including geo-technical data, electrical upgrades, project contingencies, risk, construction administration, insurance and project management costs.

Then, given the increase in traffic at ORIA in the first half of 2019, a decision was made to bring forward additional airfield improvements that previously were not expected to start until an unspecified future date.

Increasing ramp space at the General Aviation Terminal (GAT), a partial parallel taxiway from the east end of the runway and an extension to the commercial apron were added to the original plan. This increased the $34 million estimate by over $12 million to give a total of about $47.2 million for all the airfield works once completed.

While the General Aviation Apron Expansion Project, estimated to cost $1.5 million, is now being reconsidered due to the COVID-19 impact on aviation traffic, there are significant concerns that the final price tag will still be far more than current estimates, given the history of the project.

Another sign of financial trouble ahead for this project is the need for a loan at a time when the airport has virtually no income, nor is it clear if the costs for the loan have been added to the final price tag.

The CIAA was given the go-ahead by Cabinet to borrow an additional CI$12.4 million for the extra external work as well as an overdraft facility of in excess of $8 million, but this was in November 2019, long before the COVID-19 lockdown and the closure of the airport, which shut off the airport authority’s revenue stream.

ORIA is currently now limited to weekly aircraft traffic consisting of one British Airways flight, a handful of Cayman Airways flights and a few small private jets, which means the airport’s future earnings look very uncertain.

Government has nevertheless made a bridging loan to the airport to cover the ongoing costs as the airfield project wraps up and as details of a commercial loan are settled on the open market. It is not clear, however, how the loan will be repaid while the tourism sector remains effectively shut down and when a return to the 500,000 record-breaking annual air arrivals seen in 2019 remains a very long way off.

See the CIAA press release with details of the airport cost in the
CNS Library.

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Category: Government Finance, Politics, Transport

Comments (88)

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  1. Anonymous says:

    But but but we were told we could not afford jet bridges.

  2. Todd Heinz says:

    100 million And no moving jet bridge to aircraft it is 2020 the jet bridge is about 3 million or so .Buying the land across the street would not have been a bad idea either ,at least drives still have the danger zone and warning for aircraft that may crash into them .

    • Cruyff says:

      Todd you should know that you buy the bridge at the end of the project.

      A private sector board strikes again.

      We need to shut down these run a way SAGC’s and return them to the civil service.

      The private sector boards are not working. Look at Offeg. CPA etc

  3. Anonymous says:

    Well they had to make up for loss of payday on Port deal.

  4. Anonymous says:

    The DG would say that this is a job well done. When will there ever be any accountability within government?

    • Anonymous says:

      Start with accountability by the Major Projects Office.

    • Anonymous says:

      3:33. The DG? You mean the private sector board that runs the Airports Authority.

      I bet you also believe that we should have reduced the size of the terminal or forgoe the run way improvement to build a jet way.

      The PWC (private sector) business case made the sensible proposal that the jet ways should be purchased after.

      I guess you believe that a smaller terminal with jet ways would be a great idea.

      Get help!

    • Anonymous says:

      3:33. Sorry not the DG. A private sector boards runs this Authority.

  5. Anonymous says:

    Correct that much of the funding for the airport development comes from Passenger Facility Charge (PFC), but that itself depends on passengers. Exactly where are they now?

    Of course those charges, among others, are collected directly by the airlines and forwarded to the CIAA but notably one particular airline withholds forwarding these funds to CIAA for years and years and others threaten to do the same because of what is seen as “favourable” conditions for the one.

    Overall, CIAA will not be in a great position to repay for all its recent developments for awhile.

  6. anon says:

    The terminal work has been ongoing for years, is it finally finished and if so what is the final cost and overrun on the original estimate. To all this needs to be added the cost of the new Civil Aviation Authority headquarters whatever that will be, plus the ongoing and ever increasing subsidy paid to keep Cayman Airways flying.

  7. Anonymous says:

    I wonder if any local importers or hardware stores or contractors or, or, or benefited from these ‘over runs’. If you don’t understand how money gets from the public purse in plain sight to its friends, just look at how many public projects go way, way, way over budget.

    Now I’ll go sit back on my lodge. it’s a gold one.

  8. Anonymous says:

    I confidently predict that the final cost will be a couple of bucks shy of $200 million.

    • Hubert says:

      No incorrect. Final cost somewhere between $250 to $300 million. Same price as the Canadian airport proposal with air bridges.

  9. Hypocrites of Cayman says:

    The fun part is the amount of Change Orders that have enrich certain contractors connected to certain board members Aaaah Cayman taking into consideration all hooohah that went on with this current Mafiya about the previous board alleged conflicts of interest and now they spending our money like there is no tomorrow and the level of nepotism and cronyism by the current chairman hiring scheme for his friends and lodge bros! By the way who is Aviation under again???? The Complicity speaks volumes eh Cayman so long as the our money keeps flowing our dear Gov keep towing the line and blowing their horn. Sad sad what Cayman has come too!

  10. Anonymous says:

    This is like that bridge to nowhere in Alaska. You spend $140M on the airfield with a taxiway of marginal value and a terminal with 2014 budget and 2019-2020 costs and no tourist. Sounds like a plan to me.

  11. Anonymous says:

    the incompetence at the civil service is never ending…

    • Anonymous says:

      Yup. Those same incompetent people had nothing to do with you being able to post your comment and then go out freely anywhere in the country and not be worried about getting sick with covid-19.

    • banon says:

      10:06. Poor you. You haven’t figured out that the airports authority is not part of our world class civil service.

      The word authority should be hint.

  12. Anonymous says:

    Another major achievement by that Major Projects Office? Who supervises that office?

  13. Anonymous says:

    So let’s see a full breakdown of the costs…

    • Naya Boy says:

      Good luck wid dat memba what Minister HEW said its A SECRET!

    • Anonymous says:

      A full breakdown of the costs? Sorry, but they can’t let the public see that! The final cost might be between 15 million and 130 million. Or……… it might be a few million more.

    • Anonymous says:

      100m for a new terminal a strengthen run way and new jet ways doesn’t sound too bad.

      We all know that the private sector contractors struggle to keep on schedule.

  14. Anonymous says:

    Why not tell the truth? We all know if we build a fowl coop it will cost more than estimated – everyone knows that. That is how it usually turns out. We all expect that and we all expect you professional to tell the truth. If you tell us the truth we will say that is the nature of the beast, however if you lie to us we will say you are trying to cover up and we won’t know what to believe!

    • Anonymous says:

      Still have to figure out what each of their cuts are?

    • Anonymous says:

      Why do we put up with this? Getting off an airplane 100M airport and you have to wait till CAL have enough umbrellas. Stupidity at the highest level.

  15. Anonymous says:

    It is interesting to look at the airport and try to figure out just how this all cost so much.

    The mind boggles… as we really haven’t gotten much for our $100m. I mean some people obviously have, but the public not so much.

    • Anonymous says:

      So true, why are we paying for consultants if even THEY don’t know what to do or can give any reasonable ballpark on how much these projects will ACTUALLY cost? Government can call off any other projects that cost too much!

      If I go to the grocery store and spend $100, I don’t expect to be confronted with a bill 5 times what the items cost!!! My electricity bill is high enough to pay once, much less five.

      What happened to public consultation?!! Why is the Minister of Infrastructure trying to hide these costs and projects as “sensitive industry secrets”? At least if the public can transparently see where all the money is going and to any additions thereafter, people might actually stop complaining. (Such groundbreaking stuff, I know) After all, we will be stuck paying every cent anyway, whatever the cost is. Anecdotal receipts not working for me. Need a financial ledger, a contractor bid, an invoice, something substantial in public domain before (not after) the check signing!

      Somebody must believe we are stupid and having a big laugh: the “Unity” politicians, self-serving high-ranking government employees, construction/development companies, financial stakeholders/shareholders, CITA and other tourism coalition gangs, CUC and gang, leaderships in other countries, etc..

      You can fool some of the people some of the time but can’t fool all of the people all of the time!!!

  16. Anonymous says:

    In other words, he explained that there were just too many things that he did not understand or comprehend to to make it his fault. That is why the original plan for 25.8 million turned into 120 million. Everyone knows that to get a million dollars worth of anything on this island cost about 4 million.

  17. Anonymous says:

    All airport improvements are funded from the Passenger Facility Charge that is paid on every ticket on every airline in and out of Cayman. That money is ring fenced for capital projects, and in normal times is more than sufficient to pay for ongoing improvements. The loan facility currently being negotiated to cover necessary additional works plus COVID shortfalls will be serviced by those same funds once the economy returns to some semblance of normal. Nothing to see here folks.

    • Anonymous says:

      You had me until you used “Cayman” and “ring fenced” to explain your position.

      The CIG/Cayman Airways and everyone one of the made up Authorities are one giant slush fund they have no idea where the money is or where it goes.

    • Anonymous says:

      Hmm make sense on why a ticket from Mia to gcm is almost $400 usd one way lol but seriously though how are they going to get back all this money with barely any flights coming in and out from cayman island ?

      • Anonymous says:

        They aren’t. Not too worry – Roy will borrow the money and your grand kids will have to pay it back. Just like the civil service pension obligations. And Clifton Hunter, and John Gray. Any obligation to repay that stretches beyond a politicians period in office is irrelevant to their thinking.

    • Anonymous says:

      So the use of passenger facility fees shouldn’t be subject to scrutiny for efficient and ethical usage?

    • Anonymous says:

      It doesn’t matter which government bank account the money comes out of, what matters is the personal banks accounts it ends up in and whether the owners of those accounts have supplied the equivalent value in products and services.

  18. Anonymous says:

    I just cant figure out how all government projects jumps up by MILLIONS of dollars. I know things can happen I have built quiet a few things now and estimated one price but due to something happening it jumped up by a few unexpected hundred dollars. But EVERYTHING the government do same to start in the millions then to complete it goes in the millions sometime just as much or more than first cost sad part sometimes after all that it still not complete. Glad I was part of helping STOP THE PORT.

  19. Anonymous says:

    Interesting headline in the Compass today, ‘$45 million airfield upgrade close to completion.’ Not a mention of the budget over-runs. This is getting back to the situation we had in the 1990s when the paper wasn’t much more than an extension of GIS.

  20. Anonymous says:

    There doesn’t appear to be any reasonable limit to the dishonesty, illegality and corruption Cayman residents will inherently abide, out of general moral acceptance, conditioning, or fear. Sadly, this squares well with and reinforces the dark international reputation we’ve earned over the centuries. Did you see something? Don’t like it? Do something about it. We need good honest people to come forward, report and testify to the wrongdoing happening every day here. The $30mln airport reno becoming $117mln would be funny if it weren’t our money and other possible futures being burned.

    • Anonymous says:

      Trouble is, when good people step forward, they see the opportunity to share in the money trough that the top dogs are already scoffing from, and want their piece of the pie too. Whether it be over-inflated invoices, repeat costs to remediate shoddy and already-paid for work, huge unjustified management salaries, or consultancy services charged at well above the market rates, its a recipe for the secrecy behind unexplained overruns. Shame on them all. Integrity is long lost.

  21. Anonymous says:

    Despite all the improvements passengers still have to embark and disembark in the rain! LoL

    • Anonymous says:

      Can you imagine what the budget over-run would have been if they’d installed jetbridges?

      • Anonymous says:

        Jetbridges would have been supplied by foreign contractors, so less risk of trough frenzy as there is on local, connected contractors

        • Anonymous says:

          Supplied by foreign contractors but with local partners running the operation here – that’s how things work isn’t it and that’s why contracts like this get screwed up. Are you seriously suggesting that a jetbridge contract wouldn’t have got scammed in exactly the same way the whole airport re-vamp has been? If you are you’re delusional. The other problem with jetbridges would have been who operated and maintained them after they’d been installed. If that job went to a local company, as I’m sure the politicians would have insisted, you’re talking instant cluster****.

      • Anonymous says:

        Imagine if they had gone with the Canadians. There would have been no budget overruns as the price was guaranteed by the Canadian Government through the Canadian Commercial Corporation.

        • Anonymous says:

          Nope you are wrong, there was a few local piggies involved with that deal

          • Anonymous says:

            Guarantee you there is no way the local piggies would have conned the Canadian airport people. The local piggies had no success in Jamaica, Ecuador, Trinidad so would have not worked here. Our people are neophytes it terms of corruption compared to those places. Though we are superb at money laundering in real estate.

        • Anonymous says:

          1:59 Guess you don’t remember the Matrix scrap metal fiasco? That was a Canadian contract. They couldn’t even bring the equipment they needed to do the work in without a load of hassle because local interests got in the way.

          • Anonymous says:

            6:40, You obviously have serious gaps in your knowledge. The Canadian Commercial Corporation was never involved with the Matrix deal and no price or work guarantees were ever given by the Canadian Government on the deal.

            Though you are correct that local interests messed up the deal, because they wanted a bigger cut than the Canadians were prepared to give.

  22. Anonymous says:

    Who would’ve thunk? Duh!! Sad thing is that it’s all public expenditures and how you think it will ultimately be repaid when the passengers don’t come? More taxes on us!!

  23. Anonymous says:

    Does anyone here know about the law of diminishing returns?

  24. Anonymous says:

    If we build it, they will come. Oh, wait…

  25. Ambassador of Absurdistan says:

    Just Another Day in Absurdistan

  26. Anonymous says:

    interesting how it grows………………..

  27. Fool me once shame on me fool me twice shame on me says:

    Once again the public coffers are being drained due to huge cost overruns on large capital projects. Two high schools (1.5 to be more accurate) and the airport. Thank goodness they didn’t get to build the port.

    Why doesn’t additional work at the airport during a lockdown and afterwards cost less? Seems that labor costs should be down significantly.

    Perhaps a Progressive-led government should not be allowed to undertake public projects exceeding $5 million unless an independent watchdog gets involved.

    • Anonymous. says:

      Thank God for CPR Cayman that stopped the cruise port project. That would have been the biggest and most expensive mistake ever!

    • Anonymous says:

      But can’t find $100k for local news!! Smh

    • Po Boy says:

      Five million? Can you make that ONE million? I don’t have that kind of money. Stop wasting (stealing?) our money!

  28. Anonymous says:

    Why does this government struggle to tell the truth?

    • Anonymous says:

      Apparently dollar bills tell very convincing bedtime stories.

      Easy to spend money that isn’t yours and convince the owners it just disappeared. Day late and dollar short promises not stopping the bank from taking my house or making my children bellies full!

      I certainly know who I’m voting for and it’s not for any of these “do as I say, not as I do” politicians!!

      • Anonymous says:

        Old public sector saying, ‘It’s not our money and there’s plenty more where it came from!’ The problem is one day the free lunches have to end and at that point a few people are going to walk away from the mess very well off while the rest of us find ourselves royally screwed.

    • Po Boy says:

      They can’t tell the whole truth… They might end up in jail!

  29. Anonymous says:

    The correct answer to Chris Saunders’ question would be that absent COVID, airport works and improvements should never end. Airports have to keep up and since this is Grand Cayman’s only airport, one would hope there is a program of continuous improvements and upgrades. Anyone who thinks all improvements should stop because COVID is going to turn back time is a fool.

    • Anonymous says:

      While this statement may be true in theory, there are clearly small county airstrips and regional airports with far greater comfort, safety and sophistication than Owen Roberts. They have modern control towers, radar/guidance safety systems, award-winning architectural designs, Herman Miller furniture, retractable jetways, seasoned controllers, and of course functioning credit card parking meters for multilevel parking garages – and all of which at a total cost value far less than $100mln, even when adjusted for inflation. Compare that to the fact that we are at USD$140,000,000 and counting, in under a year, on a retrofit to an existing air field and terminal. At which of our Minister of Tourism lie detection points should we tap the brakes and drill into this?!?

    • Anonymous says:

      Er….. Who said improvements should stop?

  30. Anonymous says:

    It seems we cannot trust these guys to be responsible with our money. This is really scary stuff.

  31. Anonymous says:

    Another day another expensive ppm disaster we all have to pay for

  32. Anonymous says:

    The quartet of Premier McLaughlin, Minister of Tourism Moses Kirkonnell, Chief Officer Stran Bodden and Minister of Infrastructure Joey Hew are all responsible for another expensive mess. They were all directing the project from day one. They must all be held accountable.

    • Anonymous says:

      “They must all be held accountable?” Surely you jest! Since when have our glorious leaders ever been held accountable for ANYTHING?

  33. Deja vu says:

    It appears they all have problems with basic mathematics and project management. They need to go before they bankrupt the country. This is like 2009 all over again.

    • Anonymous says:

      It’s like we have to write another constitution just to keep these money grubbers in check!! Ridiculous incompetence! Might need new words too.

  34. Anonymous says:

    Moses is a disgrace as tourism minister and does not care because it is not his own money he spends

  35. Time to drain the Cayman Swamp says:

    Can anyone in this Cabinet or PPM tell the truth about anything? Moses K needs to retire now everything he says and does has proven to be over budget or a lie. Time to drain the Cayman Swamp.

  36. George Ebanks says:

    Whatever the cost, we need a first class airport!

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