Airport Business

DEC 2018-JAN 2019

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December 2018/January 2019 airportbusiness 35 HANGAR DEVELOPMENT current build costs as a dollar per square foot number in their local area, but even then it’s second hand information. These quotes are usually expressed as a range to account for contingencies. Additional assumptions — with an emphasis on the word assumptions — are thrown into the mix and soon, a completely inaccurate pro forma is the result because the right parties were not at the table when it was first created. Worse, these inaccuracies aren’t typically discovered by the FBO until the plans are finalized, submitted for permitting and put out to construction firms to bid. Several cost areas should be considered in the pro forma, in addition to the design, engineering and construction costs. Ideally, any improvement such as a hangar should be able to “stand alone” in terms of a return on investment. That is to say the “box” that is the hangar should produce more revenue than it cost to build it, plus the expenses to operate it over its service life. This means multiple factors should be in the pro forma, including but not limited to, demolition costs if an existing structure is on site, an apportioned amount of ground lease that the hangar occupies and related approach areas to, from, and surrounding the hangar, any leasehold taxes for the apportioned area, insurance, facility repair and maintenance during the hangar’s lifecycle, plus any cost of capital considerations such as pre-financing cash flow and loan amortization, if applicable. A percentage of the costs to build or maintain a fuel farm may also be considered, as a function of the total number of gallons expected to be produced by the mix of aircraft stored in said hangar, divided by the total gallons pumped by the FBO. Though building a pro forma is a walk in the park for an experienced CFO, the assumptions used in one must come from multiple parties. The result can be like an orchestra without a conductor- a cacophony of noise that leaves all parties frustrated. Jimmy Severson, president of Centrex advocates for a single, responsible party- a one stop, design-build firm that is fluent in aviation- and most importantly, one willing to take responsibility. As a 7,000 hour Airline Transport Pilot turned developer of aviation infrastructure projects, Severson’s fluency is immediately apparent. Says Severson, “At Centrex, we refer to it as Build Plus. In practice, it means we act as the ‘center tent pole,’ the single point of contact, coordinator and responsible party for the architects, the civil engineers, subcontractors, and so on.” That center tent pole is the one ensuring of those aforementioned parties are in the room to provide accurate input early on, when the pro forma is being built- not validate false assumptions after the pro forma is built. In selecting a design-build firm, the most important factor to consider is also the most obvious: Has the selected partner actually designed and built a hangar before? If so, have they done so in the past 5 years? Wenrich makes an interesting, if not nuanced point on this matter. “Consider selecting an aviation company engaged in the design and construction of hangars, immersed in aviation as fellow consumers or clients, rather than a construction firm that happens to build hangars,” says Wenrich. For FBOs that do not have such firms in their local area, consider that the cost to bring a local firm up to speed on hangar design and construction puts a disproportionate and costly burden on the FBO to educate the selected partner. It distracts the FBO from the core business of running their business, and in the end costs more. Choose an expert firm at the beginning, involve them in developing the pro forma on day one. Centrex/Ryan Flood Rampmaster Champion of Excellence 800.344.4018

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