An audit of a multibillion-dollar construction program at Hartsfield-Jackson International Airport found it has exceeded initial cost estimates by more than $640 million, and it concludes that five of the eight projects are behind schedule.
The yearlong financial review faulted the airport's budgeting process and recommended more transparency and tighter financial controls.
City of Atlanta auditor Leslie Ward said the cost of the ambitious building program, which includes the fifth runway, a new international terminal and an off-site rental car facility, was pegged at $5.4 billion in 1999, when the airport and major airlines agreed to it. As of May 2006, the cutoff date for the audit, the cost had risen to more than $6 billion, but the final numbers could be much higher.
"The ultimate cost of this program is a moving target," Ward said in an interview.
Airport General Manager Ben DeCosta disputed the idea that the massive construction program is over budget. He said original numbers used by airport officials should not be construed as cost projections. DeCosta said the 1999 numbers were just preliminary estimates used to establish the airlines' share of construction costs.
"They weren't original cost estimates," DeCosta said. "There was no design at that point. They were just budget numbers."
Clair Muller, chairwoman of the City of Atlanta's Transportation Committee, said delays and the soaring cost of construction materials have bloated initial figures.
"Delays concern me because the cost overruns most of the time are attributable to delays," said Muller, whose committee oversees Hartsfield-Jackson.
Ward said her team of auditors recommended the airport change the way it reports on the budget to make it "more transparent, more understandable" to City Council members, as well as airlines and others who are paying the bill. Auditors also recommended the airport devise solid budget numbers much sooner in the process and more closely monitor the way contingency funds are managed.
"We certainly need to follow the recommendations of the auditor," Muller said. "We'll make sure the airport does."
The costs eventually could climb much higher than the numbers cited in the audit. The audit, for example, places the cost of the proposed Maynard Holbrook Jackson Jr. International Terminal at just over $1 billion. However, a closed-door presentation on the new terminal obtained by The Atlanta Journal-Constitution under the Open Records Act, hinted that the eventual cost of the terminal could approach $1.5 billion. The terminal is now in the design phase, and DeCosta has emphasized that no final cost has been approved.
Ward's auditors placed the initial cost of the international terminal at $751 million. The auditors said the initial estimate on the off-car-rental facility --- now under construction --- was $275 million, but has jumped to $495 million.
Some other projects, including improvements and maintenance, are about $150 million under original estimates.
Airport officials have argued that it is inappropriate to compare preliminary costs estimates to budget numbers devised after final designs are in place.
DeCosta wrote to Ward after the initial scope of the audit was determined in an effort to underscore that argument.
"The $5.4 billion was an order of magnitude agreed to between the contracting airlines and the airport as a threshold basis for establishing a preliminary funding plan," DeCosta wrote. "It was not based on any estimates with any level of planning or design."
Muller, however, said of the 1999 figure: "I think it was a real number at the time."
Ward said airport officials have been able to stay ahead of escalating costs because revenues have been increasing. She said "passenger facility charges" --- the $4.50 fee added to each segment of a passenger's flight --- have increased in recent years. The charges now finance about 50 percent of the program's cost.
"Because they have ample funding, cost is not a big constraint," she said. "They watch the revenue very closely. But they don't necessarily manage the costs as closely."
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