Aircraft Hangar Development Guide - AOPA...

Aircraft Hangar Development GuideA Valuable Airport Resource

A I R C R A F T H A N G A R D E V E L O P M E N T G U I D E 1

INTRODUCTION 2

PROJECT PLANNING Step One 4Step Two 9Step Three 14

PROJECT EXECUTIONStep Four 20Step Five 32

APPENDIX I 34

APPENDIX I I 36

APPENDIX I I I 38

C O N T E N T S

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© Copyright 2005 Aircraft Owners and Pilots AssociationAircraft Hangar Development GuideVersion 1

A I R C R A F T H A N G A R D E V E L O P M E N T G U I D E2

MANY PILOTS WHO own or plan to own an air-craft want a hangar to protect their valuableinvestments in personal transportation from theelements. But there seem to be many more gener-al aviation (GA) aircraft than available hangars.Perhaps your name is on one or more hangarwaiting lists.

Building hangars can attract new businesses andgenerate additional revenue for the airport. In fact,a well-executed and successful hangar project canbe the key to a financially-secure GA airport.

The purpose of Aircraft Hangar DevelopmentGuide is to help you and your airport owner suc-cessfully plan, design, and complete a new hangardevelopment project at your airport. In an idealsetting, a hangar project would be straightfor-ward: Project scoping, financial justification, pre-liminary design and budgeting, funding,approvals, construction, and moving in all wouldfall into place as projected. Unfortunately, theideal hangar project rarely exists. You could facehurdles such as confusing regulations or fundingdifficulties. This guide—and your persistence willhelp you deal with the challenges of buildinghangars at your airport.

This guide has been tailored to meet the needs ofa typical GA airport. Some specific elements may

not apply to your airport, and your locale maynot face the same planning complexities as otherparts of the United States. Regardless, this com-prehensive guide covers many of the details youneed to know—from start to finish—about ahangar development project.

Checklists at the end of each section make iteasy to determine if you are ready to move tothe next phase of the project. The guide alsoincludes references to publications by theAircraft Owners and Pilots Association (AOPA)and the Federal Aviation Administration (FAA) toprovide you with additional information aboutbuilding hangars.

THE BASIC PROCESS for planning and executinga successful hangar project has five steps. Take alook at the following flow chart and outline to seehow the details of each step fit together.

Each of these five steps is equally important, butthe success of a hangar project largely dependsupon how well the first three steps are executed.Many projects fail because the implementationteam neglects the first three planning steps andspends its efforts executing the project (choos-ing a contractor, setting a completion date,selecting the type of hangar doors). Prematurelyjumping into project execution guarantees a

I N T R O D U C T I O N

STEP ONE:Where are we now?

STEP THREE:How do weget there?

STEP FOUR:Project

Execution

STEP FIVE:Project

Evaluation

STEP TWO:Where do wewant to be?


costlier, more difficult, time-consuming effortthat is likely to fail. It is important to evaluatethe project at the end because this will uncoverthe strengths and weakness in the process thatcan be improved upon during future projects. Italso can serve to promote the successful opera-tion of the new hangars.

IT IS CRITICAL that each party involved in theproject understands and agrees with the elements

detailed in the initial phases of planning. So, muchof your effort during the first two steps will bespent building a compelling business case (SeeAppendix III “Is Your Business Case Compelling?”).At times it might feel as if you are not makingprogress, but the reality is just the opposite. Thinkof it as “going slow to go fast.” This approach canproduce a high degree of acceptance, support, andcommitment from all interested parties and lead toa cost efficient and timely project.

S T E P O N E : W H E R E A R E W E N O W ?■ Determine the need for hangars (type, size, and number)■ Analyze the airport environment

S T E P T W O : W H E R E D O W E W A N T T O B E ?■ Explore alternate approaches■ Estimate financial impact■ Analyze strengths, weaknesses, opportunities, and threats■ Analyze boundary conditions■ Conduct stakeholder analysis■ Create a business plan

S T E P T H R E E : H O W D O W E G E T T H E R E ?■ Frame and plan the project■ Build stakeholder support■ Prepare the project team■ Create preliminary project estimates■ Identify funding sources■ Prepare financial documentation■ Identify the review and approval steps

S T E P F O U R : P R O J E C T E X E C U T I O N ■ Design and secure funding for hangars■ Solicit bids and award construction contracts■ Build hangars■ Complete the project and move in new tenants

S T E P F I V E : P R O J E C T E V A L U A T I O N ■ Evaluate the project financial performance■ Prepare a project summary for airport owner■ Conduct a user survey


WHERE ARE WE NOW?

In this first step, you will assess the current stateof your airport, how well it operates, and theviability of a hangar project. This includes quan-tifying the demand and need for hangars, assess-ing the “environment” within which the projectwill be executed, and obtaining support from keydecision makers. It also means becoming familiarwith the FAA requirements and regulations thatgovern airport development.

Before you begin, identify the key players who canassist you with the work. The team could includeairport owner representatives, engineering consult-ants, and airport supporters.

Determine the need

Start by studying your airport hangar waiting list.If your airport does not have one, generate one tolearn if there is a demand for hangars. Determinethe level of commitment from those on the list—do they intend to occupy a hangar once one isbuilt? In some cases, people have their names onmultiple lists at neighboring airports, or they donot currently own an aircraft. In other cases, thewaiting lists are not well managed, are out ofdate, or do not reflect the realistic demand forhangars. In any case, the waiting list and pilotdemand for new hangars should be verified. Adirect mail solicitation or survey to pilots withinthe airport’s service area should be considered.

E C O N O M I C S 1 0 1

Need or demand most certainly will be related to the costof the hangar rental unit. It is wise to include an estimateof the rental cost on any existing or new waiting list orsurvey. Although basic hangar construction costs areavailable industry-wide and the hangar manufacturerswill help, this first pricing estimate will require sharp esti-mates on site and land work.

One effective method to gauge the commitmentof those on your airport’s hangar waiting list isto require a cash deposit from each individual tohold his or her spot on the list. It is incumbenton whoever manages the waiting list to do sofairly and equitably—never allow back room dealsto influence priority on the list.

The type of hangar depends on the demand ofyour tenants and what is most appropriate atyour airport. For example, nested T-hangarsmost often are attractive to potential rentersbecause they provide the greatest degree ofweather protection and security, whereasshade hangars have a structurally supportedroof but open sides (no walls). Portablehangars are less expensive to build, but theyare less durable and generate less revenue.Box hangars usually are attractive to ownersof larger aircraft. These hangars can be quiteexpensive to build, but they also generate sig-nificant revenue.

P R O J E C T P L A N N I N G — S T E P O N E


A D D I T I O N A L I S S U E S T O A D D R E S S

■ History of hangar project execution at your airport ■ Demand for hangars at neighboring airports (and

how that demand is being addressed)■ Sensitivity to paying higher hangar rent (new

hangars probably will be more expensive to build,requiring higher rental fees)

Analyze the a irport environment

Analyzing the environment within which youwill be executing your project is a vitally impor-tant element that often is overlooked. Airportsupporters often presume that if the demand forhangars is strong, then all a person must do isobtain the funding needed to complete the proj-ect. But before you seek funding, it is critical toresearch all of the elements in the airport envi-ronment. These elements include airport ownersupport, community support, airport master plan,zoning and land use, environmental issues, air-port community design standards, airport tenantsupport, availability of project funding, and thecurrent airport financial situation.

Airport owner support: If you don’t have solidowner support for your airport, you will be fight-ing an uphill battle the entire way. Whether theairport is privately owned or city, county, or evenstate owned, you’ll need a lot of help and supportto successfully execute the hangar project.Identify the key decision makers early, becauseyou will need their support to get favorable deci-sions on funding applications, permits, and con-tractor bid and award. You will need supportfrom the airport manager, airport commission,city or county council, planning department, andsenior city or county staff members.

Community support: A lack of community sup-port for your airport will make your hangar proj-ect much more difficult. If your airport has been

a good neighbor, you’ll be miles ahead. Youmight think you know what level of communitysupport currently exists at your airport, but justbecause you haven’t received a series of com-plaints from neighbors doesn’t mean that youhave support. Check with local community lead-ers, newspaper editors, and business groups tolearn what they think about the airport. AOPA’sAirports: A Valuable Community Resource (http://www.aopa.org/members/files/airport/) providesstrategies that you can use to improve communi-ty support.

Airport master plan: Every airport shouldhave an up-to-date master plan—a documentapproved by the FAA that describes the fullybuilt-out capacity of the airport and the plansfor achieving it. It also includes an FAAapproved airport layout diagram that illustratescurrent and future development plans. It iscritical that your hangar project is depicted onthis diagram early in the planning phasebecause FAA grant funding, as it may apply toyour project, will be based on the airport lay-out plan.

Zoning and land use: The airport probably hassome requirements that govern how land can beused or developed. For example, there may becertain areas on airport property limited to com-mercial development, designated for aircraftstorage, or a combination of the two. Some land


might be required to remain open, free fromdevelopment. If the area available for hangars isnot zoned appropriately, you will need to correctthat issue first. Consult AOPA’s Guide to AirportNoise and Compatible Land Use (http://www.aopa.org/asn/land_use/) for basic guidelines onsound land-use planning.

Environmental issues: Environmental issuescan be difficult to deal with during airportdevelopment. Use a current master plan toaddress all such issues based on maximumairport built-out capacity. Check with yourplanning department, community developmentstaff, or other organization that has land-usejurisdiction at the airport, and get their assess-ment on whether the hangar project will needan environmental impact report (EIR). Typicalenvironmental issues can include noise, traf-fic, water runoff, water use, soil impact/degra-dation, visual impact, and vegetation or ani-mal impacts.

Your local FAA Airports District Office (ADO)can be helpful when working through environ-mental issues, and AOPA can provide technicalassistance. An EIR can be time consuming andexpensive, so plan accordingly if this becomesunavoidable. It will be important to the airportowner to know what impact an EIR will haveon the hangar project. In some cases, EIR

requirements have made hangar projects finan-cially untenable.

Airport community design standards: This maynot apply to all airports, but it should bechecked. Community design standards usuallyapply to the architectural design of buildings,including hangars. There may be restrictions onbuilding size, shape, color, materials, and provi-sions for support infrastructure (parking andhandicap access). The airport owner should beable to supply a copy of design standards, if theyexist for your airport. These standards canimpact the cost of your project, and consequent-ly, your business plan.

Airport tenant support: Even though those ona hangar waiting list might be anxious to havethe project completed, others at the airportmight not be as enthusiastic. For example, anexisting on-airport business may see newhangars as a threat—perhaps the projectrequires some of the property the business leas-es, or it creates competition. Determine the levelof support you need from current on-airportbusinesses or other tenants so that they don’tprevent the project from moving forward. Youalso might need to review or modify existinghangar lease documents to address existing orpotential conflicts.

Availability of project funding: The mainsources of funding for your hangar project willbe through existing airport revenues, state avi-ation fund grants or loans, municipal bonds,and public or private loans. In some circum-stances, FAA Airport Improvement Program(AIP) funding may be available thanks tochanges made in 2003 by Congress. Vision100, now Public Law 108-176, allows for theuse of AIP funds to construct hangar projectson non-primary airports provided that the air-port sponsor has a plan in place to fund allairside development needs first. The local FAAADO can provide additional information onthis program.

Sample airport layout plan.


Grants through the AIP come with obligationsthat are intended to support sound financialpractices and management of the airport andto ensure that the FAA’s investment is secure.The FAA requires all of the grant eligible ele-ments of the hangar project to be included onthe airport capital improvement project (ACIP)list. The FAA ADO handles these documents,which amount to an airport wish list. If partsof the hangar project that you expect to befunded by an FAA grant are not included onthis list, they won’t get approved. Long leadtimes are associated with ACIP list processingand actually receiving grant funds or otherforms of financing for a publicly owned air-port, so allow time for this in your businessplan and project planning.

To help you understand the obligations associ-ated with FAA grants, the FAA has publishedtwo valuable documents: Airport ComplianceRequirements Order 5190.6A and FAA Policyand Procedures Concerning the Use of AirportRevenue. Copies of these are available from theFAA’s Web site (www.faa.gov) or from anyFAA ADO. A working knowledge of these doc-uments will help in the creation of a soundbusiness plan. It also will be handy wheninteracting with airport owners and decisionmakers whose support is needed to successful-ly execute the project.

If your hangar project is to be a private devel-opment, then funding will not be as much of anissue. Check with the airport owner’s financialstaff for information on sources of privatefunding. Contact an engineering or aviation-consulting firm that specializes in airport proj-ect funding to determine the availability offunding for your project.

Current airport financial situation: Airportsupporters and owners often don’t fully under-stand the financial situation of their airport.Depending upon the level of support receivedand availability of the airport owner’s staff, you

might find yourself putting a lot of work intounderstanding the airport’s finances. You mightfind that the airport owner has not been han-dling the airport finances properly. For example,airport fuel revenue could have been divertedinto non-airport related accounts, depriving theairport of badly needed operating revenue.These issues should be addressed before pro-ceeding with the hangar project.

The airport manager or other individual whois in charge of the airport’s finances shouldbe able to help you find the necessary docu-ments to review for the project. Check themonthly revenue and expense statements tosee if the financial condition of the airportwill support a hangar project. Look through afew years worth of statements to see howrevenues and expenses have tracked overtime. If your airport has been runningdeficits, the local owning entity will be lesslikely to burden the operation with additionaldebt. This will make it more difficult for youto convince them of the need to buildhangars. If a long-term deficit situationexists, you might need to address that first inyour business planning before beginning thehangar project. Remember, a well-plannedhangar development project could help erasean airport’s operating deficit and help theairport turn a profit.

Depreciation is usually a year-end charge toaccount for the loss of value of an investmentover time because of the use of an asset. Forexample, new hangars put into service are“reduced in value” on the airport financial state-ment year by year to account for wear and tear.If an airport were to generate enough revenue tocover depreciation charges, it would in effect bebuilding a reserve fund so that when it was timeto replace the hangars, sufficient funds would beavailable to do so without the need of any addi-tional loans or grants. However, few airports areable to do this. (See Appendix I “Airport Revenueand Expense Financial Analysis.”)


You should be able to address each of the itemsdiscussed, based on the information you havegathered so far. You probably will not have all ofthe details, but you should have enough to accu-rately assess “Where are we now?” and what youneed to do in order to move forward. Present thispreliminary information to key decision makersto gain the support needed to proceed.

C H E C K L I S T F O R S T E P O N E

✔ Quantify and valuate hangar demand

✔ Assess level of current support for airport

✔ Identify key decision makers

✔ Assess level of current community support

✔ Identify zoning and land-use issues

✔ Confirm airport master plan in place

✔ Assess environmental issues, preliminary judgmentin hand

✔ Review airport design standards

✔ Assess level of current airport tenant support

✔ Determine availability of project funding

✔ Establish project team

✔ Decision to proceed in hand

✔ Review airport finances

L I S T S O F T Y P I C A L R E V E N U E A N D E X P E N S E L I N E I T E M S

■ Tiedown rent■ Hangar rent■ Ground leases■ On-airport business leases■ Fuel sales

■ Personal property tax■ Airline ticket tax

(for commercial serviceairports only)

■ Interest

Revenues: For most GA airports, fuel sales and rent generate thelargest portion of revenues. But personal property tax also generatesrevenue. This is handled differently across the United States dependingon city, county, and state law. However, it typically is paid by aircraft own-ers based on the assessed value of their aircraft. In some cases, a por-tion of the total payments can be returned to the airport. The airportowner and the tax agency can agree upon a funding arrangement. Forexample, a county might levy the tax and agree to return a portion of it tothe airport.

■ Salaries and wages■ Debt service (loan pay-

ments)■ Fuel purchases■ Maintenance and repair■ Office supplies

■ Hazardous waste disposal■ Utilities■ Owner overhead charges■ Insurance and risk

management■ Depreciation charges

Expenses: Debt service is typically the largest expense forairports that have continuous development. However, salaries,overhead charges, and fuel purchases might be the biggestexpenses at airports where development has been spotty.

Revenues Costs/Expenses


Explore a l ternat ive approaches

There are a number of reasonable approaches togetting new hangars built at an airport. Each haspros and cons (see comparison charts below), soyou will need to analyze the options to determinewhich is best. There are three typical approaches.First, a private company can own the hangars onleased airport property. Second, the airport ownercan build the hangars and rent them to airporttenants. Third, the land can be leased to a privatedeveloper who will build and rent the hangars toairport tenants.

W H E R E D O W E W A N T T O B E ?

In Step Two of the process, you will learn thescope of this hangar project by exploringalternative approaches and estimating thefinancial impact of each. Once you have cho-sen the best approach, you will analyze itsstrengths, weaknesses, opportunities, andthreats. You also will analyze boundary condi-tions, conduct a stakeholder analysis, identifykey decision makers, and create a compellingbusiness plan for your approach.

PROS [Private vs . Owner Development]

PRIVATE DEVELOPMENT AIRPORT OWNER DEVELOPMENT

■ No up-front owner investment required ■ Good demand

■ No owner management needed ■ Highest revenue flow to airport

■ No occupancy risk ■ Built to airport owner specs

■ One entity to deal with ■ Greatest control to ensure compliance with airport rules

CONS [Private vs . Owner Development]

PRIVATE DEVELOPMENT AIRPORT OWNER DEVELOPMENT

■ Lower revenue because open land is leased,

limiting control of future rent increases ■ Airport owner management oversight needed

■ Management of hangar waiting list can be

problematic ■ Potentially highest capital cost

■ Owner may lose asset appreciation

depending on lease terms ■ Maintenance costs come from airport budget

P R O J E C T P L A N N I N G — S T E P T W O

A I R C R A F T H A N G A R D E V E L O P M E N T G U I D E1 0

Generating revenue is usually the primary goalfor GA airports, so having the airport ownerfund, build, and manage a hangar project is fre-quently the best approach. If the owner is notsupportive, then finding a private source forfunding, construction, and operation will be themost attractive alternative. The key will be yourfinancial analysis.

Est imate the financia l impact

After exploring the alternative approaches, it iscritical to assess the financial impact of each onthe airport’s operation. Take the past financialhistory of the airport’s operation, include theimpact of the new hangars, and project the result.

You will need to get budget-type estimates forthe various alternatives you reviewed in the priorstep. Look into revenue, operating expenses, andcapital costs/loan obligation payments.Remember to include an estimate of increasedfuel sales revenue (and the other miscellaneousitems that would increase) based on the numberof aircraft based at the airport. A cost-effectivesource for such information can be obtained fromprior projects at your airport or neighboring air-ports, adjusted for inflation and differences inscope. Use an airport consultant or engineeringcontractor to generate budget type estimates.

Once you have gathered the pertinent informa-tion, run the financial projections out at least 10years, applying inflation-based adjustments foroperating expenses and revenues. During this 10-year period, you likely will see that existing loansmay be fully paid off, generating the potential forincreased positive cash flow and other benefits.These are all important to document in the finalbusiness plan as justification for the project. Acopy of a typical financial projection, or profor-ma, is included in Appendix II.

Analyze project s trengths,weaknesses, opportuni t ies ,and threats (SWOT)

The purpose of determining the project’sstrengths, weaknesses, opportunities, and threats(SWOT) is to uncover the impact that your hangarproject will have on the airport’s stakeholders. It ishelpful to have a group of project proponentsworking together on the SWOT analysis and inter-viewing key decision makers or stakeholders—thiscan uncover potential issues more quickly thandoing it alone. Typically, you will discover thingsthat you can use to your advantage or issues thatyou can address in the early stages of projectplanning to limit their possible negative impact.

EXAMPLES FROM A SWOT ANALYSIS

STRENGTHS■ History of success■ Full hangar waiting list■ City council support■ Available FAA, state funding■ Contractors committed to airport■ Generally good community relations

WEAKNESS■ Airport manager has minimal project experience■ Possible tenant resistance■ Unknown degree of owner support and staff availability■ Unknown potential neighbor resistance

OPPORTUNITIES■ Provides increased revenues for the airport■ More satisfied airport customers■ Increased airport business opportunities■ Transportation infrastructure improvements

THREATS■ Obstacles to progress created by current tenants■ Unknown community resistance■ Airport Improvement Program is not funded by

Congress (a possibility only)■ Developer or other party has conflicting interests

A I R C R A F T H A N G A R D E V E L O P M E N T G U I D E 1 1

Once you have completed the SWOT analysis, youwill have a better idea of where to focus your ener-gy as you start persuading the decision makers andother stakeholders to become supportive of the proj-ect. If you are fortunate, you might not have manyworries in this regard, but it is best to be forearmed.

Analyze boundary condit ions

Boundary conditions are nothing more than the“givens” surrounding the project. They set what’sin bounds and what’s out of bounds. Thereundoubtedly will be constraints on the project thatyou will not be able to change. Better to know thisnow and include it in your initial planning thanlater, which could put the project in jeopardy.

T Y P I C A L B O U N D A R Y C O N D I T I O N S :

■ FAA and state will provide funding■ Architectural designs will require review

and approval■ City/county council must endorse project plan and

contract awards■ Lease agreements must be renegotiated with

some current airport tenants■ Neighbors must be included in

communication process■ Hangar design is restricted by airport

layout plan ■ No additional airport staff can be added

to administer project■ Owner will not provide any supplemental funding

(i.e., hangar project must be self-supporting)

With the boundary conditions identified, youmight find more issues that need to be con-sidered as you put together the business planand deal with stakeholders during project exe-cution. It is key to determine who will be thedecision maker, from whom or what group

you will need approvals, and whether this willchange at various points during the project.

Conduct s takeholder analys is

A stakeholder is any person or group who hasan interest in or will be impacted by the hangarproject. Once you have identified the stakehold-ers, determine their level of support. This willhelp you manage the level of acceptance andcommitment for your project—strong allies caninfluence those who show little support.

Use the SWOT analysis to create strategies toincrease the level of commitment from keystakeholders. Ask yourself: “What would ourstakeholders say about the project if it was asuccess from their perspective?” or “What aretheir views of the airport operation today?” Withthese answers, you can develop strategies to getthe needed support.

Keep in mind that the stakeholder analysis likelywill change over time as issues are addressed ornew stakeholders are identified.


S T A K E H O L D E R A N A L Y S I S T O O L

Strongly Moderately Moderately Strongly Desired InfluenceName Oppose Oppose Neutral Support Support Concerns Behavior Strategy

People on X Want Support Keephangar hangars informedwaiting list ASAP

Current airport X Want Support Keeptenants hangars informed

ASAP

Business tenants X X Competition Reduced Demonstrate(varied support from new resistance equity in costslevel, multiple businessestenants)

Airport X Project Demonstrate Keepcommission success support informed

City hall X Project Supportive, Reduce need forproblems involved as active involvement,and financial appropriate projectobligations self-supporting

Community X Noise, Nominal Keep informedsafety support

FAA, state X Execute Satisfaction Keep informedproject and and use theiruse their proceduresprocedures

Contractors X Open Active Open dialoguedialogue partner continuously

Use the Stakeholder Analysis data to boost support for the project and minimize opposition.


Create a business p lan

Even if you don’t face all of the issues explainedin this guide or need to create an elaborate busi-ness plan for your key decision makers, you stillshould go through these steps. A business planwill assist you throughout the project and willhelp it run more efficiently.

By now you will have a thoroughly researcheddocument, a compelling financial statement foryour selected alternative, and a plan to deal withmost of the issues from decision makers andstakeholders. Make sure your business plan is wellsupported before presenting it. Appendix III pro-vides tips on how to compile a compelling busi-ness plan. Use the completed elements from thefirst two project steps to build your credibilitywith the key decision makers and stakeholders,which will pay dividends as the project progresses.

C H E C K L I S T F O R S T E P T W O

✔ Explore alternatives

✔ Estimate the financial impact

✔ Complete a SWOT analysis

✔ Review the boundary conditions

✔ Select decision makers

✔ Complete a stakeholder analysis

✔ Select desired alternative

✔ Report best alternative to decision makers

✔ Confirm project team members

✔ Prepare and present business plan to decision makers



H O W D O W E G E T T H E R E ?

During Step Three of the process, you willfully develop the preferred hangar alternative.This includes framing the project, settingdetailed plans for execution, and buildingstakeholder support. You also will prepare yourproject team and establish each member’s rolesand responsibilities. Creating preliminary

P R O J E C T P L A N N I N G — S T E P T H R E E

Seven key pr inciples of project management

1 Clear directionBe certain that everyone involved is clear on his orher roles and responsibilities, the required projectapprovals, and the way decisions will be made.

2 SponsorshipBe certain that you have the necessary support forthe project from the airport owner and other keystakeholders each step of the way.

3 CommunicationsDevelop a communications plan in order to keep allstakeholders, future tenants, and elected officialsinformed on progress of the hangar development.Ensure that all stakeholders are included in yourcommunications plan. The objective is to reduce sur-prises and potential resistance.

4 EngagementThe airport owner and stakeholders will need to beengaged and supportive of the project at different lev-els and points in time. Establish and confirm the need-ed level of involvement or support before you proceed.

5 Shaping and reinforcementOnce you’ve established the level of support needed,use the stakeholder analysis (created in Step Two) toassess any gaps between the sponsors’ currentlevel of support and the level of support needed.Develop plans to shape the behaviors you need fromeach sponsor and reinforce the desired ones.

6 MeasurementEstablish qualitative and quantitative criteria at eachproject step to track progress. During each step, askyourself, “What would success look like?”

7 Plan modificationOnce your plan is established, don’t assume itwill never need to be changed or updated.Changes are continual on any project; don’tignore or assume everything is as it seems orwill be. Frequently update and reassess yourplans to make sure it is current.

design and budget estimates, identifying fund-ing sources, and identifying the project reviewand approval process will occur during thisstep as well.

But before you start developing the preferredhangar alternative, take time to define seven keyproject management principles that will help toensure a successful hangar project.


Frame and plan the project

Project framing builds on the work done during“Project Planning — Step Two”: boundary condi-tions, SWOT analysis, and the preliminary stake-holder analysis. For a hangar project, this isstraightforward. The project frame usuallyincludes the hangars and nearby airport property.A concise project frame will focus everyoneinvolved on what needs to be accomplished andcan be used to prevent “project scope creep.”Project scope creep can happen when multipleinterests fail to define and maintain a highly-focused discipline in defining and adhering toobjectives. A project frame that is too wide canbecome overwhelming; but if it is too narrow,you might miss critical elements needed for theproject. Examples could include undergroundutility modifications and rainwater drainage.

Bui ld s takeholder support

Now is the time to do some detailed planning toaddress stakeholder support. Remember, a stake-holder is any group or individual that has aninterest in or is affected by this project.

Meet with the individuals or groups identified asstakeholders, and use your stakeholder analysistool (see page 12) to judge their level of support.Share your completed preliminary hangar projectplans with them, and judge their level of supportto identify possible obstacles.

There are a number of ways to conduct these dis-cussions with your stakeholders. However, some-times it is difficult to get the attention of keyplayers. Hook them on the value of your projectearly in the discussion. AOPA’s Airports: AValuable Community Resource handbook has a use-ful section, “What’s Your Airport Worth?” (www.aopa.org/members/files/airport/apsup03.html) thatis packed with facts and figures about the valueof GA airports. Most decision makers in city hallhave no idea of the value their local airport addsto the community. Use the AOPA airport hand-

book along with the financial analysis of the pos-itive impact of your hangar project to demon-strate the importance of your project to thehealth of the airport’s operation.

Members of the project team can use this infor-mation when meeting individually with the air-port owner’s key senior staff, city council, orother final decision-making group to discussplans for the long-term financial health of theairport. This will peak their interest because mostpoliticians and senior staff want an airport to beas self-sustaining as possible.

The greatest value of these types of meetings isthat you can begin to build credibility withthese stakeholders—an important step towardgetting their support. In addition to increasingtheir awareness of your project and the airport’svalue, use the meetings to tell these key playerswhat you need from them. For example, ask fortheir support when the project comes up forapproval, request their help obtaining financing,or request help getting a special variance onpotential roadblocks.

Make a point to personally thank each stakeholderwhenever he or she demonstrates the desired behav-ior, and tell each the impact that his or her supporthas on the project. The stakeholders will appreciatethe recognition. If they don’t do what you request-ed, make another contact and ask if there is any-thing you can do or information you can provide togain their support. In some cases, you might not beable to change the mind or behavior of a key stake-holder, so recognize this and include it in your proj-ect plans. As you progress through the project, besure that you don’t unintentionally do somethingthat would increase their resistance.

So far, you should have identified the stakehold-ers, determined their current level of support,identified their concerns, established the desiredbehavior from them (support for your project),and executed a strategy to influence the desiredbehavior you don’t have.


Prepare the project team

You might be the driving force behind the projectand not have an official team, but there will bemany people involved at various times who willinfluence the project. To effectively prepare yourteam, you should ensure that each person agreeswith the scope of the project and is clear on his orher roles and responsibilities. Each member shouldcommit to do what is expected and meet deadlines.It is up to you to make sure that each member hasthe resources needed to meet those deadlines.

Keep your team on track

Missed deadlines are often the result of team deficien-cies. So what should you do if team members are missingdeadlines or won’t take on responsibilities? ■ First, you should confirm that each individual mem-

ber agrees to and supports the scope of the project.This can help reveal those who think it will have anegative personal impact or may not be clear onevery aspect of the project. You might learn that youneed to modify the team because you do not havethe right members.

■ Then, verify that each member is clear on his or herroles and responsibilities, which will help clear upmisunderstandings and false assumptions.

■ Some team members may withhold their commit-ment to doing what is expected because they thinkthey cannot do the job, they do not have the tools orresources to do it, or they do not agree with someaspect of the task or they think they have a betterway to do it. In such a case, ensure that each teammember has the skills, knowledge, resources andcommitment to complete the task. This can includetime, equipment, access to information, and deci-sion-making authority. Find out what they need tobe able to deliver results. Dealing with such issuesusually will resolve a lack of commitment. While youmay not be in a position to meet all of the team’sneeds, you can positively influence those who are.

■ Finally, confirm that each person is willing to deliverwhat is expected by the established deadline beforeleaving any meetings. This should build commitmentto honor agreements.

Create prel iminary project est imates

In Step Two you looked at past hangar projectcosts to estimate the impacts of various alterna-tives. Now that you’ve selected the best optionfor your airport, you will need to refine your esti-mate to include current design, construction,material, and support costs.

Consider hiring an engineering design firm thatspecializes in airports to do the preliminary proj-ect design and budget estimates. Many airportshire an engineering firm on a “standing contract”basis to do miscellaneous consulting work. Ifyour airport does not have an ongoing contractwith such a firm, you most likely will need to gothrough a bidding and “standing contract” awardprocess to select one. Check with the airportowner’s senior staff about how to do this. Inmany cases, there is an established contract bid-ding and award process already in place if yourairport is municipally, county, or state owned.

Integrate the engineering contractor into theproject planning as soon as possible. The con-tractor’s expertise can be invaluable in helpingto refine the scope, boundary conditions, projectcost estimates, and funding resources. With theengineering design firm on board, you also canbegin the preliminary design and budget esti-mate work.

Be certain that you have sufficient project fundsto compensate the engineering firm. Many timesthere may be sufficient funds available from theairport’s operating budget. If not, you may needto request a short-term loan from the airportowner that will be paid back with funds fromyour financing source. Obtaining this extra fund-ing for the project should be easier thanks to thework you did earlier to build credibility, show thevalue of the airport, and gain support from keydecision makers.


Ident i fy funding sources

An almost infinite number of combinations ofgrants, public or private loans, bond issues, andother sources of funding are available. Some arequite sophisticated and may require a degree ofcreativity to get the combination best suited toyour project and airport financial situation. Someof the more common methods of financing willbe covered in this guide.

As noted earlier, the FAA has AirportImprovement Program (AIP) grants designedspecifically for construction, development, andexpansion of U.S. airports. When planning ahangar project, FAA grants can be used to payfor utilities, some underground work, paving oframps and taxiways, and even fencing, gates, andlighting systems. These grants usually cover up to95 percent of the cost of qualifying parts of anairport expansion with the remainder as “match-ing funds” coming from the airport owner.

The process of applying and being approved forsuch a grant from the FAA is not difficult, but itcan be time consuming and requires specificworking knowledge of the FAA AIP grantprocess. Airport engineering consulting firms cancombine the project design and funding applica-tion process. Aviation loan and grant consultantsalso specialize in helping airports apply for thesegrants. The engineering consultant should be ableto tell you which approach is best for the airport.Regardless of which approach you use, you willneed to cover the matching portion of your grantfrom other funding sources.

In addition, by federal law there is a limitation forwhat the AIP grant money can be used at a pub-lic-use airport. For example, AIP grants cannot beused to pay for strictly revenue-producing parts ofthe project. This covers the hangar buildings,including foundations, and some of the paving infront of the hangar doors. How to pay for thenon-grant eligible parts of your hangar project iswhere you may need to get creative.

A first step might be to meet with the airportowner’s financial staff. In the case of a city- orcounty-owned airport, this could be the director offinance. When you meet with the financial staff,discuss the detailed plans for the project, go overyour ideas about financing, and enlist their help tocontact lending institutions, bond issuers, andother financial resources. You might discover thatthe airport owner may be willing to consider loan-ing the airport operation the money from his orher own general revenue fund. In any case, youshould have a better idea of your options onceyou’ve involved them in your quest for funding.

Another option for funding could be your state.Some state governments have aviation loan pro-grams designed to supplement the AIP. Theseloan programs are often funded by state aviationfuel taxes and are self-perpetuating given theloan payments are made back into the program.

If you decided to have a private developer designand build your hangar project, you still will needto coordinate your efforts closely because theremay be parts of the airport infrastructure thatthey may not be able to provide. For example, aprivate building developer probably will not pro-


vide utilities to the site, taxiway extensions, secu-rity fencing, or area lighting systems. In this case,it may be possible to obtain an AIP grant todevelop the infrastructure necessary to supportthe hangar development project. You probablywill need to hire an engineering consultant todesign and manage the details between your pri-vate developer and the airport.

Financia l funding a l ternat ivessummary

■ FAA AIP grantsContact the local FAA ADO (faa.gov/arp), an engineer-ing consultant, or airport financial consultant.

■ State/county aviation loan programContact the appropriate aviation department.

■ Airport ownerCheck with the finance department about financingfrom the airport general fund or community develop-ment programs.

■ Municipal/county bond issuesFinance department staff can help, and investmentbankers can handle bond issues. (These can takesome time to put together, so plan accordingly.)

■ Bank loanCheck with the finance department staff.

■ Private development fundingThe private hangar developer will provide his or herown financing, but you probably will need to seekadditional funding.

Don’t be surprised if the construction bids ulti-mately come in higher than anticipated. Plan forthis possibility to prevent an unexpected sur-prise in the future. It is better to have donesome preliminary assessment of options than tobe surprised, possibly putting the project injeopardy. For example, you could evaluate theimpact of reducing the project scope; you couldcheck to see what additional loan or otherfinancial resources might be available; or you

could assess the impact of higher hangar rentalrates to cover the additional costs. If your proj-ect is still viable—even if faced with a signifi-cant (20 percent or more) overrun—then you willknow that the project is on firm footing to moveforward.

Prepare financia l documentat ion

After identifying the available funding sources,finalize the funding plans. But, your work in thefinancial area is not over yet. You or your air-port owner’s financial staff also will need toprepare a detailed financial projection, or proj-ect proforma, for the term of your project’sfunding. This allows the financial institutionsthat are providing funding to evaluate the proj-ect and decide whether they’ll give you all themoney you need. The FAA also will want to beassured that your project is well conceived andfinancially reasonable.

This project proforma is just an expansion ofthe work you did earlier to demonstrate thevalue of your project and gain stakeholder sup-port. This should be fairly easy because youshould have more accurate cost estimates fromthe engineering design consultant’s preliminarydesign. Use the project cost estimate and yourprojections for revenue and expenses to com-plete your project proforma. (A sample projectproforma is included in Appendix II. You willuse this project proforma in Step Four whenyou obtain funding. Remember to include otherknown future expenses, such as fuel systemreplacement, in your projections. The projectproforma will be a powerful tool when meetingwith decision makers and working to positivelyinfluence other key stakeholders of the value ofyour project.

If you decided to pursue private development,you will need to check with the FAA to see whatkind of financial projections they require.


Ident i fy rev iew and approval s teps

All the work you’ve done to this point has beendirected toward creating support from key stake-holders and decision makers for the most attrac-tive hangar project alternative at the airport.Now that you’ve defined your project scope andcreated a funding plan that is financially credi-ble, you’ll need to identify, in advance, thereview and approval steps necessary to moveforward. An airport project will impact manydifferent areas of the airport owner’s responsi-bilities and jurisdiction, and you most likely willbe confronted with numerous levels of reviewsand approvals.

Start planning your review and approvalsequence, and build the timeline into your overallproject plan. Specific stakeholders might requiremultiple reviews and approvals during differentstages of the project. (You might not need tohave your project reviewed and approved by allof the following entities.)

The city/county council or commission, themayor or county supervisor, and the airportcommission all probably will need to be involvedin the approval process to hire an engineeringconsultant, apply for FAA grants or loans,request construction bids, award a constructioncontract, and accept the completed project.

A planning department or commission may beinvolved in the overall plan approval, architec-tural review, land-use review, and environmentalimpact review. The project also will need to bereviewed and approved by the legal and finan-cial departments. Other commissions and com-mittees might need a say in a bicycle/pedestrianreview, landscaping, public access and security,and noise and traffic concerns. The fire marshal,police department, and public works/parks andrecreation department probably will need to par-ticipate as well.

An effective way to plan ahead for these reviewsand approvals is to work closely with key stake-holders and ask them what is necessary for theproject to proceed. You might find that you cannegotiate away several of these steps that are notappropriate to the project. Often the individualsinvolved in reviewing the project or grantingapproval to proceed are ignorant of airports andhow they operate in particular. Use your credibili-ty and positive stakeholder relationships to yourbenefit.

Another advantage to planning ahead for thereview and approval steps is to uncover issuesyou missed in your earlier planning. Findingthese before the review and approval phase willlimit the surprises you could face in the future.With all of this information and a compellingbusiness case in hand, you should be able to geta decision to proceed.

C H E C K L I S T F O R S T E P T H R E E

✔ Complete project framing

✔ Build stakeholder support

✔ Prepare project team

✔ Create preliminary project estimates

✔ Identify funding sources

✔ Prepare financial documentation

✔ Identify review and approval steps



P R O J E C T E X E C U T I O N

Many hangar projects are erroneously startedin what should be the fourth step—projectexecution. Bypassing the first three planningsteps usually leads to frustration and projectfailure. If you have turned to this section inan attempt to shorten the process, go back tothe beginning. Following this guide step bystep will ultimately save you time, effort,and money.

All of the project pre-planning and preparation tothis point begins to pay off. During the projectexecution phase you will complete the projectdesign and funding, solicit bids, award the con-struction contract, build the hangars, and movein tenants. In this phase, it also is important toimplement the seven principles of project man-agement discussed in Step Three (page 14). Therewill be changes that must be incorporated intothe project plan (change in funding sources, reg-ulations, stakeholders, size of project scope), andusing these principles can ensure the best possi-ble outcome.

Project design and funding

You should have already decided whether tohave the hangar project done privately by adeveloper or publicly by the airport owner.Depending on which option you selected youwill have varying levels of involvement. Someof the responsibilities of each option are detailedin this section.

Private ly bui l t and managed: The pri-vate ownership and management option requiresa land lease or purchase agreement between theairport owner and private developer. The airportowner will likely prepare these documents but

you should be involved—your knowledge of andwork on the project will be valuable.

If a developer is allowed to purchase airportproperty, it is vitally important that the FAAbecomes involved early in the discussionsbecause the agency has stringent requirementsgoverning such matters. Any sale of airportproperty must receive FAA approval and beconducted at full fair market value, with pro-ceeds going to the airport.

If the developer will lease airport property, con-sider the appropriate term of the lease. (Typicalleases run 25 to 30 years; however, in somecases, the lease term may be tied to the level ofcapital development proposed.) Establish whatwill happen to the hangars after the lease expires:Will the lease be eligible for extensions in time?How many extensions? Or will the hangars revertto the airport owner at the end of the lease term?The final terms of any lease should hinge on thelength of the lease term as well as the level ofinvestment involved. Also include a clause in thelease that allows the airport owner to be involvedin the hangar project to help ensure that buildingcodes, permits, inspection requirements, and thelike are met.

You will need to assist the developer through-out the project by obtaining any required per-mits, integrating the project into existing air-port infrastructure, obtaining funding and proj-ect management for non-developer portions ofthe project, and monitoring the progress ofconstruction. You will also be responsible forresolving any issues that may arise between thedeveloper and airport owner representative.Participating in the final inspection and accept-ance of hangars and ensuring compliance of thelease agreements will also be a priority.

P R O J E C T E X E C U T I O N — S T E P F O U R


Airport owner-bui l t and -managed: Ifthe airport owner is going to build and managethe hangars, you will have a lot more work to do.But it will also generate significantly more rev-enue for the airport, which could lead to addi-tional airport development projects being fundedwith existing airport revenue.

If you have already been working with an engi-neering consultant on the preliminary designsteps of your project, you will need to finalize acontract for completing the design work. You willneed input and assistance from the airportowner’s legal staff or representative to preparethis contract because the decision makers in cityhall will probably have to approve the contract.

Once the design contract is in place, get the engi-neering consultant started on the detail design. Insome cases you might need to hire an architectur-al firm to complete some of the building designs.

Design Elements

■ Underground drainage and storm water runoff con-trol

■ Underground utility layouts, fire protection sprinkler systems, electric, telephone, cable, sewer,gas piping, and tie-ins to existing systems

■ Site grading, contour, excavation, and sub-base material plans

■ Concrete hangar foundations■ Ramp, taxiway, and apron paving■ Architectural treatments and material specifications

for hangars■ Structural design of hangars (may be done by

building supplier)■ Ramp and hangar lighting■ Landscaping■ Security fencing, gates, and personnel

walk-through gates■ Parking lots as required and pedestrian walkways■ Not all of these elements will be necessary for all

hangar development projects. The engineering con-tractor will be able to provide appropriate guidancefor your project.

While the project designs are under way, begin towork through your review and approval plan.Many projects require multiple reviews throughoutthe process, so plan ahead. Depending on thenature of the project (private or public), the fundingmight need to be in place before beginning thedetailed project design work. So, the next taskmight be to obtain funding instead of beginningdesign work, you will need to determine what isappropriate in your case.

Obtain funding

By now you should have a good idea of howmuch time will be required to get the funding inplace to proceed with construction. The engineer-ing consultant might also be familiar with theprocesses used by the FAA, state, county, or citywhen applying for grants or loans. The details ofthe funding process are outside the scope of thisguide, but the basics have been identified, includ-ing the owner’s staff responsibilities.

FAA AIP grants: The FAA has a specific processfor applying for and receiving grant money fromthe Aviation Trust Fund. Before the FAA willgrant any money for an airport project, thegrant-eligible aspects of a project must be includ-ed on the airport’s annual airport capitalimprovement project (ACIP) list. The FAA alsoexpects that the estimates used in the ACIP listfor grant-eligible items be accurate within 10 per-cent of the final cost, so allow for escalation ofcosts in these estimates. To obtain cost estimates,the design consultant will need to do some pre-liminary design engineering.

The FAA requires that the ACIP list be updatedannually in early December for the followingcalendar year. This means that the hangar proj-ect must be on the airport’s ACIP list the yearbefore you would expect to receive funding.Don’t forget to incorporate this reality into yourproject schedule. The FAA will only fund hangardevelopment projects at eligible airports, provid-ed that the airport certifies that all airside devel-


opment projects in the ACIP have been plannedfor future implementation.

Public or private loans: Project loans, whetherfrom private banks or state, county, or municipalsources, can take a considerable length of time tobecome a reality. (“Project Planning — StepThree” should have given you an idea of whatyou’ll be facing at this point in the project.)

Municipal (government) bonds: If your project-funding plan includes publicly-or privately-issuedbonds, remember that this too can be time con-suming. The airport owner’s financial staff can bea valuable resource when preparing the details ofa bond issue or sale.

You can likely use the financial projections youdeveloped in Step Three when you did your prelimi-nary financial impact estimates for your project. Ifproject costs have changed, you should be able toeasily update your proforma to satisfy the needs ofyour funding sources. (See Appendix II.)

Construct ion planning

With the hangar project design complete, fund-ing in place, and approvals in hand, preparefor construction. Some of the things you needwill include a contracting plan, a performancebased contract, bid packages, and bid reviewand approval.

The project engineering consultant or staffshould be able to create a contracting planand construction schedule suited to your proj-ect. A contracting plan identifies which ele-ments of the construction will be combined toincrease efficiency. Often, all of the construc-tion elements can be bid together with onecontractor, for things such as undergroundutility and drainage, site grading, concretefoundations, building design and materials,building erection, electrical and area lighting,fencing, paving, and more.

Experience has shown that the fewer contractsthe better as this forces the contractor to beresponsible for the coordination and facilita-tion of all the interacting parts of the project.This method also reduces the workload onwhoever will be coordinating the contractor(s)on site.

Decide who will serve as the overall projectmanager for construction. In most cases, a cityengineer or the design engineer will fill thisrole. The airport owner will likely want toretain this role through an existing engineer-ing staff. However, he or she may charge asubstantial fee for this. (Be mindful of thepotential economic impact this could have onthe project.) An efficient method would be tobid the entire construction project to one gen-eral contractor and pay the engineering con-sultant to act as construction manager andairport owner representative. The engineeringconsultant is ideal for the job because he orshe already has done the engineering anddesign work.


Contract wording

It is imperative that the person preparing thecontract prior to the bid process addresses specif-ic items related to the project. Many items can beincluded in standard contract clauses by the air-port owner, but make sure that the airport designand/or construction manager reviews the contractfor completeness prior to releasing the project forbids. Later, if you find yourself in a tough situa-tion with the hired contractor, falling back on acomplete and detailed contract will be invaluable.This guide provides a few suggestions that shouldbe included, but tailor the contract to fit yourproject. A competent lawyer will be a must.

Schedule of values: A schedule of values,or unit prices, is a required element of contractsat most publicly-owned airports and for all air-

ports using FAA funding. The FAA requires thatall the books associated with the project be open.The contractor must provide his schedule of val-ues so that the resident engineer (the individualfrom the airport owner’s staff or the engineeringconsultant who is responsible for overseeing con-tractor performance) can approve contractor“progress payments.” The vast majority of con-struction contracts are based on a lump-sum bid,but contractors will expect to be compensated asthe construction progresses. These progress pay-ments must be based on actual constructionprogress. Sometimes contractors will submit a billfor significantly more progress than has actuallybeen completed. Without a schedule of values,you won’t be able to easily refute such claims.For example, if a contractor bills the airportowner for 20 percent of the rough grading, theresident engineer must be able to verify that 20percent has been completed. Payment will be


based on 20 percent of the total cost of roughgrading, usually measured in cubic yards. Theschedule of values provided by the contractorwith his or her bid should provide the cost percubic yard of this rough grading.

Without this schedule of values, the residentengineer will not be able to approve suchbillings for payment. In addition, the FAArequires a schedule of values as documentation.Some contractors may be reluctant to providesuch detail with their bid, but it is required byFAA regulations.

Unknowns and surprises: Unforseen circum-stances can arise during the construction phaseof a project, whether unplanned by contractor orunexpected by all parties involved. How suchcases will be handled should be laid out in detailin the construction contract. For example, thecontractor must immediately notify the residentengineer of a “surprise.” Then the resident engi-neer must review and evaluate the claim of asurprise and decide whether it would constitutean actual change. The resident engineer wouldnegotiate the change based on time and materi-als or unit price or lump sum basis to completethe additional work. The time-and-materialsapproach must be detailed clearly in the contractwording, including an appropriate mark-up forprofit. This approach should prevent a contractorfrom taking advantage of the surprise.

Notice of potential claim: This situation ariseswhen the resident engineer says there is nochange in the project but the contractor thinksthere is. In such a case the claim for “extrawork” would go to arbitration, where an impar-tial third party would decide whether the con-tractor’s claim has merit. Ensure that your con-tract covers such circumstances so the projectcan keep moving while the claim is in arbitra-tion. The resident engineer would track costs forthe change, including time and materials. Whenthe work is substantially complete, the finalclaim would go to the arbitrator who would

authorize final payment.Delays: During the course of construction thecontractor may notify the resident engineer ofa delay. If this is caused by late materialdeliveries call the supplier to confirm thedelay. Get the facts and assess the impact onthe overall project schedule. There may beways to adjust the schedule by rearrangingvarious aspects of the project, such as inspec-tions or approvals.

If there is no solution to get back on schedule,the resident engineer should estimate the costto the client which, in this example is the air-port owner. This would include liquidated dam-ages, which would usually include loss ofpotential revenue and additional overheadexpenses. These must be quantified and howthese are calculated must be available to thecontractor. This information would be usedshould the airport owner wish to file a claimagainst the contractor for the financial impact


of the delay on the project. If the contractor isnot at fault, it could be necessary for the con-tractor to pursue the supplier. The best protec-tion is to have all such provisions for handlingdelays specifically explained in the contract.

Standard retention: In most contracts, a setamount of the total contract will be withhelduntil the airport owner has accepted all workas complete and satisfactory. The standardretention amount is 10 percent of the totalcontract price. (This also applies to claims ofextra work.) The contract should be clear onthis subject. Be sure there are provisions in thecontract that spell out how and when the par-ties would go to an arbitrator if an agreementcannot be reached. The 10 percent rule is usedbecause it is usually enough to cover the costof completing the work if the contractor quitsnear the end of the project. It is unusual forthis to happen, but the contract should allowfor this possibility.

Progress inspections: The resident engineer isusually responsible for monitoring dailyprogress. This is to be certain that progressbillings from the contractor can be verified.

Specialty inspections: Specialty inspectionsinclude architectural, construction, under-ground, plumbing, electrical, and other neces-sary inspections. The resident engineer usuallycoordinates inspections that are required bythe airport owner’s building department andare all part of a final project inspection andacceptance. Most building departments con-duct inspections so as to not impede the con-struction progress. The key to efficient use ofproject inspectors is for the resident engineerto notify the appropriate inspector in plenty oftime so that schedules can be coordinated. Besure to include the time required to scheduleand conduct these inspections in your contractso the contractor is aware.

FAA inspection: The FAA requires a final

inspection (and some during the course of theconstruction) to ensure that their requirementshave been met. The FAA requires taxiway slope,fill material compaction, and concrete tests. Theairport design consulting engineer should beaware of the detailed FAA requirements.

Punch list: The resident engineer and airportowner inspectors usually draw up a punch listof items that must be completed by the contrac-tor before the construction can be consideredcomplete or accepted by the airport owner. Itemssuch as hangar door adjustment, touch uppainting, and other minor items are often on apunch list.

Temporary occupancy permit: A temporarypermit for occupancy may be issued by the air-port owner to allow tenants to move into theirnew hangars should some remaining construc-tion punch list items remain open, such asfinal landscaping. The benefit of a temporaryoccupancy permit is that it allows the revenuestream to start before the construction projectis complete.

Notice of completion: This is a formal notifica-tion of project closeout. It gives anyoneinvolved in the project an official notice thatthey have a period of time (normally 35 days) tofile any lien claims on the project. It also freesup the property for final occupancy. After the35 days and after all punch list items are com-plete the airport owner can release the 10 per-cent payment retention. Less any uncompletedor disputed items. It is usual to retain up totwice the amount in dispute from the overall 10percent. Be sure that your contract containswording to cover your project in this area.

Construct ion bonds: A bond is intended toprotect the airport owner in the event that the con-tractor does not complete the project. For example,the contractor could go out of business or walk offthe project. The bond works like an insurance poli-cy, providing funds for the airport owner to com-


plete the project.Also, there should be a 10-percent bid bond inplace in case the awarded contractor refuses toenter into a contract. Once a contract is awarded,this bond is refunded to the contractor. If thecontractor refuses to enter into a contract, he orshe forfeits the bond. Make sure the contractincludes specific details regarding the bondingrequirements.

Contractor qualification: The contract shouldcontain some wording requiring that the con-tractor is qualified to do work at an airport.Some of the unique elements of an airportconstruction project require a contractorexperienced in working on airports. An inex-perienced construction contractor could makeany number of mistakes, causing problems forthe project.

Bidding

The airport owner will have specific require-ments for compiling a bid package. The engi-

neering consultant will likely prepare the bidpackages. In addition to the detailed designdrawings, the package will include materialspecifications, grading plans, utility connectionsto existing facilities, certificates of nonsegregat-ed facilities, bonding certificates, insurance doc-umentation, how extra work claims will be han-dled, and other standard clauses as dictated bythe airport owner. Include any FAA, state, orcounty requirements.

Pre-qualify potential bidders while the bidpackages are being prepared. The airportowner’s engineering staff or the engineeringconsultant should know contractors who arecapable of handling the project. It would bepreferable that only contractors with prior air-port construction experience bid on the project.However, this might not be practical in everycase. The airport owner may have a specificprocess that he or she uses for bidding con-struction contracts and most often can handlethis entire portion of the project.

Project site walk: Once the bid packages arereleased, the bidders will have a standardlength of time to prepare their bids. Schedule ajob site walk early in the bid period. The proj-ect manager (engineering consultant or airportowner representative) will schedule a time,usually included in the bid documents them-selves, to have all interested bidders meet atthe project site.

During the site walk, the bidders’ representa-tives will have an opportunity to ask questionsabout the project. Pay particular attention tothe subtle aspects of a project that may beobvious to you and the airport owner, becauseit might not be to the bidders. These includesutility tie-ins, special soil conditions, noise orcurfew restrictions, impact of continuing air-port operations during construction, and keyowner contact during construction. Given theinterest shown by the bidders at the site walk,you might get an idea of how interested they


are in bidding.Bid opening and review: In the public arena,bid opening usually includes a public openingwhere the bid amounts and names of the con-tractors are announced. Once opened, thepackages usually go through a review toensure that all elements of the constructionproject have been included in the bid; some-times contractors will miss a part of a projector misunderstand the intent of the bid pack-age. The airport owner’s engineering staff willusually do this, but you can also have yourproject manager or engineering consultantreview them as well.

Bids may come in well above or below the project cost esti-mate, leaving you with a number of alternatives to pursue.

Bids are too high■ Cancel the project and return the funding ■ Seek additional funding■ Reduce the scope of the project (revise the financial

projections accordingly)■ Proceed with the project, and work to secure addi-

tional funding (not likely as most airport ownerswill want to have the funds in hand to completethe project before agreeing to award a construc-tion contract)

Bids are too low■ Continue with the project and return or “bank” the

surplus funds if below your estimate■ Increase the scope of the project (revise your finan-

cial projections accordingly)

Last-minute potent ia l problems

Problems can arise and even kill your hangarproject. Here are a few examples of issues youmay face.

Potent ia l obstac les to complet ion

■ Uncooperative airport lease holder or prop-

erty owners that change their mindsregarding the use of their property for air-port hangars

■ Changes in key decision makers to includeairport opponents

■ Local community groups seeking to block theproject, citing noise, traffic, and safety issues

■ Unresolved issues from prior projects thatwere not uncovered earlier

■ Changes to rules and regulations impactingthe operations of the airport

■ Loss of funding

These are just some of the last-minute issuesthat can jeopardize the successful completion ofyour project despite your careful project plan-ning. However, the support and credibility thatyou built with stakeholders early in the processcan be a project saver. Leverage your relation-ships with key decision makers, such as city orcounty council members. With the credibilityyou have built to date and the demonstratedpositive value of the project you should be ableto call on these key people to help you negoti-ate your way to a positive result.

Construct ion contract award

The airport owner should know how the con-struction contract award is to be handled. Insome cases a senior member of the airportowner’s staff can handle this. Or it may requirethe vote of the city or county governing body toobligate the airport owner to the financial liabili-ty of administering a contract. If you are unsureof how such a body will vote on the project,informally poll the group using the connectionsyou have built up during the hangar projectprocess. If further work is necessary to get theconstruction contract awarded it is best to knowahead of time and deal with these issues.Regardless, the final award of your constructioncontract should be quite simple at this point.

Negot iat ion and value engineer ing:Depending on the scope of the hangar project,


you might have the opportunity to reduce thecost of the project while the contract documentsare being finalized. This is called value engineer-ing. During value engineering, you meet with theconstruction contractor, project designer, andproject manager (this may be the airport owneror engineering consultant representative) toreview the project design details. Look for ele-ments of the project that, with minor redesign ormaterial substitutions, could save money. Afterthe contract award, your construction contractormay not have much incentive to lower costs. Butkeep in mind that you could run into “fair con-tract practice” issues with the other bidders if thisdiscussion is held before contract award. So timethis discussion accordingly. It is worth looking atvalue engineering because there could be signifi-cant savings waiting to be uncovered. Valueengineering could include the modification ofarchitectural designs, substitution of buildingwall material, reuse of existing materials such as

fencing, substitution of subgrade materials andfill requirements, and deferral of requested projectelements by special interest groups.

Once you’ve completed value engineering, you willhave the lowest possible cost for the project. If thecontract has been awarded, any changes you maketo the basic contract will most likely be included in achange order. Both the original contract and changeorder must be forwarded to the governing FAA ADOfor their review and comment. This is requiredbecause you may have an FAA grant included in theproject financing. The engineering design consultantmore than likely can help you with this.

Pre-construct ion meet ing: At the pre-construction meeting all the various parties meetto review, discuss, and agree on the project con-struction administration details. Many of theseare required by the FAA, and the airport engi-neering design consultant should be able to helpplan and conduct this meeting.


Sample pre-construct ion

• Labor provisions, prevailing wage rates, etc.

• Project scope review

• Construction observation and quality assurance

• Project management

• Sponsor/owner engineer

• FAA project engineer

• Engineering consultant representative

• Airport manager

• Construction observation/materials testing

• Project administration

• Materials testing, quality assurance testing

• Resident job site engineer

• Coordination with airport, city staff, FAA, airport users

• Construction activity coordination

• Weekly progress meeting

• Notams issued by airport manager

• Construction contractor key personnel identified

• Administration

• Contract award signatures completed

• Notice to proceed, first day of work, material orders, etc.

• Project schedule and time limitations reviewed

• Change orders, review, approval

• Progress payments

• Request and documentation

• Schedule of values (unit prices)

• Documentation of progress

• Retention escrow account (usually established by owner/sponsor finance department)

• Construction operations

• Airport access, security during construction, operations

• Limitations on contractor operations during construction

• Public safety: barricades, warning signs, night obstruction lighting

• Protection and restoration of property at conclusion of construction

• General limitations

• Specific project limitations (access to certain areas)

• Pavement closures and notifications to airport manager

A G E N D A


meet ing agendaHangar construct ion

There are two keys to a successful constructionprocess. The first is the mindset that you andyour team have when you interact with the con-tractor. The team’s mindset should be positiveand business-like. This will set the tone for theremainder of the project. When a contractorknows that you will deal with him or her fairlyand that you expect the same in return, you willhave the best opportunity for a successful con-struction process.

The second is the efficient administration of theperformance-based contract. This depends on thecomprehensive nature of the contract and thewillingness of the airport owner to hold everyoneaccountable to the requirements in this docu-ment. Work to ensure that construction will pro-ceed with a minimum of problems, delays, andcost overruns. Of course you may not be able toavoid all potentially contentious situations withyour construction contractor but you should beable to minimize their impact.

Final FAA construct ion report : TheFAA requires a final construction report (FCR).The airport engineering design and constructionmanagement firm, or airport owner representativewho is familiar with the project, should preparethis report. The report should contain:

■ Project narrative of the construction phase;■ Documentation of any changes made during

construction;■ Data from quality assurance tests for con-

crete, asphalt, base rock, fill;■ Tabulation of final costs, including quantities

of materials used and an explanation of dif-ferences if the total cost to be covered by anFAA grant is off by more than 10 percent ofthe amount requested;

■ A final payment release request for grantfunds (FAA withholds a final 10 percent untilthis report is received and accepted); and

■ An updated airport layout plan with the newhangars and other airport changes shown(include one for your state if they haveinvested money in the project, and particular-ly if there are major airport ramp and taxi-way changes).

Final thoughts on hangar construc-t ion: It is important that both the constructionand the design engineering contractors have priorexperience working on airport projects. Checkand verify their references and experience claims.Airport owners sometimes have their publicworks in-house engineering staff do the designwork. This is usually intended to save money butwithout prior airport design experience andfamiliarity with design standards they can causesignificant problems.

Hangar buildings are not typical metal buildings.The specifications are unique and differ from thetypes of buildings the airport owner’s engineeringstaff might have designed. Also, the paving gradeon airports is different from the grade on citystreets. Paving on city streets can be sloped fordrainage with a 2-percent or higher grade.Aircraft owners would not be able to push theirairplane up that slope into their hangar. Designingand adjusting hangar sliding doors is not like thatof regular steel buildings. Doors must overlapwithout binding and move with a minimum ofphysical effort. The architect, building supplier,engineers, and inspectors must be familiar withthese types of differences to avoid problems.

Private hangar developer: With privatehangar development the developer will carry theresponsibility of hangar construction. However,the FAA still needs to approve the designs andmethods used on the project. The same contractwording applies to the lease agreement with aprivate developer. But there are some additionalpoints to include in the contract. Be certain thatthe developer is required to work closely with theengineering design consultant and resident engi-neer (or airport owner representative) because the


FAA’s design criteria applies to them too. Alsoinclude a performance clause that requires thedeveloper to agree on a time period to start andcomplete the construction. Ensure that the devel-oper cannot agree to build the hangars, therebytying up open airport property, and then fail tocomplete the project. Do this by requiring airportland lease payments to start only when allrequired parties have signed the lease agreement.Add specific wording to require the developer tomeet all of the construction requirements of theairport owner and permit agencies.

New hangar move in

After all the hard work you and your team haveput into this hangar project you are finally readyfor the tenants to move in. In most cases you willbe moving in tenants who signed up on a wait-ing list for those hangars. It is critical to managethis process in a professional manner. Administerthe list fairly and consistently. Don’t allow back-room deals.

Review your project cost economics to make surethe hangar rents will cover your costs. Alsocheck that the airport owner’s accountingdepartment is ready to receive monthly pay-ments from the tenants.

Notify the tenants on the list by mail or phonethat they can move into the hangars. Remindthem of the monthly rent and include any otherfees that they will incur upon move in such asdamage deposits. When the tenants are ready tomove in have the rental or lease agreement readyfor them to review and sign and obtain the appro-priate insurance documentation from each tenantto protect the airport owner. After the tenantshave moved in check to ensure that any punchlist items are completed. This could include utili-ties, paint touch ups, or door adjustments.

If you work through the waiting list and stillhave vacancies, consider advertising the newhangar availability. Posting advertisements and

talking to nearby flying clubs, FBOs, and airportmanagers can be useful. If you have filled thenew hangars and still have people on a waitinglist, continue to manage it as you did during themove-in process.

Private hangar developer: You or an airportowner representative should have an agreementin place about how to coordinate tenant movein with the private developer. You and thedeveloper might have separate waiting lists ifyou have a combination of privately and air-port-owned hangars. If all of the hangars areprivately developed then the hangar owner usu-ally manages move in.

During move in you should have an airportowner representative (usually the airport manag-er) available in case disagreements arise betweenthe hangar developer and tenants on the waitinglist. However, if the developer compiled and man-aged the waiting list, your capacity to resolve adisagreement will be limited.

Be certain that the developer does not allowrenters to engage in activities that do not complywith airport zoning and building codes (i.e., run-ning a business in a noncommercial zone or per-mitting nonaviation activity prohibited by airportoperating standards).

C H E C K L I S T

✔ Obtain project design and funding

✔ Bid and award construction contract

✔ Construct hangars

✔ Complete hangar project and move in tenants


P R O J E C T E V A L U A T I O N

During the course of this project you probablygained new insight into airport operation, devel-opment, and hangar construction. It is importantthat your team passes this real-world knowledgeon to others who might pursue construction proj-ects at your airport. “Project Evaluation” focuseson capturing what was learned throughout theentire hangar project process. This will helpensure consistency in the operation of your air-port and implementation of future airport devel-opment projects.

The two basic parts of project evaluationinclude checking to confirm your project eco-nomics are still valid and producing a recordof the project. In Step Five you will track thefinancial performance of the airport (includingnew hangar operation), adjust rental rates asappropriate, debrief project participants, con-duct an airport tenant opinion survey, andpresent a final project report to the airportowner decision makers.

Project economics

When the income stream starts flowing from thenew hangars, closely review the monthly revenueand expense reports produced by the airportowner. Check your original estimates (producedduring the first three steps of the guide) and con-firm that the hangars are generating sufficientrevenue to cover all of your expenses, includingany new principle and interest payments. Don’tforget to include additional fuel sales revenue inthe review.

Ideally you would be generating sufficient rev-enue to cover all of the operating expenses andfinancing costs, with enough to set some aside in

a reserve fund. If the project is generating excessrevenue, evaluate the reserve fund needs andadjust as appropriate.

If insufficient revenue is being generated, itmay be necessary to increase the rental rates tocover the shortfall. Your standard rental/leaseagreement may limit rent increases so take thisinto account when evaluating financial per-formance. It may take a few months to get agood handle on the situation but start trackingthe airport finances early and often. AppendixI, “Airport Revenue and Expense FinancialAnalysis,” can be used to check the airport’snew financial state.

At a federally funded airport the FAA requiresthat airports charge fair market rental rates. TheFAA also frowns upon charging rates that exceedfair market value and the agency could view suchan act as unjust economic discrimination. Forany consideration of adjustments in hangarrental rates it is extremely important to involvestakeholders early in the discussions.

Debrief project part ic ipants

An effective method for evaluating the projectis to go back to your stakeholder analysis andconduct interviews with these individuals again.Now that the project is complete ask for theirthoughts and suggestions about how to improvethe process. Discuss the project approvalprocess, the impact on schedule and cost, theimpact on current airport businesses, tenants,and staff, and the level of satisfaction from keydecision makers. You also should obtain inputand reactions from the airport design engineer-ing consultant, airport owner engineering staff,construction contractor, resident engineer, andairport owner representative.

P R O J E C T E V A L U A T I O N — S T E P F I V E


Conduct a irport tenant opinion survey

Many airport tenants (business owners andusers) initially might not be included in thestakeholder debriefing but their input is noless important. An effective way to obtaintheir input is to conduct a short opinion sur-vey. Limit the survey to 10 or fewer ques-tions and use a simple scale (e.g., rank thelevel of satisfaction from 1-10). The easiestway to distribute the questionnaire is to maila copy to all airport users who appear on the

airport owner’s records, including the newhangar tenants.

Tabulate the numerical results and consolidatethe written comments. Then combine your stake-holder and tenant survey results to create a briefreport for your key decision makers and airporttenants. (A Microsoft PowerPoint presentation isa simple and effective reporting method.) Becauseyour decision makers and tenants took time to beinterviewed or to complete an opinion survey,you owe them an opportunity to see the results.An airport users’ meeting can be an effectivevenue for such a presentation. Sharing the resultswith the stakeholders and tenants fosters opencommunication and relationship building.

Provide copies of the final project report tothe group responsible for airport managementoversight, whether it is an individual, airportcommittee, or local government commission.They should have copies available for whoev-er becomes involved in the next airportdevelopment project. Your report and sharedexperiences should enable the next projectteam to complete their project more efficient-ly than if they were to start from scratch asyou probably did.

The project process in this guide have been triedand proven to work. It will provide you withmany useful ideas, tools, and approaches to over-come the many obstacles involved with embark-ing on a hangar project at any GA airport.

Sample opinion survey quest ions

Did the construction phase of the project impact youruse of the airport?(1-10 scale, 1 being strongly disagree, 10 beingstrongly agree)

How did the project impact your use of the airport? (Ask for a written response or provide a list of examples with boxes to check.)

This hangar project will benefit the airport.(1-10 scale)Explain why or why not.

Waiting list was well administered.(1-10 scale)Explain why or why not and provide some suggestions for future projects.

Tenant communication was sufficient.(1-10 scale)Explain why or why not.

Overall, how would you rate this project.(1-10 scale)Explain why.

What else would you like to see developed at the airport?

C H E C K L I S T

✔ Track financial performance of airport, including new hangar operation

✔ Adjust rental rates as appropriate

✔ Debrief project participants

✔ Conduct airport tenant opinion survey

✔ Provide final project report to airport owner decision makers


A I R P O R T R E V E N U E A N D E X P E N S E F I N A N C I A L A N A L Y S I S

The financial analysis is nothing more than abalance of the airport’s revenues and expenses—think of it as balancing the airport’s checkbook—and much of the information can be obtainedfrom the airport owner’s finance department.What follows are some of the principal elementsthat make up the airport’s revenues, expenses,and other financial items. Whether a privatedeveloper or the airport owner builds and oper-ates the hangars, most of these financial elementswill apply to the typical GA airport.

Revenue■ Fuel sales: revenue from 100LL, Jet A,

auto, oil, etc.■ Hangar rent: revenue from owner-operated/

-built operated/built hangars■ Tiedown rent: revenue from tiedowns,

including transients■ Ground rent/land leases: revenue from airport

land leases for FBOs, charter operators, pri-vate hangar development, etc.

■ Interest earnings: revenue from bonds andbank accounts

■ Miscellaneous revenue: property tax returnedto airport, penalty payments, etc.

Expense■ Salaries and benefits for full- and part-time

employees■ Fuel purchases: wholesale purchases of fuel

for sale (applies to airport owner-operatedfuel system)

■ Fuel flowage fees: cents per gallon of fuelsold payable to airport owner (privately-owned and -operated fuel system or largeoperator has its own fuel supply)

■ Professional and contract services: standingengineering consultant fees, contract employee fees, and other consultants

■ Utilities: payments for electric, water, sewer,heating

■ Bank fees and lab services: bank fees forcredit card purchases, ground water/runofftesting for environmental compliance, underground fuel system tests

■ Telecommunications: telephone, computerservices, etc.

■ Office supplies: postage, paper, pencils, com-puter, interior areas and other supplies

■ Repair supplies: parts to maintain airportvehicles, hangars, fuel system, etc.

■ Repairs and maintenance: services for equipment repair, hangar maintenance, fuel system repairs, etc.

■ Miscellaneous: travel, memberships, advertising

■ Overhead allocations: secretarial staff,finance staff, management. This can be allo-cated based on a standardized method usedfor charging other departments of owneroperations, or it can be direct actual costs.The FAA requires whatever method used beconsistent for all departments and enterprisefunds.

■ Insurance: general liability and damage coverage

■ Taxes: local, county, state ■ Bad debt write-offs

Other i tems■ Loan payments: principle and interest■ Federal grants received■ State grants received■ Capital project expenses■ Fixed-asset depreciation

A P P E N D I X I


Use the financial analysis to build your credi-bility as a knowledgeable airport proponent. Ina situation where there has been little analysis,this information also will help influence keystakeholders to support the project. If the air-port’s financial situation is not currently satis-

factory, rectify this situation before proceedingwith the hangar project. By tabulating the air-port’s annual financial results and tracking itscurrent fiscal year performance quarterly ormonthly, you will learn quickly about itsfinancial health.

Sample Airport Operat ing and Expense Summary

REVENUE BUDGET ACTUAL 1QR 2QR 3QR 4QRFuel sales 460,000 480,000 110,000 130,000 140,000 100,000Hangar rent 420,000 450,000 105,000 105,000 120,000 120,000Tiedown rent 15,000 17,800 4,400 4,400 4,500 4,500Ground rent 90,000 93,000 22,500 22,500 24,000 24,000Interest earnings 46,000 48,000 12,000 12,000 12,000 12,000Property tax return 48,000 45,000 0 0 45,000 0Miscellaneous 12,000 11,500 4,000 2,500 3,000 2,000TOTAL 1,091,000 1,145,300 257,901 276,402 348,503 262,504

EXPENSES BUDGET ACTUAL 1QR 2QR 3QR 4QR

Salaries, benefits 32,000 32,000 8,000 8,000 8,000 8,000Fuel purchases 360,000 370,000 90,000 80,000 100,000 100,000Contract services 82,000 90,000 20,000 30,000 20,000 20,000Utilities 55,000 56,500 14,000 14,000 15,000 13,500Bank/lab fees 12,000 12,500 3,000 3,200 3,500 2,800Telecommunications 2,500 2,500 600 600 700 600Office supplies 2,500 2,700 600 600 800 700Repair: parts 15,000 20,500 5,000 3,000 6,000 6,500Repair: maintenance 20,000 24,000 6,000 4,000 7,000 7,000Miscellaneous 9,500 10,500 3,000 2,500 2,000 3,000Overhead 85,000 86,000 21,500 21,500 21,500 21,500Insurance 6,000 6,000 1,500 1,500 1,500 1,500Taxes 4,000 4,000 1,000 1,000 1,000 1,000Bad debt 1,500 1,300 500 300 400 100TOTAL 702,000 718,500 174,701 170,202 187,403 186,204

OTHER BUDGET ACTUAL 1QR 2QR 3QR 4QRLoan: principle (82,000) (82,000) 0 (41,000) 0 (41,000)Loan: interest (355,000) (355,000) 0 (178,000) 0 (177,000)Federal grants 150,000 150,000 0 150,000 0 0State grants 0 0 0 0 0 0Capital project expenses (160,000) (181,000) 0 (169,000) (12,000) 0Depreciation (85,000) (85,000) 0 0 0 (85,000)TOTAL (450,000) (471,000) 0 (169,000) (12,000) (262,000)

In this example there is a budgeted loss of$61,000, compared to an accumulated year-endloss of $59,200. Since this loss can be attributedto depreciation charges, $85,000, (see commentsabout depreciation in “Project Planning — StepOne”), there is actually a small surplus whendepreciation is excluded from the review.

To summarize

BUDGET ACTUALRevenue: 1,091,000 1,145,300Expenses: 702,000 733,500Other: (450,000) (471,000)TOTAL (61,000) (59,200)


H A N G A R P R O J E C TP R O F O R M A

The financial project proforma is a detailed pro-jection of the impact of your hangar project onthe financial health of the airport. To create thisproforma, take the year-by-year financial reviewas outlined in Appendix I and make someassumptions based on the scope of your hangarproject. The financial institutions that will beproviding the money for your project will proba-bly want to see the analysis. The airport owner’sfinancial staff might be able and willing to dothis for you; if not, it is not difficult. Remember,it will demonstrate the true value of your projectto the airport over time. This proforma will beuseful when influencing the key decision makersand stakeholders to support the project. If youcan prove that your hangar project could makethe airport self-supporting (without the need forsupplemental funds from the local tax base),you’ll find them much more supportive.

The first task is to complete the annual financialanalysis in Appendix I. Then list the project scopeassumptions. Identify the scope items in the proj-ect that will impact the airport’s revenue, expens-es, and loan payments after the hangars are com-pleted and generating revenue. Take a look atthese assumptions for the example airport finan-cial analysis used in Appendix I.

■ Current airport hangar space rented: 124,000square feet.

■ New hangar space for rent: 30,000 squarefeet (30 new hangars, 24-percent increase inrentable hangar space). You will have to esti-mate the cost of the hangar project and use aloan calculator to estimate the interest andprinciple payments. The design engineeringconsultant should be able to create a project

cost estimate.■ Utilities increase with the increase in hangars

(24-percent).■ Increase the current rental rate of $0.27 per

square feet per month as appropriate (assume3 percent annual inflation).

■ Additional fuel sales: There are currently 200aircraft, and you will be adding 30 newhangars. Assume that 50 percent of thehangar occupants are new to the airport (i.e.,15 new aircraft). This means a 7.5-percentincrease in aircraft based at the airport[(200+15)/200 = 1.075 or 7.5%]. Therefore,fuel sales also should increase 7.5 percent.The rest of the hangars would be occupied bycurrent tiedown renters ($480,000+7.5%=$516,000).

■ Current hangar rent: $450,000 (124,000square feet) + $99,000 for the new hangars(30,000 square feet x $0.275/mo) = $549,000.

■ Increase operating expenses 3 percent peryear for inflation.

■ Increase fuel purchases 7.5 percent.■ Increase miscellaneous revenues and expens-

es by 7.5 percent related to aircraft on field.

Now that the assumptions are in place, set up theprojections. Consolidate some of the revenue andexpense numbers such as those that are notimpacted by the increase in aircraft based on thefield. Exclude grants, depreciation, and capitalproject expenses because you want to projectonly the ongoing operating revenues and expens-es to see if you can afford the hangar project.

The yearly projected total is the total revenueminus the expenses and loan payments. “Year 0”is the current financial state of the airport. “Year1” assumes the hangar project is complete andgenerating revenue. This airport example wouldinclude the 7.5-percent increase in fuel sales and

A P P E N D I X I I


the net end-of-year financial picture start toimprove. Inflation will continue to drive up costsand expenses, but your financing cost is con-stant, so you’ll see an improvement in your air-port financial picture.

If the airport does not own the major sources ofrevenue, like the fuel system and hangars, the via-bility of your hangar project could be significantlyaffected. This is why a careful review of the air-port’s financial situation is vital. Working all ofthese issues into your business plan is critical ifyou are going to build the support needed to exe-cute your project effectively.

purchases and 3 percent inflation increases inrental rates (3 percent inflation for followingyears as well). You could do these projectionswithout considering inflation, or you could use afigure other than 3 percent, but don’t forget theimpact of rent increases on revenue. You can con-tinue the projections through to the end of theloan term, but only the first 10 years are shown inthis example. The numbers on the chart belowhave been rounded to thousands of dollars.)

After the project is complete and begins to gener-ate revenue and attract new aircraft to your air-port, thereby increasing fuel sales, you will see

REVENUE YR 0 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10Fuel 480 530 547 563 580 597 615 634 653 672 691Hangar rent 450 549 565 582 600 618 636 655 675 695 715Other rent 110 113 116 119 122 126 130 134 138 142 146Property tax 45 50 51 53 54 56 58 59 61 63 65Other 60 62 64 66 68 70 72 74 76 79 82SUBTOTAL 1145 1329 1345 1386 1428 1472 1517 1563 1611 1660 1709

EXPENSESSalaries/benefits 32 33 34 35 36 37 38 39 40 42 43Fuel purchase 370 398 409 422 435 447 461 475 489 504 519Utilities 57 71 73 75 78 80 82 85 87 90 93Other exp 162 167 172 177 182 188 193 199 205 211 217Overhead 86 89 91 94 97 100 103 106 109 113 117Other exp 11 11 12 12 12 13 13 14 14 15 16SUBTOTAL 718 769 791 805 840 865 890 918 944 965 1005

OTHERLoan principle 82 84 86 88 90 92 94 96 98 100 102Loan interest 355 353 351 349 347 345 343 341 339 337 335New loan principle 20 21 22 23 24 25 26 27 28 29New loan interest 86 85 84 83 82 81 80 79 78 77SUBTOTAL 437 543 543 543 543 543 543 543 543 543 543

TOTAL (10) 17 11 38 45 64 84 102 124 152 161


A P P E N D I X I I I

I S Y O U R B U S I N E S S C A S EC O M P E L L I N G ?

For your project to be successful it must be com-pelling to the key decision makers and stake-holders. There are four key phases to create andintegrate a compelling business case for yourhangar project.

Phase One: Develop the business casePhase Two: Check with stakeholders to ensure

the business case is compelling Phase Three: Develop a basic presentationPhase Four: Feed the business case into

your communications plan

Depending on the requirements of your projectand the demands of decision makers and keystakeholders, you might not need to go throughall of this detail. However, it is beneficial to gothrough these phases to ensure the project will besuccessful even when faced with resistance.

Phase One:Develop the business case

Review the questions listed in Phase One andbrainstorm other questions that will capture thefive aspects of a compelling business case. It isimportant to document the business case, evenparts that seem obvious, because it gives everyonethe same point of reference for communication.

Parts of a Compelling Business Case Questions to Ask to Develop Each Part of the Business Case

PART ONE:Description of the project ■ What is the current situation?

Describe what will be targeted in the project.■ What is currently going well that can be built on?■ What has been done to confirm the need for new hangars?■ Who authorized/initiated the project?

PART TWO:Description of the project importance ■ Why are the hangars needed?

■ What is the motivation of airport users for new hangars? Do they perceive:• An opportunity – a situation leading to future success?• A need – a current shortage of hangar space?• A discomfort – an existing problem requiring a solution?• Pain – a severe problem requiring immediate response?

■ What situation demonstrated the current need?

PART THREE:Description of benefits of the new hangars ■ How will stakeholders benefit in the short run?

■ How will stakeholders benefit in the long run?■ How will the airport, local community and owner benefit in the

short/long run?■ What are the consequences of not doing the project?■ What resources will be available to complete the project?


PhaseTwo:Check with stakeholders to ensurebusiness case is compel l ing

In Phase Two, evaluate how compelling thebusiness case is to key stakeholders. Reviewthese questions, and check your business caseagainst them.

Parts of a Compelling Business Case Questions to Ask to Develop Each Part of the Business Case

PART FOUR:Description of the costs associated with ■ What will it cost in terms of money, time, and effort?the project ■ How will stakeholders be impacted by these costs?

■ What is the cost/benefit analysis (project proforma)?

PART FIVE:Measures for success ■ How will success be measured? What is the monitoring system?

■ What does success look like?■ How will stakeholders recognize success?

The Stakeholder will ask: The Stakeholder really wants to know:

PART ONE:What does the project look like? ■ Is the project going to impact my business or daily work?

PART TWO:Why is this project important? ■ What’s in it for me?

■ Who cares?■ So what?■ Is it going to negatively impact me?

PART THREE:Is it good for business? ■ How will the project help my business?

■ How will the project make my job easier/harder?■ How will the project make me look good/bad?

PART FOUR:What will this cost me? ■ How will the project impact my budget, people, and time?

■ What do I have to give up if the project goes forward?■ What additional workload will I have?

PART FIVE:When will this be successful? ■ How do I know I’m done with this and can go back to my “real work?”

■ How will I know there is a positive impact on my business?


Phase Three:Develop a basic presentat ion

Once the business case has been drafted intoyour plan and checked with a sample of stake-holders, develop a presentation that can be usedfor communication about the project. For exam-ple, Microsoft PowerPoint can be a helpful toolto organize and deliver your presentation. Adjustthe format to match the audience to which youare speaking.

Phase Four:Feed the business case into your communicat ion plan

Be sure that the communication plan you havedeveloped to gain the support of key stakeholdersincludes a discussion of the business case. Also,keep in mind that the business case will changeas the project progresses. Revisit the businesscase frequently as conditions and situationschange, such as project cost increases.

AOPA Airport Support Network Frederick, Maryland 21701 • 301-695-2200 • [email protected]

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