Jan.

2018
Analysis of Capital Expenditure
on Expansion of Bangalore
International Airport (Terminal
Building, Taxiway and Apron)
for the second control period
(01/04/2016 to 31/03/2021)
Evaluation Report

RITES LIMITED
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

OM SRI GANESHAYA NAMAH

_____________________________________________________________________________________________
Jan 2018 Page | 1
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

Contents
1. INTRODUCTION ............................................................................................................................... 7
1.1. Background ........................................................................................................................................... 7
1.2. Scope of Services................................................................................................................................... 8
1.3. The Study Team .................................................................................................................................... 8
1.4. Data Collection ...................................................................................................................................... 9
1.5. Report ................................................................................................................................................... 9
2. PROPOSAL BY BIAL ........................................................................................................................ 10
2.1. Expansion Proposal ............................................................................................................................. 10
2.2. Capital Cost Proposal .......................................................................................................................... 10
3. TRAFFIC REVIEW............................................................................................................................ 13
3.1. Project Information File ...................................................................................................................... 13
3.2. Air Traffic Forecast by Landrum & Brown ........................................................................................... 13
4. GOVERNING PARAMETERS............................................................................................................ 16
4.1. Report of the Inter-Ministerial Group (IMG) on Norms & Standards for Capacity of Airport Terminals
(2009) .................................................................................................................................................. 16
4.2. AERA Order No. 07/2016-17 ............................................................................................................... 17
5. EVALUATION OF THE PROPOSAL ................................................................................................... 21
5.1. Capacity Constraints ........................................................................................................................... 21
5.1.1. New Runway and Taxiways ......................................................................................................... 21
5.1.2. New Terminal Building (T2) and associated landside infrastructure .......................................... 22
5.1.3. Expansion of Apron ..................................................................................................................... 25
5.1.4. Expansion of the Main Access Road ........................................................................................... 25
5.2. The Capital Cost Proposal ................................................................................................................... 26
5.2.1. General ........................................................................................................................................ 26
5.2.2. New South Airfield Development works ..................................................................................... 27
5.2.3. T2 Apron – Phase I ...................................................................................................................... 27
5.2.4. Second Terminal – Phase I .......................................................................................................... 27
5.2.5. Forecourt roadways & landside development – Phase I ............................................................ 28
5.2.6. Existing Runways/Taxiway Improvements.................................................................................. 28
5.2.7. Other works ................................................................................................................................ 28
5.2.8. Other Costs ................................................................................................................................. 29
5.2.8.1. Design Engineering & PMC Fee @ 10%................................................................................... 29
5.2.8.2. Contingencies .......................................................................................................................... 31
5.2.8.3. Preoperative Cost @ 5% ......................................................................................................... 32

_____________________________________________________________________________________________
Jan 2018 Page | 2
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

5.2.8.4. Provisional Sum: ...................................................................................................................... 32

5.2.8.5. Interest during construction ................................................................................................... 32
5.3. Comparison of Basic Cost .................................................................................................................... 32
5.4. Construction Schedule ........................................................................................................................ 37
6. FINDINGS ...................................................................................................................................... 38

_____________________________________________________________________________________________
Jan 2018 Page | 3
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

List of Tables OF TA

Table 1 RITES team for the assignment ........................................................................................................ 8

Table 2 Proposed Total Capital cost for expansion ..................................................................................... 10
Table 3 Comparison of Forecast versus Actual passenger.......................................................................... 14
Table 4 Comparison of Forecast versus Actual Aircraft movements .......................................................... 15
Table 5 Ratio based Peak Hour Traffic for estimation ................................................................................ 16
Table 6 Area Norms for type of airports ..................................................................................................... 17
Table 7 Peak hour passengers for Domestic, International/enplaned and deplaned ................................ 23
Table 8 Comparison of Peak-Hour Projections of L&B Studies and current proposal ................................ 23
Table 9 Comparison of Terminal areas for Existing & Proposed Terminal ................................................. 24
Table 10 Area requirement as per IMG norms ........................................................................................... 24
Table 11 Peak Traffic for Arriving and departing passengers and Employees ............................................ 25
Table 12 Total Cost of pavement works heads ........................................................................................... 28
Table 13 Major AAI airports Terminal building Design & PMC details ....................................................... 30
Table 14 Average Cost of Pavement Works for Aircraft Movement area .................................................. 32
Table 15 Comparison of Cochin and Bangalore Terminal Buildings ........................................................... 33
Table 16 Comparison of Cost of Cochin and Other Terminal Buildings ...................................................... 35
Table 17 Details of Total capital cost recommended ................................................................................. 38

_____________________________________________________________________________________________
Jan 2018 Page | 4
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

List of Figures

Figure 1 Cost distribution of Capital Expenditure (Base Cost) .................................................................... 11

Figure 2 Comparison of ATMs forecast in 2010 and 2013 .......................................................................... 14
Figure 3 Total ATM Forecast Comparison with 2010 forecast.................................................................... 15
Figure 4 ATM Growth Chart ........................................................................................................................ 21
Figure 5 Passenger Traffic Growth Chart .................................................................................................... 22

_____________________________________________________________________________________________
Jan 2018 Page | 5
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

Abbreviations

AERA Airports Economic Regulatory Authority of India

AAI Airports Authority of India
ATM Air Traffic Movement
GoI Government of India
BIAL Bangalore International Airport Limited
IMG Inter-Ministerial Group
IATA International Air Transport Association
ICAO International Civil Aviation Organization
IRA Independent Regulatory Authority
LOS Level of Service
MARS Multiple Aircraft Ramp System
MoCA Ministry of Civil Aviation
MPPA/mppa Million Passenger per Annum
Mn million
MYTP Multi-Year Tariff Proposal
PPP Public Private Participation
PHP Peak Hour Passenger
TRB Transport Research Board
UDF User Development Fee
WPI Whole sale price Index

_____________________________________________________________________________________________
Jan 2018 Page | 6
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

1. INTRODUCTION
1.1. Background

Development of new greenfield international airport at Bangalore through PPP was awarded to
Bangalore International Airport Limited (BIAL) and the concession agreement was signed between
BIAL and the Ministry of Civil Aviation (MoCA) on 05 th July 2004.

At the time of Financial closure and commencement of construction, the Initial Phase of the
Bengaluru International Airport (renamed as Kempe Gowda International Airport on 17th July
2013) was designed for handling about 4.5 million passengers per annum and the project cost was
Rs. 1411.79 crore. However, owing to significant increase in aviation traffic, BIAL redesigned the
initial phase midway through the implementation of the project, increasing the capacity of the
Airport to 11.4 million passengers per annum and the project cost to Rs. 1930.29 crore, so that the
Airport, at the Airport Opening Date (AOD), had the requisite capacity to handle the aviation traffic
at the required/ prescribed service levels. The entire additional cost was met by increase in debt
from lenders. Subsequently, certain project extension works were taken up with supplemental
expenditure budget of Rs. 540 crores (which was funded partly by raising additional equity from
the shareholders and partly by further additional debt from lenders) taking the total project budget
to Rs. 2470.29 crores. The airport commenced the operations on 24th May 2008.

Salient features of the concession agreement relevant to this report are highlighted below:

Nature of Agreement - Concession agreement for Development, Construction, Operation and

Maintenance of Bangalore International Airport between Ministry of Civil Aviation - Government of
India and Bangalore International Airport Limited

Concession

GoI grants BIAL the exclusive right and privilege to carry out the development, design, financing,
construction, commissioning, maintenance, operation and management of the Airport (excluding
the right to carry out the Reserved Activities and to provide communication and navigation
surveillance / air traffic management services which are required to be provided by AAI)

Scope of the Project: Development and Construction of the Airport on the site in accordance with
the provisions of the agreement, Operation and maintenance of the airport and performance of
the Airport Activities and Non-Airport Activities in accordance with the provisions of the
agreement, performance and fulfilment of all obligations of BIAL in accordance with the provisions
of the agreement

 Fee: BIAL shall, in consideration for the grant by GoI of the Concession pursuant to Article 3.1, pay
to GoI a fee amounting to four per cent (4%) of Gross Revenue annually on the terms specified.

Charges: The Airport Charges specified in Schedule 6 (Regulated Charges) shall be consistent with
ICAO (International Civil Aviation Organization) Policies. The Regulated charges set out in Schedule
6 shall be indicative charges. Prior to Airport Opening BIAL shall seek approval from the Ministry of
Civil Aviation for the Regulated Charges, which shall be based on the final audited project cost.
From the date the Independent Regulatory Authority (IRA) has the power to approve the Regulated
Charges, BIAL shall be required to obtain approval thereof from the IRA.

Term:30 years
_____________________________________________________________________________________________
Jan 2018 Page | 7
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

The shareholding pattern of Bangalore International Airport Limited as on date is as under:

Fairfax India - 48%

Siemens - 26%
Airports Authority of India - 13%
Government of Karnataka - 13%

1.2. Scope of Services

There is a proposal for Expansion of the airport including development new parallel runway,
taxiway, apron, new Terminal Building, forecourt, access road, multi-level car park etc. at Bangalore
International Airport. The project consists of Civil, Electrical, Equipment, Air-Conditioning etc. BIAL
has submitted their capital cost proposal amounting to Rs. 12,170 Crores to AERA for the second
control period (01/04/2016 to 31/03/2021). AERA has appointed RITES vide letter dt. 14 th August
2017 to examine the same.

The scope of services assigned to RITES include

a) To examine the proposal of the airport and assess the need for the proposed project and
its capacity/scope with reference to Passenger growth/Cargo Volumes/Air Traffic
Movement and also to suggest cost effective alternatives
b) To examine the building standards and designs proposed by the airport operator in line
with IMG norms/IATA/ICAO norms
c) To analyze the reasonableness of the proposed cost with reference to the tentative ceiling
decided by Authority vide order no. 7 dated 13/06/2016 based on the details of the rates
and quantity as per government/industry approved norms and advise the Authority on the
reasonableness of the costs
d) To review designs and specifications proposed in case the costs are assessed to be
excessive where the Projects are already in progress or the contracts are already awarded.
Further to examine whether proper procedures have been followed in the award of the
work
e) To assist AERA in case any litigation arises in future in connection with the reasonableness
of the cost estimates
f) To review and justify the reasonableness of time schedule of completion of work of
proposed by BIAL
g) To perform any other duties as may be deemed necessary and specified in the award letter

1.3. The Study Team

The following team has been formed by RITES to undertake the assignment:
Table 1 RITES team for the assignment

SN Name Designation
1. Mr.Pawan Chowdhry Group General Manager/Airports
2. Mr.N.S.Rawat Jt.General Manager/Airports
3. Mr.N.Ganesh Babu Jt.General Manager/Airports
4. Mr.Abhas Kumar Sr.Dy.General Manager/Airports
5. Mr.V.S.Solanki Sr.Dy.General Manager/Airports

_____________________________________________________________________________________________
Jan 2018 Page | 8
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

SN Name Designation
6. Mr.Vivek Kumar Assistant Manager/Airports
7. Mr.Saurabh Pareek Assistant Manager/Airports

1.4. Data Collection

The following data has been collected and studied:

 Airport Expansion & Capex Proposal submitted by Bangalore International Airport Limited
vide Detailed Project Report (Revision: R-6 dt. 26.05.2017) and Block Cost Estimate Report
(Revision: R-5 dt. 23.05.2017)
 Airfield Schematic Design Cost Report – NSPR Earthworks (Package 1) submitted by BIAL
vide Ref. AERA/Finance/2017-18/06 dt. 19th June 2017
 Note on BIAL Airfield development cost submitted by BIAL vide Ref. No.:
AERA/Finance/2016-17/03 DT. 22 nd November 2016
 Concession Agreement for the Development, Construction, Operation and Maintenance of
the Bangalore International Airport between Ministry of Civil Aviation, Government of India
and Bangalore International Airport Limited dt.05th July 2004 and amendment dated 20th
Nov. 2006.
 Order No. 07/2016-17 dt. 13th June 2016 issued by AERA in the matter of Normative
Approach to Building Blocks in Economic Regulation of Major Airports – Capital Costs Reg.
 Clarifications provided BIAL in response to RITES queries

1.5. Report

Based on the study of data provided by BIAL during field visit to Bangalore, this draft report was
prepared and submitted to AERA on 09/10/2017, followed by a power point presentation on
17/10/2017. As advised by AERA, the findings were also discussed with BIAL on 24/10/17. BIAL
submitted clarifications on various issues raised by RITES vide email on 31/10/2017. The same are
enclosed at Appendix– 1 to this report.

This report sets out the findings by RITES of the need for expansion of existing infrastructure and
capital cost thereof at Bangalore International Airport on behalf of the AERA. This exercise is
undertaken to assist AERA in assessment of capital expenditure and determination of UDF thereof.
It is important to note that the findings and outputs are provisional and that the capacity analysis is
subject to consultation and refinement.

The remainder of this report is structured as follows. Section Two describes briefly the proposal
submitted by BIAL; Section Three analysis of the Air Traffic; Section Four the governing parameters;
Section Five the Evaluation of the proposal and Section Six the Findings.

_____________________________________________________________________________________________
Jan 2018 Page | 9
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

2. PROPOSAL BY BIAL
2.1. Expansion Proposal

The submission made by BIAL has been forwarded to RITES by AERA. The major components of the
proposed capital expenses include the following heads:

 Project 1 - Airfield Development (Target date of completion – Sep. 2019)

o New South Airfield Development works
o Rescue and Fire Fighting
o Aircraft Maintenance & Airport Maintenance
 Project 2 – Terminal T2 and Associated projects (Target date of completion – March
2021)
o T2 Apron – Phase 1
o Second Terminal – Phase 1
o Forecourt roadways & Landside development – Phase I
o Fuel storage & distribution – Phase I
o Airport & Airlines Administration offices
o Utilities
 Project 3 – Existing airfield upgradation (Target date of completion – March 2022)
o Existing Runways/Taxiway Improvements

2.2. Capital Cost Proposal

As per the initial proposal submitted by BIAL, the total capital cost for expansion of the airport
during the second control period is estimated by BIAL at Rs. 12,170 Crores inclusive of design
engineering, supervision, contingencies, pre-operative costs and interest during construction
as per the break up given below in Table-2.
Table 2 Proposed Total Capital cost for expansion

SN Description Est. Cost Rs.

Crore
A 1 New South Airfield Development Works (including Site preparation 2,304
& Earthworks)
2 T2 Apron – Phase 1 678
3 Second Terminal – Phase 1 3,174
4 Forecourt roadways & landside development – Phase 1 1,256
5 Aircraft maintenance & Airport maintenance 132
6 Rescue & Fire Fighting 10
7 Fuel storage & distribution – Phase 1 1
8 Airport & Airlines Administration offices 57
9 Utilities – Phase 1 98
Existing Runways/Taxiway Improvements 320
Sub-Total - A 8,029
B 1 Design Engineering & PMC fee @ 10% 803
2 Contingencies @ 10% 803
Sub-total - B 1606
C Total (A + B) 9,635
_____________________________________________________________________________________________
Jan 2018 Page | 10
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

SN Description Est. Cost Rs.

Crore
D Capital Cost – Soft Cost
Preoperative cost @ 5% on Á 401
Interest during Construction (IEDC) 2134
Sub-Total -D 2535
Total Cost (C+D) 12170

The distribution of the base cost is depicted as shown in the Figure-1 below and the
contribution of various infrastructures to the total cost has been noted as given below:

Passenger Terminal (Second Terminal) – Phase 1 - 39%

Development of new south airfield development works - 29%

Forecourt roadways & landside development - 16%

T2 Apron - 8%

Improvement to Existing runway/Taxiways - 4%

Other works - 4%

Cost Distribution of Capital Expenditure

(Base Cost)
1%
2% 1%
New South Airfield Development
4% Works (including Site preparation &
Earthworks)
T2 Apron – Phase 1
16% 29%

Second Terminal – Phase 1

8%
Forecourt roadways & landside
development – Phase 1
39%

Aircraft maintenance & Airport

maintenance

Airport & Airlines Administration

offices

Figure 1 Cost distribution of Capital Expenditure (Base Cost)

_____________________________________________________________________________________________
Jan 2018 Page | 11
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

BIAL vide submitting clarifications on various queries raised by RITES, has revised the hard cost
to Rs. 8,366 Crores as against the initial submission of Rs. 8,029 Crores, as given at Annexure 6
to Appendix – 1. Further, vide additional submissions BIAL has revised the soft cost to Rs.
1,441 Crores as against the initial estimate of Rs. 2,007 Crores (excluding Interest during
construction). The same is deliberated in the subsequent sections of this report.

_____________________________________________________________________________________________
Jan 2018 Page | 12
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

3. TRAFFIC REVIEW
3.1. Project Information File

In the Detailed Project Report (Rev.: R-6 Dt. 26/05/2017) submitted by BIAL, the following
has been stated regarding the existing capacities and the need for expansion.

 The passenger traffic at KIA has increased from 10.1 MPPA in 2008 to 22.8 MPPA in
2016-17.
 The existing runway is designed for Code E aircraft with 4000 m in length and 45 m
width. The runway is connected by a full length parallel taxiway complying with
Code E, along with three Rapid Exit Taxiways and one perpendicular link taxiway.
 Existing airfield handles approximately 34 aircraft movements in peak hours.
 Existing apron has an area of approximately 58 Ha, with capacity of 68 Code C –
Convertible MARS stands, permitting one Code E aircraft to occupy two Code C
stands. There are currently 15 Code C contact stands, which can also be used as 7
Code E contact stands. A separate cargo apron is provided for 7 narrow-body aircraft
(Code ‘C’) or 4 wide body aircraft (Code ‘E’ or below) stands.
 Existing passenger Terminal 1 was commenced in the year 2008 with a capacity of
11.40 MPPA, expanded in 2014 to accommodate the passenger traffic up to 20
MPPA. Airport presently has passenger capacity of 20 MPPA. The total built up area
for T1 is 1,58,500 sqm. With minor modifications, the existing building can handle up
to 26.5 MPPA.
 The existing Main Access Road is 5.5 km long with two lane dual carriageway and the
right of way available is 60 m.
 The kerbside provide 300 m long drop-off kerb and 300 m long pick-up kerb in 2
lanes.
 The objective of proposed KIAB airport development is to cater to 55 million annual
passengers and 1 million metric tonnage of cargo by 2031-32.

3.2. Air Traffic Forecast by Landrum & Brown

 BIAL entrusted M/s Landrum & Brown to develop Air Traffic Forecast in the year
2010.
 The traffic forecast was reviewed and updated in February 2013

Passengers

The comparison of passenger forecast as given in 2010 and 2013 reports is as shown in
the figure given below.

_____________________________________________________________________________________________
Jan 2018 Page | 13
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

Figure 2 Comparison of ATMs forecast in 2010 and 2013

 In the year ending March 2017, the actual traffic handled by Bangalore International
Airport stood at 22.88 million including 3.59 million international passengers and
19.28 million domestic passengers. The comparison of the forecast versus actual is
as given below in Table-3:
Table 3 Comparison of Forecast versus Actual passenger

Passenger Forecast as Forecast as Actual (2017) Deviation

Traffic handled per 2010 per 2013 from
2016-17 report report 2013
forecast
Domestic pax 16,804,900 14,313,400 19,281,966 34.71%
International 4,507,900 3,631,200 3,599,426 -0.87%
Pax
Total 21,312,800 17,944,600 22,881,392 27.51%

 It can be seen that there is unprecedented growth witnessed in the domestic

passenger movement while the international passenger growth is subdued.

Aircraft Movement

The comparison of ATM forecast as given in 2010 and 2013 reports is as shown in
the Figure-3 given below.

_____________________________________________________________________________________________
Jan 2018 Page | 14
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

Figure 3 Total ATM Forecast Comparison with 2010 forecast

 In the year ending March 2017, the actual traffic handled by Bangalore International
Airport stood at 177,271 including 24,022 international aircraft movements and
153,249 domestic movements. The comparison of the forecast versus actual is as
given below in Table-4:
Table 4 Comparison of Forecast versus Actual Aircraft movements

Aircraft Forecast as Forecast as Actual (2017) Deviation

Movement per 2010 per 2013 from 2013
handled 2016-17 report report forecast
Domestic 179,050 131,650 153,249 16.4%
International 26,790 21,680 24,022 10.8%
Total 205,840 153,330 177,271 15.61%

It can be seen that there is considerable growth in the overall aircraft movement.

It can be seen from the above that the overall air traffic growth has surpassed the
traffic forecast made in 2013 and there is a need for expansion of the facilities to
match with the growing demand.

_____________________________________________________________________________________________
Jan 2018 Page | 15
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

4. GOVERNING PARAMETERS

4.1. Report of the Inter-Ministerial Group (IMG) on Norms & Standards for Capacity of
Airport Terminals (2009)

IMG has deliberated in detail on various key issues and made following recommendations:

A Growth Rate for Traffic Projections

Keeping in view the trend in air traffic in last few years, a span of five years be adopted for
the projects planned during the current five-year plan period, i.e., up to 2011-12. Thereafter,
as the growth rate stabilizes, the span for making projections should be increased to 7 years
for a more realistic assessment.

B Target year for Capacity Creation (Design Year)

Following norms could be adopted for capacity creation:

- Smaller airports (< 5.0 mppa) – 10th year from Planning year.

- Bigger airports (> 5.0 mppa) – 7th year from Planning year.

C Peak Hour Projections

Methodology given in ICAO Manual on Air Traffic Forecasting by finding ratios from historical
data and recent studies be adopted. As per ICAO Manual, forecasts of peak period
passengers are to be obtained from annual forecasts by applying ratios of busy period traffic
to annual traffic derived from actual data at various airports.

Actual data for the past five years should be analyzed to determine the Peak Hour Traffic
and the trend growth thereof. Projections for the Design Year should be made based on the
trend growth in the past. AAI should make arrangements for data collection of Peak Hour
Traffic in respect of all non-metro Airports, so that same is available at the time of planning
expansion of these Airports.

In absence of actual data, the Peak Hour Traffic may be estimated based on ratios given in
Table-5 below.
Table 5 Ratio based Peak Hour Traffic for estimation

SL. Traffic (in mppa) Ratio for International Ratios for Domestic
No Terminal Terminal
PH/PD PH/PD
1 1.0 - 5.0 0.30000 0.250000
2 0.5 – 1.0 0.3500 0.3500
3 Less than 0.5 0.4500 0.4500

In the event that requisite data is not available for airports with traffic above 5 million
passengers per annum, the above ratio-based norms may be considered in the interim.

_____________________________________________________________________________________________
Jan 2018 Page | 16
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

D Level of Services in Target Year

Level of Services ‘C’ as per IATA Airport Development Reference Manual (Jan 2004) denotes
good service at a reasonable cost. Therefore, this level could be used for design for target
demand in the design year. The unit area specified in paragraph E below represents Level of
Service ‘C’. Net impact of this norm would be that in the initial years, the passengers may
experience LOS ‘A’ or ‘B’ and as the traffic increases LOS ‘C’ would be achieved.

E Unit Area Norms

Overall space/area norm should be such as to provide a reasonable level of service for all
components required in a Terminal Building. Commercial or Retail area providing amenities
like food & beverages, book shops, counters for car rental, vending machines, public rest
rooms etc., normally require 8-12 percent of the overall area, and should be planned and
provided accordingly. In bigger airports, i.e., with annual passenger traffic exceeding 10
million, commercial area could be up to 20 per cent of overall area. Keeping in view the IATA
norms and discussion above, the norms as given in Table- 6, are considered appropriate for
Indian Airports.
Table 6 Area Norms for type of airports

SL. No Nature of Terminal Area Norm –

Sqm/php
1 Domestic Terminals
a) Traffic up to 100 php 12
b) Traffic between 100 -150 php 15
c) Traffic between 150 – 1000 php 18
d) Traffic above 1000 php 20
2 Integrated terminal for handling both domestic and international 25
3 International Terminals 27.5

F Unit Cost of Construction

IMG recommended that the Appraisal Committee should specify the ceiling unit cost and the
architects/engineers of AAI should plan and implement the project within the ceiling, subject
to revision on account of increase in WPI.

G Airports developed through Public Private Partnerships

In the case of airports developed through Public Private Partnerships, the project authorities
may adopt a case by case approach with respect to norms relating to unit area and unit
costs. Based on the judicious consideration of international best practices and financial
viability, the norms may be specified in each case prior to inviting bids for private
participation.

4.2. AERA Order No. 07/2016-17

In the matter of Normative Approach to Building blocks in economic regulation of major

airports – Capital Costs, AERA Vide Order No. 07/2016-17 issued orders as given below:

_____________________________________________________________________________________________
Jan 2018 Page | 17
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

i) Pending finalization of a norm in this regard after going through a more rigorous
process, the tentative ceiling cost of Rs.65,000/- per sqm of the terminal building
and Rs.4,700 per sqm for the Runway/taxiway/Apron (excluding earthwork up to
sub grade level) is approved as a reasonable benchmark for evaluating capital costs
to be incurred by Airport Operators of major airports for the purpose of tariff
determination on a tentative basis.

ii) The airport operators are advised to relook at the costs proposed in their
submissions and justify the increase, if any, over and above the ceiling rates as
indicated above.

iii) The Airport operators are expected to evaluate the costs in adoption of various
alternatives finishes and the corresponding benefits that accrue to users in case of
adoption of such alternative higher specifications.

iv) In case the rates are higher than the ceiling rate approved by the Authority, the
justifications, so submitted by the airport operators on actual incurrence of the cost
shall be examined by a duly constituted Committee of experts to be constituted by
Authority and based on their recommendations the final costs will be adopted.

v) These ceiling rates shall apply only in case of new projects where the works are yet
to be awarded. In case of awarded projects, the capital costs will need to be
examined by the committee approved for the purpose.

While arriving at Rs. 65,000/sqm for the terminal building and Rs. 4,700 per sqm for the
runway/taxiway/apron, the cost of construction at Cochin International Airport has been
taken as bench mark as given below:

_____________________________________________________________________________________________
Jan 2018 Page | 18
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

_____________________________________________________________________________________________
Jan 2018 Page | 19
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

_____________________________________________________________________________________________
Jan 2018 Page | 20
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

5. EVALUATION OF THE PROPOSAL

5.1. Capacity Constraints

5.1.1. New Runway and Taxiways

BIAL has proposed development of New South Parallel Runway (Code-F compliant) along
with one full length and one part-parallel taxiways, 4 rapid exit taxiways, 6 link taxiways and
cross field taxiways.

As per the traffic projections (2013) submitted by BIAL, the total Air Traffic Movement is
expected to reach 229,860 by the year 2021 (end of the 2nd control year period)
achievement of which is most likely as shown in the Figure-4 given below.

ATM Growth
250,000 50.00%

200,000 40.00%

30.00%
150,000
20.00%
100,000
10.00%

50,000
0.00%

0 -10.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

ATMs Growth Rate Expon. (ATMs) Linear (ATMs)

Figure 4 ATM Growth Chart

As per ICAO planning manual, the annual capacity of a single runway airport configuration
could exceed 195,000 operations with suitable taxiway, apron and ATC facilities. In the year
ending March 2017, the airport handled 177,271 aircraft movements. The airport is
anticipated to handle 229,860 aircraft movements in the year 2021. The existing facilities
will be just adequate to handle the projected traffic up to the year 2021. However, to cater
to the future requirement for the next 5 years i.e. 2026, development of a new runway as
proposed by BIAL would be necessary. As per IMG norms, the target year for capacity
creation in the case of bigger airports (>5 mppa) could be 7th year from Planning year.

BIAL has proposed to develop the new south parallel runway with one full length parallel
taxiway and one-part parallel taxiway along with rapid exit/ perpendicular exit taxiways. The
proposed facilities will augment the ATM capacities to more than double the existing level.

The existing runway is provided with a single runway and one full length parallel taxiway
with 3 rapid exit taxiways and 3 perpendicular exit taxiways and handled 1,77,271 aircraft
movements. As per traffic forecast report 2013, the total aircraft movement corresponding
to 45 million total annual passengers is estimated to be 420,540 in the year 2028-29.

_____________________________________________________________________________________________
Jan 2018 Page | 21
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

The proposed new parallel runway along with associated taxiways is considered essential to
augment the ATM capacities.

BIAL has proposed 4 Rapid Exit Taxiways and 6 perpendicular exit taxiways to the proposed
south parallel runway in order to achieve runway occupancy time of 50 seconds to handle a
peak hour ATM of 45 in segregated operations in the year 2025-26 and also keeping into
consideration the closure of the existing runway for maintenance or emergency.

The requirement of peak hour ATM of 45 for each runway is projected to occur in the year
2025-26 which may be delayed due to increase in the passenger load factor. The
development of taxiways H2, H5, H6 and H9 can be deferred to next control year period and
the area thus can be reduced by 53,000 sqm appx. However, any expansion work near to an
operational runway would require closure of runway and disruption of services for some
time. Further, the cost of construction may also shoot up due to restricted working and
escalation of prices. Hence, the proposal by BIAL for construction of the additional taxiways
can be considered.

5.1.2. New Terminal Building (T2) and associated landside infrastructure

BIAL vide its submissions has proposed construction of new terminal building T2 to handle
the overall demand of 45 million passengers with additional capacity of 25 million
passengers over the existing planned capacity of 20 million passengers of Terminal 1.

As per the traffic projections submitted by BIAL, the airport is anticipated to handle 32
million passengers per annum by 2021. (end of control year period 2016-2021). Based on
the trend line projections, the annual passenger traffic is expected to reach between 28-30
million by the year 2021 as can be seen from the Figure-5 given below.

Passenger traffic Growth

35,000,000 50.00%
30,000,000 y = 1E+07e0.0833x 40.00%
25,000,000
y = 1.62E+06x + 7.24E+06 30.00%
20,000,000
20.00%
15,000,000
10.00%
10,000,000
5,000,000 0.00%

0 -10.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Pax Growth Rate Expon. (Pax) Linear (Pax)

Figure 5 Passenger Traffic Growth Chart

It can be seen that the existing capacity of 20 million of the Terminal building will be
inadequate to cater to the traffic and therefore expansion of terminal capacities is essential.
BIAL has proposed development of Terminal 2 covering an area of 2,55,000 sqm to meet
additional capacity of 25 million passengers with overall capacity of 45 million, which will

_____________________________________________________________________________________________
Jan 2018 Page | 22
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

be adequate to meet the traffic forecast up to the year 2025-26 if the traffic growth
follows the 2010 forecast and 2027-28, i.e. beyond of next control year period as per 2013
forecast.

The existing terminal building built in the year 2008 and expanded in the year 2014 is spread
over an area of 1,58,500 sqm and planned to handle a capacity of 20 million passenger per
annum. The building is presently handling appx. 23 million passengers. As per the concession
agreement dt. July 2004, initially the building was planned to cater 2017 total passengers in
the peak hour with a floor area of 55,000 sqm and later as per amendment dt. Nov.2006,
planned for 2733 passengers with floor area of 71,000 sqm.

The new terminal building proposed by the BIAL (T2), after commissioning would cater to all
the international traffic and the surplus of domestic traffic from terminal 1 (T1), whilst the
Terminal 1 (T1) would act as a dedicated facility for domestic traffic. As per the current
scenario the existing domestic traffic is nearly 17 Mppa which is more in line with 2010
projections and it is likely to reach the 24 Mppa mark by 2020-21.

The additional area now proposed is 2,55,000 sqm to handle additional 25 million
passengers per annum. The design hour passengers, calculated by BIAL based on historic
ratios of peak-hour passengers with peak month average day at KIAB is as given below in
Table-7:
Table 7 Peak hour passengers for Domestic, International/enplaned and deplaned

Passengers Peak-hour
Domestic enplaned 2990
Domestic deplaned 2610
International enplaned 2640
International deplaned 2240
Combined enplaned 4180
Combined deplaned 3810

A comparison of the peak hour projections as per the earlier forecasts and updated is as
given below:
Table 8 Comparison of Peak-Hour Projections of L&B Studies and current proposal

Year 2010 2013 2016

(Design Year 2025- (Design Year (Figures of Only
26) 2028-29) Terminal 2)
Domestic Arrival 5681 5962 2990*
Domestic Departure 6251 6558 2610*
International Arrival 2386 2364 2640*
International departure 2414 2446 2240*
Airport wide Total Segregated
Peak 16732 17330 19190**
Airport wide Combined Peak 11677 12303 14530
Percent w.r.t 2010 projection 105% 124%
Note: * Data of Terminal 2 Only
** Total Segregated peak of Terminal T1 is 8710 and that of Terminal T2 is 10480

_____________________________________________________________________________________________
Jan 2018 Page | 23
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

It can be seen that there is 25% variation in peak hour passengers between the earlier
forecast and the latest.

While it would be prudent to use the combined peak for optimising the size of the terminal
building from the economy point of view, the individual peaks viz. domestic departure,
arrival and international departure and arrival have been used to work out the process Area
by BIAL. The IMG norms is not explicit in this matter.

The comparison of area of the existing terminal and the proposed terminal is as given below
in Table-9:
Table 9 Comparison of Terminal areas for Existing & Proposed Terminal

Terminal Area provided Planned Appx. Area

Capacity/annum Peak hour provided/peak
pax hour pax.
Terminal 1 1,58,500 sqm 20 million pax. 6000* 26.41 sqm
Terminal 2 Ph1 2,55,000 sqm 25 million pax. 7500* 34 sqm
Terminal 2 Ph1 2,55,000 sqm 25 million pax. 10480# 24.33 sqm
* As per thumb rule indicated in IMG where historic data is not available
# As worked out by BIAL based on historic data

The area requirement as per IMG norms for segregated and integrated domestic and
international peak hour passengers works out as under:
Table 10 Area requirement as per IMG norms

Peak hour pax. IMG norms Area

Domestic (segregated) 5600 20 1,12,000
International (segregated) 4880 27.5 1,34,200
Total (segregated) 2,46,200
Total integrated 10480 25 2,62,000
Area proposed by BIAL 2,55,000

The area of 2,55,000 proposed by BIAL is higher than the area required of 2,46,200 sqm for
segregated terminals. While it is the common perception that the area of the terminal
building could be reduced by integration of domestic and international terminals, it can be
seen that the area worked out based on the norms of 25 sqm/php given by IMG for the
integrated terminal building works out to be more (262,000) than the area required for the
process to be treated segregated (246,200). This is probably due to the reason that while
working out the area norms for integrated terminals, the peak hour of international
passenger might have been considered more.

It may be mentioned that as per the Airport Development Reference Manual – 10th Edition
the definition of ‘Level of Services’ (LOS) has since been revised by IATA from the “C” to
“Optimum”. The proposed new terminal is planned to cater to the international passengers
exclusively till saturation of the existing terminal (exclusively for domestic). As per the
proposal, the split of domestic to international passengers in the proposed terminal will be
approx. 65:35 in the design year. In terms of IMG norms, the area proposed by BIAL is
within the IMG norms of 25 sqm/php for integrated terminal and hence the area proposed
is considered justified.
_____________________________________________________________________________________________
Jan 2018 Page | 24
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

5.1.3. Expansion of Apron

The airport at present has 68 Code C – convertible MARS stands. There are currently 15
Code C contact stands, which can also be used as 7 Code E contact stands. The existing
apron area is 5,80,000 sqm.

To cater to increased traffic demand, 61 additional stands (Narrow Body Equivalent) has
been proposed by BIAL. It has been proposed by BIAL to develop apron for Terminal 2 with 5
Code C, 7 Code E and 2 Code F contact stands and 39 remote stands.

While calculating the stand requirements, BIAL has considered that 90% of the international
passengers and 60% of the domestic passengers will be handled through contact stands and
the remaining through the remote stands.

Apron area of 5,73,000 sqm has been proposed by BIAL for development in Phase -1.

BIAL has further submitted the parking requirement up to 2021 submitted by various airlines
which justifies the expansion plan proposed by BIAL.

5.1.4. Expansion of the Main Access Road

The existing traffic for Terminal 1 in terms of PCUs (Passenger Car units) has been estimated
at 3,564.

This includes Passengers arriving and Departing as well as working Employees. The breakup
for the same has been shown below in Table-11.
Table 11 Peak Traffic for Arriving and departing passengers and Employees

Category Peak Traffic

Terminal 1 Terminal 2 Total
Passengers 2,872 3,619 6,491
Employees 692 835 1,527
Total 3,564 4,453 8,018
Category Peak Traffic
Entry 2,228 2,784 5,012
Exit 1,336 1,669 3,006
Total 3,564 4,453 8,018

The existing facility consists of four lane divided carriageway. The capacity of each lane with
a time headway of 2 sec can be estimated to 1800 Veh/hour/lane. Thus, total capacity for
two lane road works out to be 3600 Veh/hour. However, since this is applicable for exclusive
through lane (with grade separated intersections) and owing to variation in speed and traffic
mix the time headway could vary from 2.5 to 3.5 sec during peak hour, thus reducing the
capacity of the existing approach road to 2400 veh/hour approximately

Capacity = 3600/Time Headway.

Alternatively, assuming 85th percentile speed of 40 kmph and 2 sec response time, space
headway for a single lane between two consecutive vehicles could be estimated to 28.24 m.

Space Headway = 0.278 x Velocity x Reaction Time

_____________________________________________________________________________________________
Jan 2018 Page | 25
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

Thus, total no of vehicles/ lane /km works out to be 35.4, resulting in 1416 veh/hour/lane
and total capacity of 2832 Vehicles per hour (in one direction).

Capacity = Traffic Density x Velocity

Thus, it could be inferred that the existing facility can easily cater for the Peak hour traffic for
the terminal 1. However, when terminal 2 becomes operational an additional traffic of 4453
vehicles will also use the facility during peak hour. This will necessitate the creation of new
facility or widening of the existing approach road.

5.2. The Capital Cost Proposal

5.2.1. General

The capital cost proposal has been prepared by BIAL by adopting the following methodology:

Pavement works

 For working out the cost estimate of airport pavement works, items rates have been
adopted from Delhi Schedule of Rates (DSR) 2014 where applicable or Standard Data
Book for Analysis of Rates published by Ministry of Road Transport & Highways
(MoRTH) using basic material and labour rates as per Delhi Schedule of Rates 2014,
CPWD where available and cost duly adjusted for the Cost Index of Bangalore for the
year June 2014. Further, the rates thus arrived has been enhanced for cost
escalation for the proposed year of construction @ 3.6% per annum.

Building & Civil works

 For working out the cost estimate for building and civil works, CPWD Plinth Area
Rates 2012 has been adopted duly increased for cost index at Bangalore for the year
2014. The rates thus arrived has been enhanced with due provisions for special
finishes and terminal equipment.

Escalation Indexation

 For working out the escalation, indexation has been considered in the Block Cost
Estimate @ 3.6% annual in accordance with the ‘the results of the survey of
professional forecasters on micro-economic indicators’ published by RBI over the
next 10 years.

Design Engineering & PMC Fees

 Design Engineering fee @ 5% and Project Management fee @ 5% has been

considered by BIAL based on CPWD Works Manual. This has subsequently been re-
worked by BIAL.

Contingency

 Contingencies @ 10% has been included in the Cost Estimate. This has subsequently
been re-worked by BIAL.

Pre-Operative Cost

_____________________________________________________________________________________________
Jan 2018 Page | 26
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

 Pre-operative cost @ 5% has been considered towards general administrative

expenditure. This has subsequently been re-worked by BIAL.

5.2.2. New South Airfield Development works

An amount of Rs.2,304 Crores is catered in the proposal for development of new south
airfield development works which includes site preparation, earth works, pavements,
fencing, AGL equipment, CFT, drainage, signages, cabling etc., which constitutes to 29% of
the total basic cost.

Out of this Rs. 2,304 Crores, an amount of Rs. 726.66 Crores has been catered towards site
preparation and earthworks. It was given to understand that this work has already been
awarded by BIAL through open competitive bidding for Rs.547.31 Crores and the works
nearing completion. Hence, the estimated cost gets restricted to actual value of award of
work i.e. Rs. 547.31 Crores.

In the item rates of pavement works, the cost of bitumen is considered as Rs.59,000 per MT
at 2014 level which has considerably come down in the recent times. Bitumen being one of
the major constituents of flexible pavement works, the same has been corrected to
Rs 38,550 per MT as per DSR 16.

Applying the above corrections, the total cost of new south airfield development works
stands revised at Rs. 1,910 Cr.

5.2.3. T2 Apron – Phase I

Apron area of 5,73,000 has been proposed for Terminal 2 for creating 61 additional aircraft
stands. An amount of Rs.678.13 crores is catered in the estimate for apron development
which is approx. 8% of the basic cost.

The rate per sqm proposed for apron has been reviewed for the cost of reinforcement. The
revised cost stands at Rs. 640 Cr.

5.2.4. Second Terminal – Phase I

An area of 255,000 sqm has been proposed for the Second Terminal Phase I for handling
additional capacity of 25 million. A target unit rate of Rs. 100,800 per sqm has been
considered by BIAL in the estimate as against the AERA norms of Rs. 65,000 per sqm. The
total cost has been estimated at Rs. 3173.52 Cr.

The methodology and the rates adopted for arriving at the unit area rate for the terminal
building has been reviewed. BIAL has worked out a rate of Rs. 1,19,724 per sqm but
restricted to Rs. 1,00,800/ sqm. The methodology adopted for arriving at the cost has been
reviewed and found to be in order.

The rates have been reviewed for the cost of steel. The revised cost works out to Rs. 3,077
Cr.

_____________________________________________________________________________________________
Jan 2018 Page | 27
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

5.2.5. Forecourt roadways & landside development – Phase I

An amount of Rs. 1256 Crores is catered in the estimate towards the forecourt roadways &
landside development which includes terminal 2 forecourts, terminal 2 roadway and
kerbside access, terminal 2 multi-level car park, employee parking area, main access
roadway, north secondary access roadway, south secondary access roadway, east site access
roadway, trumpet interchange etc.

The rates have been arrived based on CPWD DSR 14, Plinth area rates. The rates adopted for
steel has been corrected. The total cost stands revised at Rs. 1124.25 Cr.

5.2.6. Existing Runways/Taxiway Improvements

Construction of additional exit taxiways and second parallel taxiways to existing runway has
been proposed at an estimated amount of Rs. 320.48 Cr. The proposal is to improve the
runway capacity and are considered essential in view of the ATM growth witnessed in the
recent years.

The rates have been corrected for the cost of bitumen. The total cost stands revised at Rs.
275 Cr.

5.2.7. Other works

The following amount has been provisioned in the estimate towards other development
works.

Aircraft Maintenance and Airport Maintenance - Rs. 131.66 Cr.

An amount of Rs. 131.66 Crores is catered towards site development, construction of apron
of 24,750 sqm area and workshops and ancillary building construction. The cost after
applying corrections stands revised at Rs. 130 Cr.

Rescue and Fire Fighting - Rs. 9.96 Cr

Fuel Storage and Distribution - Rs. 0.73 Cr

Airport and Airline Admn. Office - Rs. 57.10 Cr

Utilities - Rs. 97.67 Cr

Thus, the base cost of works stands revised as shown in Table-12:

Table 12 Total Cost of pavement works heads

SN Description Estimated Cost Revised Cost

submitted by BIAL Recommended in
in Rs. Crores Rs. Crores
1 New South Airfield Development 2304 1910
Works (including site preparation &
earthworks)
2 T2 Apron -Phase I 678 640
3 Second Terminal – Phase I 3174 3077
4 Forecourt roadways & landside 1256 1124
_____________________________________________________________________________________________
Jan 2018 Page | 28
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

development – Phase I
5 Aircraft Maintenance & Airport 132 130
Maintenance
6 Rescue & Fire Fighting 10 10
7 Fuel storage & distribution – Phase I 1 1
8 Airport & Airlines Administration 57 57
offices
9 Utilities Phase I 98 98
10 Existing Runway/Taxiway 320 275
improvements
Sub-Total 8029 7322

BIAL vide its additional submissions has revised this cost to Rs. 8,366 Crores by
adding Rs. 257 Crores extra towards ICT Equipment/Systems and Rs. 80 Crores
towards site preliminaries/enabling works. It has been observed that in the initial
estimates, the cost of ICT works was not catered by BIAL and during discussions it
was explained by BIAL that the ICT works were initially planned to be catered under
operational expenses through outsourcing. However, BIAL has changed their plans to
implement the ICT works through the works contract under the capital expenditure.
The additional claim of Rs.257 Crores is supported with the list of proposed
equipment. It has been ascertained that the cost of ICT works in the work of
Construction of new terminal building at NSCB International airport, Kolkata
constituted to Rs.197.07 Crores out of the total cost of Rs.2114.48 Crores i.e. approx.
8.9%. The claim by BIAL of Rs. 257 Crores constitutes to approx. 8.35% of Rs.3077
Crores and therefore found to be in order.
Preliminaries are provisional sums catered towards provision of barricading to the
work area, labour camps, dust arresters, traffic management, temporary signages,
temporary roads etc. These sums generally vary between 1% to 5% depending on
the total estimated cost of works. As per the prevalent practices in India, these are
in-built into the unit rates to be quoted by the bidder for various work item s or
measured and paid separately. In the global tenders, the preliminary items are
costed separately. The preliminaries & enabling works @ 1% of the project cost is
considered reasonable.

5.2.8. Other Costs

The capital cost proposal submitted by BIAL comprises the following provisions:

5.2.8.1. Design Engineering & PMC Fee @ 10%

An amount of Rs. 803.00 crores is provisioned in the capital cost proposal @ 10% of the
estimated cost of works towards design engineering @ 5% & PMC @ 5%. BIAL has quoted
CPWD norms for the same. However, it would be appropriate to compare the fee quotes for

_____________________________________________________________________________________________
Jan 2018 Page | 29
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

works of similar nature and magnitude concluded in the recent times for better
appreciation.

BIAL has submitted that details of commitment already made by BIAL for an amount of
Rs.250.00 Crores (appx. 3% of the estimated cost) on account of design consultancy services
and has envisaged another Rs.530.00 Crores (appx. 6.5% of the estimated cost) towards
remaining design and project management works, which included Rs.400 Crores for Project
Management.

BIAL vide their revised submissions dated. 08/01/2018 has revised their claim to Rs. 500
Crores towards design & other consultants as against Rs. 803 crores claimed earlier. It has
been observed that BIAL has deleted the ‘PMC’ under this head but accounted for Rs.180
Crores under the head ‘Pre-operative’ costs towards staff from PMC agency for 4 years.

The quotes received for Design and Project Management consultancy in some of the
recently invited bids by Airports Authority of India for expansion of terminal buildings at
major airports are tabulated as under in Table-13:
Table 13 Major AAI airports Terminal building Design & PMC details

Airport Est. Cost Area Appx. Cost PMC fee including Time
per sqm design and schedule
(Rs. (Sqm) excl.
construction
Crores) basement (Rs.) (deign +
supervision as per
constn.)
Quote received
through open bid on
QCBS

Jaipur 9+36
Airport 1177.74 125000 94,219 3.47% months

Chennai 9+36
Airport 2100 168800 1,24,407 2.79% months

Guwahati 9+36
Airport 913 77500 1,17,806 3.90% months

Trichy 9+36
Airport 764 60723 1,25,817 6.40% months

Lucknow 9+36
Airport 878.25 100000 87,825 6.94% months

There is a need to restraint the cost incurred on design and project management. In
consideration of the similar works taken up by AAI through open competitive bidding, the
fee of 10% considered for design development and supervision by BIAL appears to be on the
higher side.

In consideration of the fee quote tabulated above, a fee of 5% is considered reasonable for
design development and PMC for this magnitude of work.
_____________________________________________________________________________________________
Jan 2018 Page | 30
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

5.2.8.2. Contingencies

A provision of 10% of the estimated cost is catered towards contingencies, amounting to

Rs.803 Crores on account of cost variations due to uncertainties of the quantities, work
elements or other project requirements etc. not identifiable at the time of preparation of
cost estimates. It may be mentioned that the cost proposal submitted by BIAL caters costs
towards escalation in the prices of materials and equipment for the period up to its
implementation.

BIAL vide their additional submission has given the break-up of contingency as below:

Quantity contingency - 3%

Unit rate contingency - 3%

Project requirement changes/Modification - 1%

Enabling works - 1%

Information, Communication and Technology - 3%

Other reasons - 2%

Total - 13%

BIAL vide their clarifications has reduced the contingencies to 6% as per details given below:

Quantity contingency - 2.5%

Unit rate contingency - 2.5%

Project requirement changes/Modification - 1%

Enabling works - 0% (to be covered under works)

Information, Communication and Technology - 0% (to be covered under works)

Other reasons - 0%

Total - 6%

The project is still in detailed design stage and the quantity contingency can be taken care of
during this stage. Although the unit rates are based on 2014 price level, the same has
already been adjusted for price escalation up to the year of implementation.

Generally, contingencies for projects of this magnitude are catered at 3% of the estimated
cost in the Government projects.

Considering the magnitude of the project, the provision of 3% towards contingencies is

considered adequate as presently followed by the government organizations such as AAI
and CPWD.

BIAL vide their additional submissions dt. 08/01/2018 has revised their claim to 3% of the
base cost estimate.

_____________________________________________________________________________________________
Jan 2018 Page | 31
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

5.2.8.3. Preoperative Cost @ 5%

An amount of Rs. 401.00 crores is provisioned in the capital cost proposal towards
preoperative cost @ 5% of the estimated cost of works. This is catered towards salaries of
staff working on the project and general administrative expenditure incurred by the
company from 2015 to 2021. Out of this, the pay roll cost is Rs. 357.11 Crores. It may be
mentioned that this cost is in addition to the Design and Project Management consultants
proposed to be engaged for the project. There is no precedence available for inclusion of the
preoperative costs in the Project Cost. These are expenses incurred by the company in day
to day running and therefore not to be included in the Project Cost.

Further, vide the revised submissions dt. 18/1/2018, BIAL has revised the claim under the
pre-operative cost to Rs. 461 Crores which included Rs.180 Crores towards staff from PMC
agency for 4 years.

The admissible Design & PMC charges are already dealt with under para 5.2.8.1. Hence the
claim of Rs.180 crores is not considered admissible separately. However, AERA may like to
take a view on the claim of Rs. 280.93 Crores claimed by BIAL towards Preoperative cost
covering the salaries of the existing employees, admin & other costs.

5.2.8.4. Provisional Sum:

BIAL vide their submission dt. 08/01/2018 has submitted to consider an amount of Rs. 240
Crores towards ‘Provisional Sum’ as part of the project cost estimates to cater the following:

 Change in Project/Facility Scope

 Change in Technologies like implementation of Aadhar based initiatives etc.
 Change in Statues, Laws, Taxation
 Change in Standards/Codes
 Major foreign currency fluctuations

The construction of pavement works are already in progress and generally no major
deviations are anticipated in the pavement works. Further, the detailed engineering for the
buildings works are in progress and the changes in project scope or technologies etc. can still
be controlled. Other claims such as changes in statutes, laws, taxation, changes in codes,
foreign currency fluctuation etc. as given above are hypothetical in nature and can not be
predicted at this stage. These have to be dealt with as and when the need arise and hence
not recommended.

5.2.8.5. Interest during construction

An amount of Rs.2,134 Crores is catered towards interest during construction. This aspect
may be reviewed by AERA as per extent policies and rates.

5.3. Comparison of Basic Cost

The average cost of pavement works for aircraft movement area (after corrections) works
out as below:
Table 14 Average Cost of Pavement Works for Aircraft Movement area

_____________________________________________________________________________________________
Jan 2018 Page | 32
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

SN Description Type of pavement

Cost per sqm (@
June 2014)*
1 Runway Bituminous 5,085/sqm
2 Runway – Shoulders Bituminous 3,105/sqm
3 Runway Concrete 4,890/sqm
3 Taxiway Bituminous 5,074/sqm
4 Taxiway – Shoulders Bituminous 3,157/sqm
5 Taxiway Concrete 4912/sqm
* excluding the cost of earthwork formation, drainage, airfield ground lighting etc.

The average cost of pavement works including runway, taxiway, apron and shoulders works
out to Rs. 4,910/sqm and the average cost of pavements excluding shoulder works out to Rs.
5,445/sqm at June 2014 price level excluding service tax as against the AERA prescribed
norms of Rs. 4,700/sqm.

This increase in cost is attributed to the design of pavement which is guided by the following
factors.

 More number of annual movement of aircraft

 Heavier design aircraft
 Soil conditions

The cost of terminal building is proposed at Rs.1,00,800 per sqm at June 2014 price level as
against AERA prescribed norms of Rs. 65,000/sqm. This rate has further been adjusted for
cost escalation and service tax which works out to Rs. 1,30,745/sqm. Inclusive of ICT costs.

An attempt has been made to compare the cost of the new terminal building constructed at
Cochin and the proposed new terminal building at Bangalore as below:

A field visit was undertaken to Cochin by RITES expert on 20th Sept 2017 to understand the
design & specifications adopted by Cochin International Airport for the construction of new
international terminal building. Based on the data collected, the difference in the
construction cost between the new international passenger terminal buildings at Cochin and
the proposed expansion at Bangalore has been broadly analyzed and the major reasons are
brought out as under:
Table 15 Comparison of Cochin and Bangalore Terminal Buildings

S.No Criteria Cochin Bangalore

1 Facade Glazing Combination of Single 60-85% double Glazed paneling
& Double Glazed for 35
to 40% area
2 Internal Wall Wooden panel with ACP wall cladding with
finishes/claddings Laminates perforations
3 Roofing Sheeting 3 Layered System 5 Layered System with Skylights
system without Skylights for natural lighting
(Kingspan)
4 False Ceiling systems Hunter Douglas Premium imported false ceiling
5 Sanitary fixtures & Local Makes Premium imported sanitary
Fittings ware

_____________________________________________________________________________________________
Jan 2018 Page | 33
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

S.No Criteria Cochin Bangalore

6 Flooring in Passenger Vitrified Tiles Granite Flooring
Movement areas
7 Passenger Loading Non-Glazed Mostly Glazed
Bridges
8 Passenger Seating Wooden Sofas with Imported PU Based seating
system cushion
9 No of floors levels of Four Levels Six or more for other terminals
the Terminal
10 Foundation of Pile foundations
Terminal building
11 Tendering Process Bid process adopted by Due to invitation of bids from
CIAL appears to be selective short-listed bidders,
better than other the competition gets restricted
airport operators. resulting in substantial higher
Based on the details bids than the estimate. The
collected, it has been concessionaire should ensure
observed that there is adequate/healthy competition
very healthy in order to get reasonable bids.
competition and as It is also observed that Terminal
such the bid received cost (per sqm) executed by AAI
are lower than the like Chennai, Kolkata of similar
estimated cost. magnitude is lower than Delhi,
Mumbai, Hyderabad and
Bangalore.
12 Equipment The cost of Airport The cost of Airport systems is
systems like PLB, much higher.
Escalators, Lifts,
Travellators, VGDS, etc.
is lesser.
13 Terminal Separate Domestic and Integrated Terminal
International
14 ASQ Rating Lower Higher

Further, it has also been observed that the area of the new international terminal building at
Cochin is appx. 1,40,000 sqm and not 1,50,000 sqm as claimed.

_____________________________________________________________________________________________
Jan 2018 Page | 34
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the second control period (01/04/2016 to 31/03/2021)

A sub-head wise broad comparison of cost of the terminal buildings at Cochin, terminal constructed at Kolkata by AAI, proposed terminal expansion
at Hyderabad is given below.

Table 16 Comparison of Cost of Cochin and Other Terminal Buildings

Cochin Bangalore Kolkata Cost Difference from Cochin (Rs. /Sqm)

Cost Rs. Banga-
Sub Head Cost Rs. Cr % Per sqm Cost Rs. Cr % Per sqm Cr % Per sqm lore Hyderabad Kolkata

Civil Works 401.47 47% 26765 669.22 28% 33461 957.16 43% 48173

Spl finishes 70.26 8% 4684 277.50 12% 13875 56 3% 2818

External
façade 47.98 6% 3199 191.77 8% 9589 167.12 8% 8411
Roofing
system Incl. Incl. 314.11 13% 15706 161.76 7% 8141 37,983 38,041 32,896

HVAC 8100 105.52 4% 5276 144.88 7% 7292

Electrical
system 0 150.36 6% 7518 193.54 9% 9741
Plumbing &
Drainage 0 60.23 3% 3012 71.74 3% 3611
Firefighting
system 0 27.50 1% 1375 27.8 1% 1399

Fire detection 121.5 14.31% 0 16.00 1% 800 0% 0 9,880 7,843 13,942

Vertical &
horizontal
transport 0 80.00 3% 4000 119.48 5% 6013

PTB furniture 0 30.00 1% 1500 0% 0

Airport
systems 185.1 22% 12340 346.00 14% 17300 301.93 14% 15196

_____________________________________________________________________________________________
Jan 2018 Page | 35
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the second control period (01/04/2016 to 31/03/2021)

Cochin Bangalore Kolkata Cost Difference from Cochin (Rs. /Sqm)

Cost Rs. Banga-
Sub Head Cost Rs. Cr % Per sqm Cost Rs. Cr % Per sqm Cr % Per sqm lore Hyderabad Kolkata

Special works 22.85 3% 1523 126.27 5% 6314 3.31 0% 167 15,250 38,265 7,512

Total Cost 849 100% 2,394.48 100% 119724 2,205 100%

Area 150000 200000 198692

Cost Rs. /sqm rest.
56,611 119,724 To 1,08,000 110,962 63,113 84,149 54,351

_____________________________________________________________________________________________
Jan 2018 Page | 36
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

It can be seen from the above that the major difference is due to the exterior and interior
special finishes and the cost of Airports systems including baggage conveyor, escalator,
travellator etc. These mainly depend on the design of the terminal building and the type of
building structure i.e. whether RCC or steel structure and the number of floors. A detailed
comparison can be undertaken only when the detailed drawings and BoQ are available.

5.4. Construction Schedule

BIAL has submitted the overall implementation schedule with date of commencement as
April 15 and completion in March 2022 including design development, procurement and
construction. The construction works is planned to begin from July 2017 to March 2021 for
pavement works (45 months) and from Oct. 2017 to March 2021 (42 months) for the
building works.

The time for construction stipulated by AAI in some of the tenders for airport terminal
building projects for Project Management Consultancy including design and supervision is 9
months planning & design and 36 months for construction.

Hence the time schedule proposed by BIAL is considered to be reasonable.

It has been observed from the year wise project cost expenditure proposed by BIAL that
an amount of Rs.481.72 crores is proposed to be spent during the year 2021-22 which is
beyond the 2nd control period under consideration.

_____________________________________________________________________________________________
Jan 2018 Page | 37
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

6. FINDINGS

6.1 Findings
The findings of the exercise with reference to scope are summarized as under:

a) To examine the proposal of the airport and assess the need for the proposed project and
its capacity/scope with reference to Passenger growth/Cargo Volumes/Air Traffic
Movement and also to suggest cost effective alternatives

The proposal for expansion of the airport submitted by BIAL is justified in view of the
traffic trend and the growth witnessed in the recent years at Bangalore airport as
discussed in Chapter 3.

b) To examine the building standards and designs proposed by the airport operator in line
with IMG norms/IATA/ICAO norms

The airport was commissioned in 2008, i.e. prior to issue of IMG norms. Hence, the area
standards recommended by IMG did not apply to the existing terminal building. The total
area proposed for the new terminal building is found to be within IMG norms prescribed
as discussed in Chapter 5.

c) To analyze the reasonableness of the proposed cost with reference to the tentative
ceiling decided by Authority vide order no. 7 dated 13/06/2016 based on the details of
the rates and quantity as per government/industry approved norms and advise the
Authority on the reasonableness of the costs

A macro level examination of the capital cost estimate submitted by BIAL has been
conducted based on the information provided by BIAL and engineering in practice. The
revision to total capital cost is recommended as under in Table-15:
Table 17 Details of Total capital cost recommended

SN Description Estimated Cost Revised Cost

submitted by BIAL Recommended in
in Rs. Crores Rs. Crores
1 New South Airfield Development 2304 1910
Works (including site preparation &
earthworks)
2 T2 Apron -Phase I 678 640
3 Second Terminal – Phase I 3174 3077
4 Forecourt roadways & landside 1256 1124
development – Phase I
5 Aircraft Maintenance & Airport 132 130
Maintenance
6 Rescue & Fire Fighting 10 10
7 Fuel storage & distribution – Phase I 1 1
8 Airport & Airlines Administration 57 57
offices
9 Utilities Phase I 98 98
_____________________________________________________________________________________________
Jan 2018 Page | 38
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

SN Description Estimated Cost Revised Cost

submitted by BIAL Recommended in
in Rs. Crores Rs. Crores
10 Existing Runway/Taxiway 320 275
improvements
11 Add – T2 ICT Equipment/Systems 257 257
12 Add – Site Preliminaries/Enabling 80 76
Works (restricted to @ 1%)
13 Sub-Total – A 8,366 7655
14 Design Engineering & PMC as per 500 383
revised submissions by BIAL
(Restricted to @ 5%)
15 Contingencies @ 3% as per revised 240 230
submissions by BIAL
16 Provisional Sum as per revised 240 --
submissions
15 Sub-Total – B 980 613
16 Total (A+B) 9,346 8,268

An amount of Rs. 461 Crores has been included in the revised submissions towards pre-
operative costs which includes Rs.180 Crores towards PMC. The cost towards PMC is
already taken into consideration at sl.no.14 above and hence to be excluded. AERA may
therefore like to take a view on the balance amount of Rs.281 Crores claimed towards
Pre-Operative expenses.

An amount of Rs. 2,134 Cr proposed towards Interest during construction may be

reviewed by AERA.

It has been observed from the year wise project cost expenditure proposed by BIAL that
an amount of Rs.481.72 crores is proposed to be spent during the year 2021-22 which is
beyond the 2nd control period under consideration.

d) To review designs and specifications proposed in case the costs are assessed to be
excessive where the Projects are already in progress or the contracts are already
awarded. Further to examine whether proper procedures have been followed in the
award of the work.

The specifications for the existing terminal building has been catered in the Concession
Agreement. The specifications for the new terminal building has been proposed matching
with the existing terminal building presumably to maintain homogeneity. The preliminary
designs proposed for pavement works are found to be in order for the intended purpose.

BIAL has laid down and documented procedures in place for procurement. However, the
same is not in tandem with guidelines on procurement of services and goods of
Central Government.

The contract for the earth work package has been awarded by BIAL following open tenders,
evaluated by a committee constituted by BIAL.

_____________________________________________________________________________________________
Jan 2018 Page | 39
Analysis of Capital Expenditure on expansion of Bangalore International Airport (Terminal Building, Taxiway and Apron) for the
second control period (01/04/2016 to 31/03/2021)

e) To review and justify the reasonableness of time schedule of completion of work of

proposed by BIAL

The time schedule proposed by BIAL is considered adequate and reasonable.

***

_____________________________________________________________________________________________
Jan 2018 Page | 40