1. Evaluate the implementation of Denver International Airport Baggage Handling System. What are the top 3 factors that lead to the projects failure? Who is most at fault?
The DIA automated baggage-handling system had its uncertainties and risks like in any other project but the challenges faced were mainly due to the poor planning, 1st of its kind in terms of size of the project and underestimation of complexity of the whole project. There are many problems encountered by the project and the top 3 factors that lead to the project failure were:
1. Scope, time-schedule and budget commitments – Planning. The master plan for DIA was developed by the various experts in the respective fields but there was a fundamental strategic error as DIA had adopted the build-design project meaning building the airport while designing it. The airport’s Project Management team had assumed that individual airlines would make their own baggage handling arrangements. In 1991, the airport’s Project Management team changed their strategy and realized that if an integrated system was to be built, they needed to take responsibility back from the individual airlines and run the project themselves.
This change in strategy came a little more than two years prior to the airport’s planned opening date and the timing of the decision was in large part the trigger behind the excessive schedule pressure the project was exposed to. BAE and the airport Project Management team made another major mistake during the negotiations. Although the airlines were the key stakeholders in the system they were excluded from the discussions during the project defining and planning stage. When the stakeholders are finally engaged, they demand for significant changes on the project that required modifications as the project went along.
The project was oversold by political leaders who used the airport initiative as a platform to revive their economy. Pena won the election and committed by the public promise. There was a transfer of authority to from Pena to Wellington Webb as the new mayor, who followed the predecessor
administration’s emphasis and also didn’t ensure the commitment of the major carriers. The City of Denver and a consultant team shared the leadership of the DIA project. It quickly became clear that shared leadership was doing duplicate duties and not efficient. The project was financed by many sources where all wanted to have a say, making it increasingly more difficult to coordinate and accommodate different administrative, political and social interests. On top of that, the management had no experience of building automated baggage systems, but it assumed the responsibilities any way without making necessary changes in the management team. The respective teams were working of silos and the leader failed to enforce structure for collaboration and feasibility of the overall project monitoring. One month after BAE was awarded the contract, the head of DIA project resigned.
3. Communication difficulties.
The channels to communicate among the city, the project management team, the consultant, DAE and airlines were never well defined. Everyone had their own tracking systems for the activities and there were several copies of everything. They tried to merge them into one central database and it took 3 years to get it to work. BAE felt being restricted to access anywhere they wanted which was granted in the initial negotiation and other construction works were hindering BAE progress, there were no clear communication channel to raise their predicament. The large number of airport entities involved increased the complexity in effective communication and everyone had its unique requirements and timeline to meet.
2. As Gene Di Fonso, what would you have done differently to avoid the problems faced at the end of the case?
If I am Gene Di Fonso, I would use the project life cycle as the foundation for managing this project. I will make sure that all the stages of Defining, Planning, Executing and Closing are thought through and discussed with the experts thoroughly. Especially, when comes to dealing with the hyped up City of Denver project which has government, social, economic influences and timeline to meet for DBO repayments. The product life cycle would have enforced a structure to think critically before accepting or negotiating the contract.
Both the defining and the planning stage would have provided a good assessment whether to pursue such a complex with limited timeline even though the revenue and BAE image of doing such big project is overwhelming. The downside of project failure and inability to complete the project on time would be a blow to BAE image in the public eye. Before entering into the executing stage, both the defining and planning stage would ensure the contract entails the terms and conditions and also include all the limitations, all the technical requirements in the building infrastructure stated with the realistic timeline and the deliverables stated upfront.
All major stakeholders have to be involved in the project defining stage for actual feedback and requirements to be clearly stated that no changes allowed after signing of contract and should be enfored
Minimally, all these stages have to be followed through as a project manager. The more complex the project, more time needed to tackle uncertainties to complete the project and it is also necessary to form a highly skilled project management team in order to complete the project successfully.
I feel that Di Fonso knowing the tight timeline with lots of external influences such as the political, economical and social factors, it would be a best decision to stay focused as initially planned and commitment with United Airlines unless all the contractual terms determined after going through the detailed defining and planning can be accepted by all the stakeholders.
3. How should Di Fonso respond to Mayor Webb’s decision to impose a $12,000 per day penalty and the requirement that BAE assume the $50 million cost of building a conventional tug-and-cart baggage system?
I feel that it is not entirely BAE fault for the failure of the automated baggage system project. There were other external factors involved that worked against the whole project. So, Di Fonso is not entirely at fault and should fall back on his contract with the City and negotiate the legal terms. There were provisions and requirements, especially permanent power requirement, were made explicit and in addition unrestricted access for BAE equipment and priority in any areas to install the system due to tight timeline were agreed and accepted by the Denver officials. Definitely, the contract was not adhered to and Di Fonso has high chance to sue the City for the breach of contract.