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Denver International Airport: The Writing is on the Wall [Author Name(s), First M. Last, Omit Titles and Degrees] [Institutional Affiliation(s)]

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Denver International Airport: The Writing is on the Wall Denver International Airport’s automated baggage handling system project was unique, a pioneer of its kind in the United States, given its size and complexity. The project was designed to deliver a baggage handling system that would drastically reduce time delays experienced by the airlines’ passengers arriving at the airport in an increasingly growing business economy. However, the project failed to deliver its projected functional expectations and in so doing, claimed its place in sort of what would be described as a ‘hall of shame’ for the worst project failures to surface in the modern era in the field of project management. This report will provide an inquiry into major issues with the DIA’s baggage handling system, circumstances influencing the project during its lifetime and momentous decisions taken by management that contributed to the system’s failure. Originally meant to be an industry standard for technological advancement in baggage handling, Denver International Airport’s Automated Baggage Handling System project eventually turned out the white elephant in the room. A sequence of problems led to costly delays and even upon completion, the system barely managed to do its primary function – efficiently automate airport-wide baggage handling. Given the project’s size, complexity, and scope, it turned out to be the hallmark of abysmal project failure. This paper will examine the major contributing factors to the project’s failure. Circumstances surrounding the inability to estimate project’s complexity Denver’s economy was experiencing an upsurge. This was a direct consequence of booms in the oil, tourism, and real estate industries. The airport, however, had capacity limitations, in that neither the north-south nor the east-west runways could accommodate concurrent arrival streams, meaning delays would be experienced during high-traffic periods. As

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such, the general view of the town was the Stapleton’s Airport was an eye-sore limiting the attractiveness of the region considering the many businesses popping up at Denver (de Neufville, 1994). Secondly, Denver’s geo-location and its increasing population put it in a strategic position as a suitable airline hub. In severe weather and high-traffic periods, though, connection schedules would be interrupted, having a significant bearing on the airport’s operations (de Neufville, 1994). From this realizations, Denver City’s local administrative powers determined that the airport needed upgrading or total replacement. Results of studies commissioned by the Denver administration in the mid-1970s recommended expansion (de Neufville, 1994). Further political activity during the mayoral race further fuelled the drive to improve the airlines’ infrastructure. The Colorado Forum successfully urged 50 of the state’s top business executives to commit themselves to the airport’s expansion. Later on, an annexation agreement between Adam’s County and the City of Denver helped Denver acquire 43.3 square miles for the construction of a new airport (Breier Neidle Patrone Associates, 1990) Significant decisions made by DIA In commissioning the commencement of the project, the Denver International Airport’s authorities envisioned a novel system designed to deliver each bag, including transfers, individually from unloading to baggage reclaim (de Neufville, 1994). In so doing, the airport’s authorities had evidently decided to kick-start a never-done-before mega project with the unique complexity that it would replace human labor in luggage management. Worthy of note is the fact that no company had undertaken a similar project of this magnitude before, and therefore, DIA was essentially wading into unknown waters with a time costly and economically crucial project for the Denver locale. As with any new and unique project, this was bound to face a series of

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unprecedented challenges. As a 1990 Breider Neidle Patrone Associates report indicated, the complexity of the system was too high for the system to be built (Breier Neidle Patrone Associates, 1990). Secondly, the DIA made the all-important decision to proceed with the full-scale project, completely disregarding clear signs that in all likelihood, the project’s time scope was insufficient for it to be completed in time. Putting this into perspective, initial indicators before entering a contractual agreement with BAE showed that the project required, at least, two more years or was entirely infeasible. First was the warning of the project’s infeasibility as accorded to DIA by Breier Neidle Patrone Associates report. Furthermore, reports indicated that several managers advised BAE senior management that the project was at minimum a four-year project. More crucially, there was an apparent lack of experience or willingness per se by contractors to bid for the automated system’s construction. Out of a total of 16 companies contacted worldwide, a sultry 3 responded to DIA competitive bid offer for the job. Even more important was the fact that a consulting firm advised against designs submitted by airport planners on the premise that such configurations would fall short of the airport’s need. However, the airport’s authority proceeded to contact BAE directly to take up the contract assuming that the company was better suited deliver just because they were the leaders in the airport facilities construction business (Montealegre & Keil, 1998). Lastly, airport authorities went ahead with the decision to organize a demonstration of the system without informing BAE. This demonstration in itself showed a lack of caution on the part of the DIA management team in that it would potentially result in imperfections being shown to the public who are the users of the airport and all its affiliated system. As events would turn out,

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the demonstration was a total failure and more significant Denver International Airport, a public relations disaster. Major decisions made by BAE project manager BAE committed to delivering the complete system under a fixed scope, schedule and budget arrangement (Randolph, 2013). This commitment was a crucial and detrimental decision in that it would have a significant bearing on the system’s quality and delivery. As (Randolph, 2013) “the seeds of a project success or failure often lie in the analysis that goes into making those decisions and the way commitments are structures.” In making this commitment, the BAE project manager had evidently taken considerable risk into the company’s responsibility domain. One would argue that the move was indicative of the project manager’s shortsightedness in recognizing the level of risk he/she was entering. As with most projects, the initial time, budget and scope plans rarely proceed as planned. Most of the time, projects over-stretch these parameters. Moreover, the terms of the contract were agreed on in three work sessions. Obviously, such was too short a time for BAE and other parties involve to fully comprehend the extent of risks involved. Secondly, BAE project manager made the decision to accept change requests part way into the project. Originally, when BAE had entered into the contractual agreement, one of the conditions was there would be not significant changes to requirements. Not surprisingly, however, the airlines with an interest in the entire project proposed significant changes. Eventually, BAE had to yield to stakeholder pressure and accept their request to implement these changes. Such involved the addition of ski equipment racks as potential loads for the luggage handling system and maintenance racks for cart servicing. This remedial action had a major

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bearing on the project as it meant that major portions of already completed work needed redesigning. From the airlines’ perspective, this was a major display of shortsightedness not to be involved in planning discussions. As airlines renting space at the airport, they would be most affected by the outcome of the project hence needed full involvement. The DIA waited too long to involve the most crucial stakeholder – the airlines (Jeffcoate, 1997). As such, a lot of time and money was wasted in redesigning already ‘complete’ parts of the system. More surprisingly, the DIA did not bother to communicate with the constructors of the airport itself who had left just enough space as their inexperience in luggage system design deemed necessary, later resulting in a myriad of challenges with the automated luggage system. Implications of the failed project Following the delayed commencement and subsequent failure of the baggage system at DIA, the airport activities were suspended for 16 months. The financial effect was a loss rate of $1.1m per day in the form of maintenance costs (De Neufville & Neufville, 1995). Taking a total of 7 years (2 more than initially planned), the project cost was estimated to stand at $5 billion. DIA could not afford the enormous costs, with the federal government providing the much needed financial support. Notably, the budget for the new top-of-the-class baggage system project was overstretched by about 30%. This unprecedented increase was attributed mainly to the complications around the actual construction of the system, for example, the limited space available (De Neufville & Neufville, 1995).

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: Table 1: Proceedings Of The ICE - Transport

At the turn of March 1995, delays cost DIA an extra $500 million available (De Neufville & Neufville, 1995). Failure of the new baggage system had prompted the Mayor of Denver to commission a tug and cart system as a backup. To this effect, BAE was charged $12,000 per day in liquidated charges. Ultimately, the baggage system was decommissioned in 2005 due to extraordinary maintenance cost amounting to $1 m in monthly expenses. This figure was much higher than the cost of the manual tug-trolley system available (De Neufville & Neufville, 1995). Alternative action plan for BAE project management First and foremost, rolling out Denver’s automated luggage handling system should have been implemented in phases rather than the all-out approach used to adopted by the project. Considering the project was a first of its nature, much more caution should have been exercised in bringing the concept of e new, world-class luggage handling system into reality. As such it would have been more reasonable to split the project’s deliverables into a concise series of phases. These stages would have significantly reduced the pressure on the BAE project management team, allowing it to execute the project with due diligence.

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Secondly, drafting a definite risk management plan would have provided a reasonable guide to mitigating the effects of unforeseen circumstances. For example, BAE ought to have produced alternative designs for the luggage system to create a fallback alternative in the event the master design was severely flawed, as was the case witnessed during the system’s demonstration with bags being crushed Thirdly, BAE’s project manager should have involved project stakeholders from the first day. Part of the reason for the project’s outcome was failing to include airlines in the design of the luggage system. Possible loads such as ski equipment racks were neglected, as it later emerged that an airline would have preferred it be considered in the design. Furthermore, more care should have been taken to warnings from experts before making major decisions. For example, Niedle Patrone Associates report estimates that the best-case scenario was that the project would be completed project being completed in at least two more years. Again, none of the three bidding vendors could build the system in time for the airport’s official opening, resulting in unprecedented delays surmounting to several months. Additionally, BAE project management should have effected proper change management processes. Following the unfortunate demise of Walter Slinger, the systems’ primary sponsor, the project lost an outstanding leader. His successor lacked in technical experience. As (De Neufville & Neufville, 1995) note, changes are perpetual in institutional projects. Therefore, project managers ought to have made necessary preparations to forestall surprises. Specifically, the project management team should have designed a leadership structure detailing how leadership would be transferred in the event of an unforeseen absence of standing leader, as was with the unexpected departure of the team leader.

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Lastly, a reasonable course of action for the BAE project manager would have been to study common industry standards for such a system before embarking on an ambitious endeavor to design something entirely new. Observing existing baggage handling practices would have indicated that mere conveyor belts coupled with trolley systems and manual tags are, in themselves, complex enough to implement. This observation would have given the project manager a better perspective on the complexities of shifting to an entirely automated luggage handling system. In conclusion, Denver International Airport’s automated luggage handling system construction project was a total shamble. Apart from failing to do what it was supposed to do, automation was achieved in a small section of the airport, and for an insignificantly short period. The project delayed well beyond its time scope, failed to capture the functional scope of airlines and proved costly with a swelling budget while it was being deployed. From these standpoints, DIA’s failure presents itself as a classic template of poor project management practices. The writing is on the wall.

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References Breier Neidle Patrone Associates,. (1990). Denver International Airport, Baggage Handling Systems,. Denver: Breier Neidle Patrone Associates. de Neufville, R. (1994). The baggage system at Denver: prospects and lessons. Journal Of Air Transport Management, 1(4), 229-236. http://dx.doi.org/10.1016/0969-6997(94)90014-0 De Neufville, R., & NEUFVILLE, R. (1995). Designing Airport Passenger Buildings For The 21st

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