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Salford Business School

MSc. Information Systems Management

PROJECT MANAGEMENT ASSIGNMENT


DENVER AIRPORT BAGGAGE SYSTEM CASE STUDY

BY

Samuel Alofoje
@00346510

Tutor: Chris Procter

Table of Contents
1.

INTRODUCTION................................................................................................ 3

2.

CASE STUDY - DENVER AIRPORT BAGGAGE SYSTEM.......................................3


2.1 WHAT LED TO THE FAILURE OF THE PROJECT...............................................5

3.

CONCLUSION................................................................................................... 6

4.

RECOMMENDATIONS....................................................................................... 7

Bibliography......................................................................................................... 10

1. INTRODUCTION
The essence of projects in an organization or nation cannot be overemphasized. The purpose
of this report is to demonstrate and investigate if Denver automatic baggage system project is
a failure or success. Analysis of the activities of the project was considered and identification
of what aspect(s) of the project must have led to the failure was also considered. A
recommendation of what Denver automatic baggage system project should have been done
for the project to be a success using some project management measures and common sense.
Denver automatic baggage system project was judged from both the project management and
project perspectives. The project is said to be a failure in project management practices such
as over costing, project scope, and time etc. and also failed in its procurement practices. Even
with certain failures, a project can still be seen as a success to the end users. For example the
Wembley Stadium which has hosted world class sporting events regardless of the issues in
the project in terms of procurement and management practices, the end user still see it as a
state of the art and a successful project.
Denver airport baggage system was chosen for this case study because of the distinctive
massive size of the project, complex architecture design, new innovative techniques, different
sensitive stakeholder involvement including the government and general public, contractor
and subcontractors. Although it was not the first of its kind but the system was the most
innovative (Myerson, 1994).

2. CASE STUDY - DENVER AIRPORT BAGGAGE SYSTEM


In November 1989 the construction of Denver International Airport started. The airport is
located 25 miles from the downtown Denver, Colorado in the United States. It was initially
aimed at constructing the worlds biggest automated baggage system. It covers a land mass of
140 Km square which was supposed to handle a capacity of over 50million passengers on a
yearly basis (Neufville R. d., 1994).

Fig. 1: Miles of tracks to make baggage movement simple at Denver's new airport (JOHNSON, 2005)

In early 1992, the top project managers suggested the addition of an airport-wide integrated
automated baggage-handling system would drastically increase the efficiency of the
automated baggage delivery between check-in to pick-up on arrival; this was contracted to
BAE Automated Systems Inc. The project was expected with the integrated automated
baggage system to increase ground time efficiency and reduces the time wasting manual
baggage handling and sorting (Goetz & Szyliowicz,, 1997).
The opening of the airport was estimated to cost about $5 billion which includes the support
of the Federal Government and over $400 million came from airlines in fitting out
passengers building, cargo centres and catering facilities. Before the end of 1994, Denver
Airport ran into a bonded debt of more than $3.8 billion because of the problems that was
encountered in the implementation of the baggage system. These problems forced Denver
Airport to fail to open in 1993 October as scheduled and also missed another three opening
dates in April and May 1994 under increasing pressure from stakeholders.
We know that delay in a project shoots up cost and this was the case of Denver. The delay
tremendously increased the bonded debt up to $271 million for 1994 only aside the cost of
maintaining the new airport which was $33 million monthly. By March 1995, the overall
delay cost the owners about $500 million. (Neufville D. R., 1994)
In August 1994, a backup baggage system of tug and cart to be implemented, this was
approved by Denver mayor Wellington Webb who notified BAE of a $12,000 per day penalty
for not completing the baggage system at the original scheduled date (October 29, 1993).
Denver automated baggage system was tested to move 7000 bags from Continentals
Concourse A to United Concourse B. When the system was tested, bags were loaded wrongly,
misrouted or fell off the telecarts affecting the whole system to jam. The system uploaded
bags even when they were congested on the conveyor belt. (Brown H. , 1994).
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Fig. 2: (Swartz, 1997) Simulating the Denver Airport Automated Baggage System

2.1 WHAT LED TO THE FAILURE OF THE PROJECT


According to David Hughes (Aviation Week & Space Technology), some unexpected added
factors to the baggage systems failure include electrical, software and mechanical failures.
According to William B. Scott (Aviation Week & Space Technology) believes the systems
failure started in more fundamental miscalculations of the project such as the whole system
complexity, steady changes from both airline, Denver officials and the political issues
(Schloh, 1996).
There were two very important constraints that contributed to the failure, first is that the
automatic baggage system was not included to the original design of the project plan, the
geometry of the airport which was already in construction was too tight for the automatic
system to fit in, the automatic system had to be forced to fit in the boundaries of the airport
passenger buildings, the underground tunnel that connects the concourses and the terminal.
The other constraint was that the schedule of the system (within 21 months) was too tight.
The tight schedule did not allow the system to be tested for at least six months to enable
corrections. There was no backup system like tugs and carts that can cope with the high level
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of expected baggage and there were no access roads between the aircraft and check-in
(Neufville D. R., 1994).
The project sponsors wanted the money for the project to remain within the city so contracts
were given to contractors in the city who had no standard knowledge of the project
complexity, this contributed to the project delay as well.
Communication measures between the project team, consultants and city were not controlled
or well-defined. For example when the filters for electricity were ordered, a city worker
cancelled it without the knowledge of the filters being a part of the project. The filters finally
arrived later sometime in March 1994 (Neufville D. R., 1994).
The major project the project faced was when Walter Slinger who was the systems de facto
sponsor died in October 1992; his death left the project without critically needed leadership.
A new leader was appointed but the leader lacked the profound engineering knowledge
required to understand the system.
Another problem in the project was that Denver launched the DIA project without the
involvement of Stapleton airports 2 top airlines (Continental and United) who together
brought over than 70% of current passenger traffic, this brought about continuous change to
the project strategy when the tenant airlines became involved in the project (Goetz &
Szyliowicz,, 1997)

3. CONCLUSION
Defining project failure is a very complicated issue to address because there are some
unavoidable situations that could make a project cancelled such as; changing business
objectives, making significant cultural or operational change etc. (Acando, 2012). Different
people have differing views about this issue. Just because a project is not completed within
budget and time does not mean that the project is a failure. A project can still be a success
even with the failing of the project management if it meets with the long term objectives
( Munns & Bjeirmi, 1996). If a project is not delivered within specified budget, schedule and
quality it is not the project that failed, it is the project management that has failed (Goatham,
2013). For example, the Sydney Opera house. The plan started in 1957 and was supposed to
be finished in 5 years at the cost of $7M but the project took 13 years and the cost of the
project was $110M. Now the Opera house is an icon of Austria and the cost of the project has
been recovered back. From the management view the project is a failure but the project itself
is a success (Murray, 2004).
Denver project management team and BAE managers did not have the knowledge and
expertise of a system of that scale especially with the baggage system technology been
relatively new at that time. Another problem was that experts advice was ignored and they
did not know the volume of uncertainty they were going to encounter else precautionary
measures would have been taken to reduce the risk.

Denver automatic baggage system is a failure both in project management because the project
went above cost and time. The project is a failure as it did not meet with the scope/objectives
of the project. The complexity and loads of the automatic system was reduced (Reduced
quality which removed the concept of a fully automatic system). The track that was serving
concourse C was redirected to serve concourse B (United Airlines) and concourse A is now
been served by a backup system of tugs and carts. In the new system, the automatic system
serves one concourse instead of three, it operates on each track at half the planned capacity, it
does not transfer bags within aircrafts (Neufville, 1994).

4. RECOMMENDATIONS
Stakeholders Management As stated in the Project Management Body of Knowledge
fourth edition, managing stakeholder requirements is actively managing the requirements of
stakeholders to increase the possibility of project acceptance by negotiating and persuading
their desires to accomplish and maintain the project goals (Project Management Institute,
2008, p. 261). Denver airport project management team should have involved and managed
their key stakeholders who are the tenant airlines (United and Continental airlines) right
from the plan of the project. This brought a major setback in the project that led to a
continuous change in the project strategy, thus affected the time of completion and eventually
cost.
For example, Heathrow T5 always involve BAA, their main client (BA) and 60 other of their
main suppliers from the plan of the project and seek their opinion in changes that will be
made to the project (Caldwell et al..., 2009).
Top Manager with standard project leadership skills Top managers with the skills of
leadership are the key decision makers in a project. They are assumed to overcome barriers to
potential change in the project and contribute majorly to project success (Atkinson, 1999).
Denver Airport project should have designated a top project manager that would monitor,
manage and merge the changes and progress going on in the three concourses.
For example in Heathrow T5, British Airport Authority was in complete charge of the whole
project, they made all the key decision of the project and they had a standard knowledge of
the project to take it through to completion (Brady & Davies, 2010).
Political Influence The project top manager due to the importance, nature and visibility of
the project can exert control and power over the project (Pinto, 2000). Denver Airport project
sponsor should have outsourced all the critical project tasks to competent companies who
have done a similar kind of project before locally or internationally and must not have been
restricted the project within the city.
For example Heathrow Terminal 5 baggage system was designed and installed by
Vanderlande Industries in Netherland that has installed similar systems in some large airports
in the world such as Schiphol Airport. BAA did not have to give the contract to a local
company that does not have a complete knowledge of the system (Gil et al..., 2012).

Risk Management Properly managed risk reduces or removes the risk that can threaten the
achievement of project objectives (Norris, 2000). Risk management is an essential part of
project management because unmitigated or unmanaged risk can cause a project to fail
(Skitmore, 2004). Denver officials should have developed a questionnaire and send out to all
the companies that would be part of the project and the contractors would have provide
evidence to their answers. This would have determined the competence of contractors. BAE
should have accepted the risk of the project so the contractors would have confidence in
carrying out their tasks. There should have been a good backup system such as the tugs and
carts that can carry large baggage and access roads should have been created between checkin and aircraft.
For example Terminal 5 in Heathrow London, BAA who is in charge of the project accepted
the risk for the project which removed the issue of accountability from the suppliers and
contractors. This disallowed an unproductive culture of confrontation and blame. The smooth
running of T5 was facilitated by a software system called Project Flow ordered the requests
for materials and ensures they were supplied as needed and on time (Milosevic & Patanakul,
2005)
.
Communication Plan A properly managed communication plan can positively affect a
project success and reduce risk impact. Denver Airport project team should have had
consistent meetings with all the stakeholders involved in the project to notify them all
whenever there is a change to the project with a clear presentation of the changes, progress or
next stage of the project. Also a central tracking database system should have been
maintained to produce an integrated report that stakeholders of the project would have had
access to for up-to-date information or reminders.
For example, in Heathrow T5 meeting with all the stakeholders were always having meetings.
Visual languages were used to represent and present information. 2D images and 3D models
were used to give a more realistic way of the project rather than abstract concepts (Harun,
2010).
Proper test plan - Denver project managers should have given BAE some time for the
testing of the automatic baggage system. They should have assigned a test manager that will
plan the simulation of users of the system early, record the error messages that will have been
used to correct the system. (McGregor, 2001).
For example in Terminal 5 Heathrow London, a proper simulating test plan was strategized;
the entire T5 and all the systems were fully designed and modelled electronically. This
avoided delays and costly reworking. BAA planned a six months test plan of proving trials.
16,000 public members were recruited to act as passengers to thoroughly test every part of
the building such as the car parking, baggage systems, check-in, IT systems and security.
According to Mr Terry Morgan, the only part of T5 that was not properly tested was getting
the bags from the baggage hall to the aircraft and this caused a problem the day T5 was
opened because other parts of T5 was tested well and working fine, corrections to the
baggage system was easy to implement. (Brady & Davies, 2010).
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Scheduling of the baggage system Denver automatic baggage system should have been
given at least four years for the construction and testing of the system because it is a
distinctive technology and from all indicators from other contractors proposal, the project
could not have been completed within two years.
The terms and conditions of the project should have included price is based on completing
work within schedule, this will make the contractors work faster to finish the work within
schedule, a Gantt chart to analyse project schedule should have been developed (Brown D. ,
2008). Also the critical path of the project should have been analysed carefully to determine
the activities that when changes are been made to, will affect the finish time of the project.
These activities should have been carefully handled.
For example Heathrow Terminal 5 could complete 85% of their work within time because
BAA gave incentives to their contractors by signing a contract that if they finish within time,
they will be given a share from the pooled fund of gained benefits but if they overrun time,
they will lose out on their bonuses (Caldwell et al..., 2009).
Technological uncertainty and System complexity - Denver airport project should have
taken advice from other airport officials who have done similar project before. Also, BAE
should have used other well-known proven technologies to design the automatic baggage
system to save time and money.
For example Heathrow T5 that was designed by Vanderlande Industries used a proven
technology that has been used by other airports to design and install T5 baggage system
(Caldwell et al..., 2009).
Controlling cost - Denver airport project team should have kept tracks of the project budget
in each of the stages and manage time frame of the project because cost will definitely
overlap if time is not properly managed. They should have taken into account all the potential
change that might occur in the project. The use of Earned Value to identify the value of all the
work that was carried out would have been very helpful to avoid reworking. Providing
financial information to top managers should have been a good way to control cost as well
(Knoepfel, 1989).
For example BAA of Heathrow T5 took a contractual arrangement approach by requiring an
open-book to all vendors ensure that expenditures were accounted for and this worked for
them as the project was finished within budget (Caldwell et al..., 2009).

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