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DIA Project Failure - A Case Study

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on 11 July 2014

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Transcript of DIA Project Failure - A Case Study

The Conclusion
Bird Eye View of The New Denver Airport
The G & O
Unique in its Complexity, novel in its technology and new in its capacity.

Improve ground efficiency

Decrease time-consuming manual sorting and handling

By automating Baggage handling system, aircraft turn around time was to be reduced to as little as 30 minutes.

Faster turn around meant more efficient operations and was a corner stone of the airports competitive advantage.
The New Denver International airport is a massive airport.
It extends over 13,568 hectares, almost 2/4 area of Bengaluru. It has 3 parallel North-South , 2 parallel East-West runways and room for total of 12 major runways.

120 planes land an hour. 25 airlines operate within. And used by 35 million travelers.

Baggage handling system was to be at heart of the DIA. Automated Baggage handling system built by BAE Automated Systems in Denver Airport.

DIA was to be the model of airports of future.
The Insight...
DIA Project Management Failure:
A Case Study..

2010HW70527 Abhinandan N C
2010HW70530 Ashwini H K
2010HW70537 Ragavendra M N
2010HW70563 Karthik K
2010HW70567 RASHMI C U
2010HW70594 NITIN V RAO

3 W's - What Went Wrong
Airport was scheduled to open on 31st October 1993, with fully running on the BAE automated baggage-handling system.

When the airport was finally opened on 28 of February 1995, it had one automated system, a conventional system and a backup system for the automated one, 16 months late and $ 60 million over budget.

The Project was estimated to cost approximately $5 billion with greater financial support from Federal Government and over $400 million from airlines. It however overran its budget by about 30%.

As there was no previous experience, there was no suitable person to guide the team. BAE on the other hand had no experience in dealing with baggage handling systems

By August 1994, Mayor decided that a backup system of Tug and cart be implemented.

System was reduced from 3 concourses to 1. When tested, the bags were crushed or jammed on the track.
At DIA, the approach was a simple 3 Step.

At check-in, agents stick glue-backed bar code labels on baggage, identifying bag’s owner, flight number, final destination and intermediate connections and airlines. Check-in agent puts bag on the Conveyer belt.

Empty telecar arrives, the Conveyer belt holding the bag advances.

Quickly move all baggage, including transfers, automatically between check-in, the aircraft and pick-up.

This type of “Dynamic Loading” increases handling capacity, reduce labor and saves energy as well
The Approach
6 Disastrous Decision
Decision 1 : Change in strategy
Underestimation of the complexity of the project.

Assumed that individual airlines would make their own baggage handling arrangements.

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.

In one way the change in strategy made sense because an integrated system required centralized control and the airport’s Project Management team was the only central group that could run the project. But the timing of the decision was however extremely poor.

The key point the airport’s Project Management team failed to see was that the shift in technology required a corresponding shift in organizational responsibilities. The failure to recognize that shift represents a planning failure that dated back to the very start of the construction project.
Although the change in strategy is somewhat understandable, what is less understandable is why both the airport Project Management team and BAE decided to proceed with the full scale project despite clear indications that there was insufficient time left for the project to be completed successfully.

The decision to proceed was based on the communications between the airport’s Chief Engineer and BAE’s Senior Management team . Airport Project Management team and BAE decided to proceed with full time project, despite that there was insufficient time left to complete project and many expert advise were put down to go with a prototype than the actual project.

The failure by both Chief Engineer and BAE’s Senior Management team to heed the advice they were receiving and the failure of the airport’s Project Management team to have the BAE proposal and prototype independently reviewed is the epicenter of the disaster.

Poor procurement management system, that indicated that project could not be completed within 2 years.
Decision 2 : How to Proceed
Decision 3 : Schedule, scope and budget commitments
The decision to give a firm commitment to scope, schedule and budget transferred considerable risk onto BAE’s shoulders. This move indicates strongly that those in the highest level of BAE’s management structure had completely failed to recognize the level of risk they were entering into.

BAE and the airport Project Management team made another major mistake during the negotiations. Although the airlines were key stakeholders in the system they were excluded from the discussions.

Excluding stakeholders from discussions in which key project decisions are made is always a losing strategy.
Decision 4 : Acceptance of change requests
As the project progressed the airlines did indeed ask for a number of significant changes.

BAE had made it a condition that no changes would be made, the pressure to meet stakeholder needs proved to be too strong and BAE and the airport’s Project Management team were forced into accepting them.

The major changes were; the adding of ski equipment racks, the addition of maintenance tracks to allow carts to be serviced without being removed from the rails and changes to the handling of oversized baggage.

Some of the changes made required significant redesign of portions of work already completed.

The acceptance of Change Requests was a clear sign of mis-communication
Decision 5 : Design of the physical building structure
Rather than being separate entities, the baggage system and the physical building represented a single integrated system. Sharing the physical space and services such as the electrical supply the designers of the physical building and the designers of the baggage system needed to work as one integrated team.

Baggage handling system had to accommodate sharp turns. Navigating sharp turns is reported to have been one of the major problems that lead to bags being ejected from their carts.

To make effective decisions about how to design the physical building the designers of the physical building needed to be working alongside people who had expertise in designing baggage systems. Clearly this did not happen
Decision 6 : To seek a different path
In 1994, the public demonstration was an Major embarrassment. Post which the Mayor of Denver consulted a German Company.

An specialist in the field inspected and gave his review to scrap the project and go for manual trolley system.

Mayor without even thinking scraped the project and gave an heads up to the new approach at an additional cost of $51M .

Though the peer review was a good decision, it was very late decision that was taken.
Other Failure Points
Risk Management Failures
– Electrical system suffered from power fluctuations that crashed the system. Filter were built as a resolution.Delivery and installation of filters took several months. Risk management strategies were not taken into consideration.

Leadership Change
– In October 1992 Walter Slinger, the Chief Engineer died. His replacement lacked the in-depth engineering knowledge required.

Architectural and design issues
- Design chosen were complex and error prone. System had more than 100 individual PC’s connected together. System was unable to detect jams. The schedule pressure may well have been a factor in the design problems. When under excessive schedule pressure teams often settle for the first design they think of.

Change Control
Changes are constraint in Projects.

Denver should have had a proper change management process that is robust enough to control changes.

This could have eliminated the complexity introduced by various changes that took place on project
Stakeholders Management
Failure to pay attention to stake holders.

Lack of engagement and or management of major stakeholders like united and continental airlines.
Planning and Resourcing
Scope should have clearly defined what is in and out of project.

Work breakdown structure useful for resource allocation
Risk Management
Risks have positive or negative effects on Project objectives.

Planned and systematically adopted risk management procedure is essential in keeping project on time and within budget.

Denver should have carried out Risk management exercise at the beginning of project to identify potential risks
Communication and Leadership Skills
“Proper communication is vital to success of project”.

Denver should have set up communication matrix to establish required communication channels and assure nothing is missed.

“Achieving projects depend on people as people are most critical project management resource". Good and skilled leadership should have been established
Testing and Use of Experts
Industry expert organization should have been used to execute the project.

Rejecting expert advises on major issues like feasibility of implementing integrated baggage system, schedule, etc. was a big error

More time should have been taken for testing. Compromising with testing the software in any of the software management program is a disastrous decision.

Underestimation of Project Complexity

Lack of planning that resulted to numerous changes in strategy
Unachievable excessive schedule pressure
Making unnecessary firm commitments under risk and uncertainty
Poor Stakeholder management

Communication breakdown
Poor design approach
Absence of Risk Management

Failure to understanding impact changes
Lack Of Management oversight
Sec - F July 5, 2014
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