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Project Failure

In: Business and Management

Submitted By Doyne
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Doyne Mc Nally

Project Failure Essay

Title: International Airport Baggage Handling System

Why the project was established:
Denver International Airport, often called DIA, is an airport in Denver, Colorado. By land size, at 140 km2, it is the largest international airport in the United States, and the third largest international airport in the world. Back in late 1980’s the city of Denver felt they needed a larger airport to deal with the increasing amount of air traffic through the city, so they elected to construct a highly efficient, fully automated airport. The predicted passenger handling was an outstanding 50 million annually. It was envisioned as a state of the art airport mainly due to its luggage handling system. This system of automated baggage-handling would greatly reduce aircraft turnaround time. Faster turnaround meant more efficient operations and was a cornerstone of the airports competitive advantage.

Project Sponsors and Stakeholders: The Airport Project Management team on behalf of the City of Denver was the major stakeholder but funding was also received from United and Continental Airlines as they would eventually use terminals as major hubs for their respective organisations. The company BAE Automated systems was employed by DIA to design a conveyor system to meet the airports needs. Ultimately the majority of funding came from the pockets of the citizens of Colorado. The overall cost of the project was $
Success Criteria:
The airport's computerized baggage system, which was supposed to reduce flight delays, shorten waiting times at luggage carousels, and save airlines in labor costs. The airport opening was scheduled scheduled for October 31, 1993, with a single system for all three concourses. A budget of $186 million was originally put in place and was to be adhered to.
Reasons for Failure:
The complexity of the project was underestimated by the project management team. Numerous decisions made by the project management team resulted in the failure of this project. They chose to ignore statements made by companies in the bidding process that the deadline set for completion of could not be met. Many more mistakes were made by the team as they tried to complete the project to an impossible deadline. As a direct result of these mistakes and underestimation, the budget also was massively overstretched resulting in overspending.
Poor communication between the different stakeholders, at the initial negotiation stage in the project could be deemed as a catastrophic failure. During the negotiation stage, the Airport Project management team chose to exclude the two airlines from their negotiations with BAE. As a result of this the airlines made requests further into the project of facilitating sports equipment and oversized baggage into the system. Due to massive pressure placed on the project management team, they eventually surrendered to these requests adding to their already tight time constraints. Again, communication was to blame for the design of the building, all the design work for the building was completed before the design for the luggage handling system. Therefore luggage systems had to be modified to suit the building which caused problems as the turns were too sharp. This in-turn led to reliability problem with the system.
The airport eventually opened on February 28, 1995 with separate systems for each concourse, this was sixteen months from originally proposed opening and with 3 systems instead on one system for entire airport. The system's $186 million original construction costs grew by $1 million per day during months of modifications and repairs. Incoming flights on the Airport's B Concourse made very limited use of the system, and only United Airlines, DIA's dominant airline, used it for outgoing flights.
Conclusions:
All the above reasons for failure basically come down to the bad decision making by the project management team. This was due to inexperience at this scale of project. Good management at the initial stages of this project was critical. Communication between all parties would have seen a much better outcome. Integration of the various stakeholders would have helped foresee many problems that were later on encountered throughout the course of the project. This along with realistic cost projections and timelines would have aided with the success of the project.
To add insult to injury, despite all the hardship encountered during construction and implementation of this system, over ten years since the opening of the airport, a decision was made to abandon the system completely, reverting back to the old fashioned “tug and trolley” system.

References:
R. deNeufville Baggage System at Denver: Prospects and Lessons" (Journal of Air Transport Management, December 1994
Denver Airport Baggage Handling System Case Study – Calleam Consulting
Wikipedia

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