[DOCUMENT TITLE]

Harsh Vardhan Verma

ISB [Company address]
Q1. Evaluate the implementation of the Denver International Airport Baggage-Handling System.

What do you believe were the top 3 factors that contributed to the project's failure? Who do you

feel is most at fault (Peña, Webb, DiFonso, others)? Identify "top 3" and the person most at fault.

In our opinion top 3 factors that led to failure of Denver International Airport Baggage-handling

System are-

(i) Frequent decision Modifications and other Changes: -

At the start of the project, no modifications were anticipated. But, after the work started, Denever

officials frequently altered plans and timelines without discussing with BAE. Worse part is that

when changes were made for one section of project, it was not taken into account how those

changes affect the entire project. There was very poor communication and coordination through

the city as United Airlines had started construction of its own baggage handling system before

BAE. Moreover, after BAE came in, the Chief airport engineer – Slinger made changes in project

without any discussion with the city. Also, Singler’s & City Mayor Pena provide complete access

of airport to BAE for implementation the project. Later, after Slinger’s death new mayor Webb

takeover the command and not affirm the initial conditions under which BAE promised to deliver

the project. This resulted several problems as BAE not having access to complete airport. One

such instance was that United truck blocked BAE access to a particular area where it needed to

work. Also harsh chemical used in area where BAE workers were working that forced construction

force to abandon the site.

To minimize cost of whole system design United just rely on one single loop of track. This strategy

saved $20mn but need a complicated redesign. Some other changes also made such as location
change of stations, putting mezzanine baggage platform, & bigger baggage link. As time lapses

project size and complexity increased. Because of more design changes technical difficulties

increased that hampered project timeline. After BAE knew that centralized system runs along with

other subsystem, they decided to decentralize all tracking and sorting of computers. They need to

review these type of major changes and think about the alternate course of actions.

(ii) Feasibility of project timeline

This project had a very broad scope and magnitude so project timeline should be realistic.

Because of unrealistic timeline it was not possible to do concrete planning. Many experts

including experts of BAE, Patrone Associated & Munich airport experts showed their

concerns about the timeline of project completion & warned that timeline was too short to

complete the project. For successful completion of project additional buffer of 2~3 years

need to take into account. BAE experts speculate and said that this task ought to take twice as

long of a time. BAE vice president of engineering Ralph Doughty said that it’s a 3~4-year

task and they were asked to do in 2 years. Subsequently as project fell behind the deadline,

errors became more pronounced because of human error.

(ii) Planning & Execution

Denver International Airport Baggage-Handling System comes into picture in very later

stages and in 1991 BAE was contracted to build this system. As per the United airlines city

contracted for baggage system after several years into the project. Actually this baggage system

was an afterthought after airport construction. But in planning phase several problems occur

because of structure and design constraints of building which contain this baggage system track

and other components. Because of these constraints this baggage system had to fit into
underground tunnels which further increased complexity and led to frequent changes in project

plan. Difficult geometry resulted in additional construction problems. Inconvenience of

operations also occurs due to sharp turns on tracks (space constraints).

Also to attract local citizens – 400 contractors turn up but it is very difficult to guide and monitor

all of them at the same time. Based on Local City council rules to retain local talent forced BAE

to award contracts to nearly 400 independent businesses. At the same time this results in

execution complications.

Q2 What problems occurred during the timeframe when Federico Peña was mayor? Given the

constraints he faced when he succeeded Peña in November 1989, what should Mayor

Wellington Webb have done differently?

When Pena Federico was the mayor prior to November 1989, there were following major problems

in the DIA project:

1. The timeline for the completion of the project was highly unrealistic. This was further

aggravated by the fact that the project was launched and planned without specific

commitments from both the major airlines operating there: United and Continental. Hence,

it was very clear that when in future both the airlines would commit, then the project

completion timeline will be very vulnerable to change.

2. The emphasis on assuring that the project’s greatest beneficiaries would be the local

business: Pena desired to involve as many individual firm as practicable to utilize

maximum of the Denver area talent. As a result, during the construction phase around 400

different firms were involved in the project simultaneously. One part of the project like the
 runway was handled by many different firms. As a result, the supervision and the

coordination lacked in every stage of the project. This was one of the major reasons for the

delay in and the associated failure of the project.

When the new mayor Wellington took over from Pena, we think that he could have taken following

steps to alleviate the problem.

 He could have acted upon the avice from the experts related to the unrealistic project

completion time. He could have addressed to the ongoing communication breakdown and

the coordination issues.

 He could have responded to the project changes more swiftly. Upon the commitment by

major airline, the decision to implement BAE across the whole airport could have been

taken earlier.

Q3. As Gene Di Fonso, what would you have done differently to avoid the problems faced at the end

of the case?

Following were the major reasons and areas that need to be addressed by Gene Di Fonso, to avoid problems

faced at the end of the case

 There was paucity of time and the entire project including the terms of agreements and the project

scope were put across in just 3 straight sessions and thus there was a clear lack of time and a sense

of rush leading to a lack of understanding on part of BAE in terms of assessment of risk.

 Moreover, there was no clarity on the scope, budget and schedule and a commitment against these

odds was in itself a huge risk as far as BAE systems was concerned. Moreover, If the management

would have known the risk.

 Gene Di Fonso realized the importance of the leadership initiatives taken by Walter Slinger in his

time as Slinger was quotes as a “real problem solver” But Fonso could not push the replacement of

slinger to a smooth transition of leadership from one individual to another as well as he did not
 have a backup plan for building relationships with the contractor in case of any untoward incidence

like Slinger death occurred . He should have developed a strong liasoning power with the higher

authorities to whom the chief airport engineer reported and the city administration including the

mayor .

o Due to lack of preemption of the change management and ability to gauge the lack of

control on part of Gail (Replacement of Walter Slinger) , Fonso should have approached

the higher authorities as well as the contractor like Hensel Phelps who are causing delay in

the project activities in identifying the major concerns and should have addressed them

actively through a allotment of relationship manager .

o Fonso should have enforced the contract condition of unrestricted access by negotiating

with Gail and the administration at the Airport and should have highlighted the factor

causing this delay and asked for compensatory time and monetary allownace due to such

hindrance in the project.

 Moreover there were several delays in the project due to intermittent changes in the design as

“United” altered the transfer systems for Concourse B , added ski claim devices . Moreover,

Continental requested automated baggage sorting and later maintenance track were also put. All

these changes delayed the project execution & led to expenditure of additional cost in many cases

. Fonso should have requested the stakeholders like Continental and United to stick to the initial

Project plan as the continuous change in plan would not only add additional cost but also lead to

further delay in delivering the project.

 Technical issues like clean electricity for motor and circuitry functioning of the baggage system

should have been preempted by Fonso and the requisite Consultant & experienced engineers should

have been approached before running the baggage systems so as to avoid any delay in procurement

of filter for the circuit and any other operations issues arising during the project. Moreover Fonso

should have allotted a manager to priorities the procurement of critical systems to expedite the filter

purchases , and also analyzed the contracts for finding thr root cause of operation lapses as it was
 found that filter were part of the contract but were not delivered in time .Moreover these lapses

should have been red flagged by Fonso to the Airport management for accounting the delay and

thus also avoid subsequent delay by city workers due to cancellation of contract.

 Professional Contract Management professional should been involved while dealing with labor

issues that stipulated a fixed percentage of job to be contracted to minority owned companies. This

led to a loss of $6 million which could have been saved. Moreover, the contracts for maintenance

should have been negotiated with key stakeholder like unions initially with hired Labor law

consultants in place the maintenance contract would not have been lost at a later stage by BAE.

 Efficient project management team with periodic check on Fonso’s end would have helped identify

various faults immediately, thus avoiding delays that occurred delay in programming the

Concourse. Most of the issues related to “Jam Logic”,sensor issues and wrong delivery of empty

cars to terminal building etc. were software based issues which could have certainly been rectified

with testing of the logic and regular checks test by consultants could not be Moreover, the

relationship with the management team should have been strengthened by Fonso so as to improve

the credibility of BAE as well to resolve minor issues without higher escalation.

Q4. How should DiFonso 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?

Although I feel that Di Fonso was partially at fault when he accepted the project in spite of knowing

that the deadline for the same is very impractical, he could still retaliate to the penalty imposed by

Mayor Webb.

The 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 is unfair. As per the initial
contract at the time of old mayor Pena and the airport engineer Slinger, BAE equipment should

get full and unrestricted access to any kind of work. Moreover, it was also promised that BAE

would have priority in any area where it needed to install the system. This decision was taken

keeping in mind that it would help completion of the project on time. But when Webb took over,

these promises were not fulfilled. For example, on one occasion the BAE workers were forced to

abandon one area because some other agency working in the same area was using very strong

chemicals and sealants. In another instance one BAE millwright had issues with access to a

worksite. Also the BAE electricians had to leave their work areas where concrete grinders were

creating clouds of dust. Another problem was that city was not able to provide clean electricity

and when the filters were order to resolve this issue then it was cancelled mistakenly by the city

worker.

To further complicate the matters, the major airlines were taken on board at a very later stage and

this plan was not the part of the project. As a result, the airlines began requesting frequent changes

in the systems design, which resulted in even more delay.

Even when the BAE brought up this issue to the attention of city’s leaders, very little or no actions

were taken. Therefore, BAE should not be penalized for the delay in the project.