Stakeholder Analysis of Denver International Airport - Case Study Example

Executive Summary Successful project’s secret lies in the definition of the project itself. Every project has three basic objectives; scope, cost and time. Watchful planning of these objectives can lead to victory that is done in the earlier stage of project life cycle. Denver International Automated baggage system was a failed project practically and in terms of project management practices. This project was considered to be overly ambitious because of its uniqueness. There were numerous factor that lead to this failure. Main factor was the change in scope of the project because initially it was decided to build an automated baggage system then it changed into an integrated automated baggage system that make this project very much complex. There was a short time to design, build and test the system before opening day so this result in excessive schedule pressure. The complexity was not realized earlier but after entering into so many implementation problems. Stakeholders of the project, the tenant airlines, were not involved during planning and scheduling stages so their requirements were changing and boosting up the costs, so futile stakeholder management. In addition to this, there were so many technical failures and power outages that added up the costs. Company’s burden of interest payments was increasing day by day. There was lack of proper leadership and risk management. The project was lagging far behind the scheduled time and cost thus the opening of system was delayed many times. The day when demonstration of the system was held in public, it was a disaster too. Thus, with huge maintenance cost of one million dollars per month, Denver International airport reverted back to its old baggage system with use of tugs and carts. Failure of Denver has lessons to be learned that during the planning of such a large scale project, there must be in depth knowledge of the system and extensive amount of time must be sacrificed for proper planning, scheduling and implementation of these plans. Expert advice must be taken that could provide a useful knowledge of risks and uncertainties that could happen. In this paper, this project is being critically analyzed and emphasizing the importance of project management practices. Introduction Organizations use project management to accomplish their goals. It was used for external growth in past, but now a days its use for internal growth of organizations is mounting rapidly like new product developments, providing value added services to the customers etc. For this purpose, organizations undergo any short-term activities to produce an exceptional product or service that is known as project that has a clear scope, cost and time. Not All projects are successful but they do fail mostly because of not defining the objectives properly that is the essence of the definition of a project[Jac]. Denver International automated baggage system is the true example of a project failure according to project management practices such as scope changing, over costing and delayed in time. The main objective of this system was to provide the city of Denver with the world’s largest automated airport baggage handling system for efficient operations and thus to get competitive edge, rather than manual system being used earlier, that could course baggage to and from aircraft without human involvement in twenty minutes. Other objectives of the project were the multiplying profits of airlines and to efficiently cover the long distances in the airport[Sch96]. Initially, the project sounded viable according to the project initiators. Before two years of execution of project top management changed the scope of the project that was now to build an integrated automated baggage system within the airport. But when the company, BAE Automated system Inc. to whom 193$ million were granted for the designing, building, and testing of the project till October 1993, realize the complexity of the task later then there was a need to change the project budget, schedule, and all other requirements [USG94]. There were many other factors that led to this failure and are being discussed in this paper. Stakeholder Analysis To maintain the project goals, there is requirement of acceptance of project by the stakeholders that is usually done by persuading and negotiating. So stakeholders’ requirements are kept at priority. The main stake holders of Denver’s automated baggage system were the tenant airlines like United and Continental Airlines as well as the creditors to whom the owners owed much. In 1991, United and Continental Airlines signed to use Denver Airport as hub so these were the stakeholders right from the plan [Cas08]. Good will of the airport’s workers was also at stake, because they were using old-fashioned bag carts to serve people that needed much labor to cover all the customers and thus the reputation of United Airlines was at risk that was the busiest airline[Joh05]. Implementation In 1989, the construction of Denver International Airport started, located 25 miles from the downtown Denver, Colorado in the United States. In the beginning, the objective was to construct the biggest automated baggage system in the world. With land mass of 140 kilometers square, it was thought to handle 50 million passengers on yearly basis. In 1992, Top project managers proposed the additional airport-wide integrated automated baggage system to increase the efficiency from check-in to pick-up on arrival and reducing the time wastage in manual handling and sorting the bags. It was contracted to well-known BAE Automated Systems Inc. The airport’s opening was scheduled on October 1993 and cost estimated for this opening was about 5 billion dollars that includes the support of Federal Government and Airlines who spent 400 million dollars in supplying cargo centers, catering facilities and passengers’ buildings. But in 1994, Denver Airport owed to bondholders more than 3.8 billion dollars that was resulted from the problems encountered in implementation. There were many difficulties in implementation like there were continual power outrages that delayed developing and testing of system, and in solving the problem by industrial filters, their orders and installation were also delayed. Thus the opening time was delayed and Denver also missed another three opening dates in April and May due to increasing pressure from stakeholders. The delay hugely increased the bonded debt up to $271 million for 1994 only aside the cost of maintaining the new airport which was $33 million monthly. In August of this year, Denver mayor Wellington approved a backup baggage system of tug and carts because of delayed opening and he also notified BAE a penalty for not completing the system on scheduled time. In March 1995, the shoot up cost because of these delays was about 500 million dollars [Ric94]. The system was tested to move 7000 bags from Continentals’ Concourse A to United Concourse B. But the test was a disaster because the bags were not loaded and routed properly so they fell off the telecarts that blocked the whole system. The actual opening of the system was held at Feb 1995. Then with the passage of time there was huge increase in maintenance cost that was one million dollar per month in 2005. Then the system was clashed and was converted again into totally manual system to save the costs[Cas08]. Critical Analysis There were a lot of factors that led this project towards failure. Foremost and very important factor for any project is to define the objective and strategy to achieve it. Projects’ success or failure usually depend upon the way it defines the strategies and then do planning according to them. In case of Denver airport International, firstly, it was a strategic fault to adopt the build-design strategy that means building the airport while designing it. In 1991, project management team was supposing that every airline will organize its own baggage system. But after some time, project management team altered the main strategy and proposed to make an integrated system through the airport and started inviting bids for it[Cas08]. Strategy change create another problem because initially there was no automated baggage system in the project plan for airport. Thus, there was very congested space for the system to fit in. Then the system have to be forced to fit in the boundaries of the airport[Ric94]. Although there is a need to change the strategy in some cases but the timing of the strategy is a critical factor to be considered. When in case of DIA the integrated system was proposed and accepted, then there were only two years remaining in the opening of the system. So this leads towards the excessive schedule pressure and many other risks were involved. Secondly, BAE did not realize the complexity and uncertainties involved in the project when it was being contracted with DIA and was supposed to work in a static scope, budget and plan. BAE was although a well-known company for automated systems but this project was very unusual to it. They have not designed such a system before. So they miscalculated the complication and freshness of the project. This was the company who have to make key-decisions for it and they misjudged the timing within which it could be completed thus failed in doing so[And13]. The complexity issue was too big to be undervalued. Because it causes much hazards in the project, BAE had to change the scope of project. Within a very low time frame, the company was unable to make a proper lay out and architecture for the system that leads towards the wrong schedules and estimations of budget as well as technical errors specially with detectors. Thus schedules were made too tight that it did not allow the proper testing so that corrections could be made before demonstration in public. Thirdly, there were so many requirement changes from the airlines. United airline asked for automatic handling for larger bags and to build a handling area. And continental airlines also required to have ski equipment handling services. Project management team has to accept these changes because these were the key stakeholders. Thus it adds more troubles in cost estimations. Stakeholders’ management was too weak in this project. Key stakeholders are needed to be involved in the negotiations but the project management team was not paying heed towards their requirements. It caused more problems because after-changings boost up the costs. [Cas08]. Fourthly, project management team was unable to encounter many risks involved in the project. There were a lot of technical problems in the system for which no safety measures were made like power failures but when it happened, the delivery and fixing of filters needed to counter the problem was delayed a number of months. Thus further delays were queued up. The death of Walter Slinger, who was the main driving force for the project, contributed a lot in the project failure. After his death, there was lack of headship and monitoring of the project because he was equipped with very extensive knowledge of engineering. [Cas08]. Thus for successful projects, there must be properly defined objectives, strategies that must be aligned with the planning, scheduling and implementation of the project. Mostly the project failures occur when they are not organized to counter unexpected deviations from the plan or failure to access expert advice. Stake holders’ indulgence in planning process is essential. Time and cost forecasts must be realistic that could be attainable. Project management practices must be kept in mind to avoid failures or for backing up the failures. References Jac: , (Meredith & Mantel, n.d.), Sch96: , (Schloh, 1996), USG94: , (US General Accounting Office, 1994), Cas08: , (Case Study – Denver International Airport Baggage Handling System, 2008), Joh05: , (Johnson, 2005), Ric94: , (Neufville, 1994), Cas08: , (Case Study – Denver International Airport Baggage Handling System, 2008), Ric94: , (Neufville, 1994), And13: , (Andrews & Bell, 2013), Read More