Improving Project Management in an Ailing Airline - Case Study Example

Improving Project Management in an Ailing Airline By Name: Presented to: Course/ Class: University: City and state: Due date: Executive summary Briefly, this report aimed at presenting lessons that can be learnt from successes or failures of a project in an airline firm. To reach this end, the report sought to understand why the particular project was started and how airport authority selected the project. The report was further tasked with the duty of highlighting ways in which costs, schedule, and risks were managed. Translation of plans into action in addition to gaining an understanding of leadership within project management team was to be tackled in the report. What is more, the report required identification of stakeholder dynamics in addition to problems encountered and how they were addressed during project execution. Denver International Airport Baggage Project registered extensive failures starting from the preliminary stages of project initiation through to the last stage of project conclusion. These failures present an opportunity for project managers to learn and improve on organizational projects. Most organizations in the world concentrate on project success. Those who fail in their project often do not document the detail, which then means that learning avenue is closed. Table of Contents Executive summary ii Table of Contents iii 1.Introduction 1 2.Project methodology 1 3.Project Summary of Denver Airport Baggage System 2 4.Impact of DIA Project across Project Life Cycle 3 5.Project decisions and lessons borrowed 8 6.Conclusion 11 1. Introduction This paper seeks to analyse Denver International Airport Baggage Project and possibly discuss how an ailing airline can improve management of its project. The first section of this writing is a short elaboration on project methodology, which is then followed by succinct account of Denver Airport Baggage System project. The choice of Denver case is simply motivated by the fact that several projects concentrate on their successes and fail to report or rather document on failures. After appreciating the nature of DIA project, a discussion covering impact of the baggage project on project life cycle follows. Along with this, details of how things could have been done differently are elaborated at the end of each stage in the project life cycle. The last section looks at Denver Airport Baggage project and lessons borrowed from the entire project that can be applied to improve project management in an ailing airline. 2. Project methodology Before commencing any project, it is vital to understand the meaning of methodology. According to Project Management Institute (2004), project methodology is guidelines or rather principles that can be adjusted and subsequently applied to a particular project. The guidelines are the activities to be done in the whole project life cycle. Project methodology can also be viewed as stages followed to ensure successful completion of project. There is no doubt that project methodology guides all participants throughout project life cycle. When a specific methodology has been chosen, consistency must be maintained i.e. all members must use the chosen methodology from the start to the end. In acknowledgment of the actuality that no single methodology fits all projects, most project managers modify and tailor the chosen methodology to fit their own project needs. However, all project methodologies have five identifiable process groups including a control system. 3. Project Summary of Denver Airport Baggage System A case in point to illustrate massive failure in project management is the Denver Airport Baggage System Project. Denver International Airport is the largest United States project occupying about 53 miles (Neufville, 1994). The airport handles close to 19 airlines with United Airlines taking up a bigger proportion of air traffic. On a daily basis, DIA controls 1,300 flights and 88,000 passengers. In terms of efficiency, DIA is the only airport to take care of three streams airlines during a bad weather. The airport has multimillion dollar joining terminals and is shown in appendix A. Denver Airport Baggage System is of significant interest simply because of its bearing in project management. It is an example of a megaproject that stretches resources to the greatest limit, has high costs, and success is very critical (Swartz, 1996). Events that accompanies Denver project is a lesson to airport industry and by extension, transport community. The Baggage System was planned in 1990 to assume an automated baggage-handling system. This was to be a large-scale system operating in real time. Other specifications of the system were 35-Km track, 4,000 high-speed, bag carrying, and deliver baggage to 20 airlines (Swartz, 1996, p. 81). The project had 100 computers managing the entire system. Additional elements in the system were 5,000 electric eyes, 400 radio scanners, and 56 bar-code scanners. Gadgets i.e. bar-code scanner served the purpose of ensuring that luggage were directed to the right direction. The objective of the new system in DIA was to carry 70 bags per minute to and from check in and checkout at the rate of 24 miles in an hour (Applegate, 1999). In the end, the system was to allow the airport to check baggage in 20 minutes. The move to the new system was necessitated by the reality that traditional tug and cart system was powered by diesel thus cause pollution in the underground tunnels that were poorly ventilated. Airport scale further called for efficiency in baggage movement to allow faster movement of planes in and out of the airport. Before settling on Boeing Airport Equipment (BAE) to develop Denver system, various proposals were evaluated by Denver Airport Baggage Handling System Evaluation Committee but subsequently rejected on the basis that they did not guarantee timely project completion (Neufville, 1994). A BAE’s bid was evaluated on its approach. The company operated a successful single-bag destination coded vehicle, a system termed as Telecar. Even though hardware and software design issues regarding the proposed system emerged between contract award and integration testing, they were not addressed appropriately. In 1991, BAE was awarded a $20 million contract to install Telecar track. Later in June 1992, BAE received a $193 million contract to work on baggage handling system (Applegate, 1999). According to the schedule, the airport was to be launched in October 1993. This was not the case as new changes were ordered while the system was still under construction. In May 1992, system redesign was ordered consequently affecting project schedule. This was further accompanied by conflicts or rather infighting between contractors, which continued until 1993. 4. Impact of DIA Project across Project Life Cycle i. Initiation Stage The first process group is initiation, which signifies the birth of an idea for a desirable outcome (Meredith, 2000). This is the stage at which nature and scope of a project is determined. Failure to execute well this stage means that the project may not meet organizational needs. At this stage, a manager must have a vivid understanding of business environment while also making certain that the project has necessary controls. Initiation stage presents the first document called project charter, which contains elements such as business case, scope and deliverables, objectives, and resources. The idea to construct an automated baggage system was stimulated by the need to increase efficiency in line with organization objective of increasing efficiency in the world-leading airline. In order to have a correct conceptualization of the project, assistance ought to be sought from experts. DIA failed to include Logplan’s assistance in spite of Logplan’s extensive experience in baggage system having built Munich Airport automated baggage system. Logplan registered success due to their skills in the job. A key element of project management that emerges from DIA case is selection of the right people with the right skills to steer a project in the right direction. Besides, inclusion of experts in project management team means that industry standards would be attained in terms of accessibility, portability, usability, and robustness. ii. Planning and Design Stage The second process in project management is planning and design where time, costs, and resources are checked to estimate work and manage risks involved. Such information is entered in project management plan. Some of the activities within project planning and design process are developing the scope statement, risk planning, communication planning, formation of schedule, and budget (Crawford, 2002). These details form the basis of project contract. Initially, BAE was contracted to develop a baggage system for United Airlines at Denver International Airport and not for the whole airport. Later on in April 1992, Denver Airport Management pursued BAE to construct an integrated system. This affects scope statement of a project. It is important also to note that the plan to construct a baggage system for the entire airport came after construction of Denver International Airport. While appreciating that construction of the automated system had not been considered in the original plan of constructing the airport, the baggage system encountered problems related with buildings and structures that would house components of the new system. These components had to be fitted into available space and underground tunnels, which actually had no relationship with Denver International Airport Construction Plans. The inability of the planned automated baggage system to fit into constructed airport meant that tight geometry had to be followed. Telecars were made to make unreasonable sharp turns. This indicates poor planning. A good plan should consider the entirety of the system i.e. constructing the baggage system along with the airport building. Time schedule for automated system was very tight, i.e. delivered in two years as opposed to three to four years as estimated by experts. To manage risks in a project, enough provisions must be made. DAI project encountered numerous technical problems since no provisions for risks had been made. An example of risk in DIA’s project was power failure that led to system crush. This problem could have been solved by making provisions for filters to be built in the system to eliminate power surges. Delivery of purchased filter took a lot of time owing to long time spent in ordering and installation thus affecting project testing. The strict time constraint also presented a difficult scenario for management to conduct appropriate risk management activities. There is no doubt that the success of a project depends on careful consideration of risks, communication, budget, costs, and scope. iii. Execution Stage The execution entails processes deployed in completing work as stipulated in project management plan (Gawler, 2005). Apart from coordinating people and resources, this stage ensures that activities of the project are integrated and performed. The outcomes of this stage are the deliverables, which are the consequences of processes identified in the project management plan. Denver project started in 1992 and in the month of May 1994, DIA organized for a demonstration of the new system even before consulting with the contractor. What was thought to be an exciting experience became a disaster. Bags were crushed and thrown off the system as shown in appendix B. The experience led to indefinite cancelation of opening date the airport. Subsequently, services of Logplan were consulted. The expert recommended the development of manual tug and trolley system to replace the originally planned system. In anticipation of rising maintenance cost due to malfunctioning automated system, the airport resorted to full manual system in 2005. iv. Monitoring and Controlling Monitoring and controlling process is the fourth stage in a project methodology. Activities in monitoring and controlling activities include variables that aid in managing and tracking project. This allows quick identification of potential problems for purposes taking an immediate corrective measure. Some details that indicate project monitoring and evaluation include measurement of project progress, monitoring project variables i.e. cost and efforts, managing change, corrective actions for risks (Lock, 2007). As soon as the project actualises its goals and objectives, activities within monitoring and evolution are concluded. Even though Denver project was monitored and evaluated very closely after its launch in 1995, several problems accompanied its operation. Problems started back at the design stage but they were not addressed appropriately by the expert like Logplan who had successfully developed a complicated system in Munich. This necessitated the scrapping of automated system in favour of a manual system. There is no doubt that monitoring and evaluation was not effective for this project given the deeply rooted problem. The fifth stage, project closing, is very critical since it puts to a stop consumption of resources otherwise the project will continue using resources (Crawford, 2002). Project closure means putting to completion activities in all process groups, splitting project team, and setting off obligation with the customer. To understand performance of a project, a project closure report is drafted. This will measure business performance against original plan of costs, time, tolerance, and quality. Besides, lessons learned report is completed and published with a view of communicating invaluable project experiences to future projects. August 2005 saw the removal of automated system and replacement with full manual system marking conclusion on automated system. BAE project conclusion was accompanied by fines for delayed project delivery. Notwithstanding the five basic process groups in a project, there is also project control that keeps a project on track, on time and within the budgeted amount of resources. Denver project did not pay attention to these critical concepts. Control starts way back during planning and concludes in post-implementation review. Average control is recommended for any project given that excessive control culminates to time wastage while little control is risky. Some elements within a project control are business strategy, standards of new system, change management, and quality control measures. In summary, processes involved in project management are summarised in appendix C. 5. Project decisions and lessons borrowed DIA’s project presents several ideas that that can be used by project managers to manage their projects. At the onset of a project, strategic decisions are made, which sets a project in a specific direction. The case of DIA was substantially affected by strategic mistake that affected the entire project. Before bids for a new system was requested in 1991, assumption was made that individual airlines would handle their own equipment. Whereas, United Airlines had already contracted Boeing Airport Equipment (BAE) to construct their systems, continental airlines remained passive. A change in strategy was witnessed in summer of 1991 when Project Management Team took over the responsibility of building the system from individual airlines. This decision to control the project centrally was valid simply because of the integrated nature of the project. However, this decision was poorly timed and communicated. It could have been done at the onset of the project to allow enough time for designers to understand complexity of the project and eventual make informed decisions (Lewis, 2002). One lesson to be learnt from this case is that where strategy is changed, then a corresponding change in organizational responsibilities should be witnessed i.e. central team be responsible for the project as opposed to individual airlines. Distinctively, a strategy that focuses on creating the most efficient airport in the world ought to be merged with development of a baggage system that increases this efficiency. Secondly, the DIA case brought to light the aspect of time and cost factor in project management. Change in strategy in 1991 meant that more time and resources was need for project completion but DIA Project Management Team and BAE chose the option of continuing with the project. The three bids that were analysed were rejected simply because they could not deliver the project in time. This could have been an indicator that extra time was urgent. In summary, a team that managed DIA’s project failed to pay attention to time factor and even ignored expert advice given the complexity of the system. A lesson learnt is that project managers should allocate enough time to a project. Moreover, expert advice must be considered since it can affect the entire project. Variables including budget, scope, and schedule are amongst critical factors in a project. The terms of contract for BAE were delivery of the project under a fixed scope, schedule, and budget, conditions negotiated within a short time without allowing airport stakeholder i.e. airlines, to make their own contributions. Tight schedule in DIA’s project culminated to avoidance of full simulation of the system. Actual of the project was $250M against the planned $195M, which translates to about 30% budget run over (Strategicppm, 2010). The project is comparable to Sydney Opera House, which ran out of resources, but still actualised its goals as opposed to Denver project. The message obtained here is that budget and time over run is bad but not catastrophic. The entire system was also not tested completely. Additionally, training was minimised. This sends a message to any project manager that all stakeholders must be part of any central decision made. A situation that initially excludes some stakeholders from decisions will automatically set back the project when these stakeholders are later on invited to make their contribution. A literature by Mourne (2006) clearly indicated that stakeholders must be involved during idea identification, design, implementation, and integration. In this case, it is advisable to do stakeholder management starting with identification, mapping and prioritising them as shown in appendix D. Likewise, management of stakeholder communication and activity throughout the project is indispensible. DIA Project additionally is a revelation that schedule must be controlled well by defining activities and their resources while establishing sequence and duration of all activities. Thirdly, full testing and full training are indispensible in a project. These factors not only reduce chances of failure but also identify areas that can be improved. Finally, the case above brought to surface the question of project structure. The structure of an ailing airline project team should be in such a way to ensure that airline business requirements agree with airport business requirement. The determination of Project Team ought to be strictly based on cost and business benefits as illustrated in matrix below. Cost and Benefit Matrix Costs High Project unlikely to be viable Joint Project Team monitors and delivers project Low Small BAE Team monitors Project Full BAE Team monitors Project and delivery activity Low High Business Benefits The matrix indicates level of participation of airline Project Team in the monitoring and delivering the project. Apparently, the matrix clearly demonstrates that high costs and benefits are attached to a joint project team. Conversely, low costs and benefits accompany a project team with small airline Team monitoring the project. The role of an airline Team is as follows: i. Analyse the needs of airline, define the project, and analyse process in line with Baggage Project Process ii. Ensure correct interpretation of requirement by the company iii. Participate in process to make certain that project design and delivery activities are in agreement with airline requirements. iv. Contribute to design and advice v. Ensure client sign off 6. Conclusion This report presented a case of a failed project with a view of giving a learning experience for project management in an ailing airport. The first part of the paper covered overview of Denver baggage project. This was followed by an analysis of the project on project cycle. Thereafter, lessons borrowed from Denver project decisions were highlighted and give due attention as variable that can contribute to the success of project management in an ailing airline. . References Applegate, L. M. (1999). BAE Automated Systems: (A) and (B), Teaching Note. Case study no. 5–399–099. Boston: Harvard Business School Press. Crawford, T., & Da Ros, V. (2002). Politics and the Project Manager. Australia Project Manager, 22(4): 20-21. Gawler, M. (2005). Project Design in the Context of Project Cycle Management. Retrieved from http://www.artemis-services.com/downloads/sourcebook_0502.pdf. Lewis, J. P. (2002). Fundamentals of project Management. New York : AMACOM. http://books.google.co.ke/books?id=3RgL2dSpHFgC&printsec=frontcover&dq=Lewis,+ J.+P.+%282002%29.+Fundamentals+of+project+Management.+New+York+:+AMACO M.&hl=en&sa=X&ei=_cO3T5_mNIjA2gW3zrWgCQ&ved=0CGAQ6AEwBg. Lock, D. (2007). The Essentials of Project Management. 9th ed. New York: Gower Publishing, Ltd. http://books.google.co.ke/books?id=1y9Gts5ME88C&pg=PA198&dq=Lock,+D.+%2820 07%29.+Project+Management.+9th++ed.+New+York:+Gower+Publishing,+Ltd.&hl=en &sa=X&ei=3sG3T5W2DMSi2QWd4KXMCQ&ved=0CE8Q6AEwBQ#v=onepage&q= Lock%2C%20D.%20%282007%29.%20Project%20Management.%209th%20%20ed.%2 0New%20York%3A%20Gower%20Publishing%2C%20Ltd.&f=false. Meredith, J. R., & Mantel, S. J., (2000). Project Management: A Management Approach. New York: John Wiley & Sons. http://books.google.co.ke/books?id=xGRtQetWjNsC&pg=RA1- PA81&dq=Meredith,+J.+R.,+%26+Mantel,+S.+J.,+%282000%29.+Project+Management :+A+Management+Approach.+New+%09York:+John+Wiley+%26+Sons.&hl=en&sa=X &ei=d8G3T7TjCcjs2gX89ZzECQ&ved=0CF8Q6AEwBg#v=onepage&q&f=false. Mourne, L. (2006). Project Relationships and the Stakeholder Circle. South Melbourne: Practical PM Pty Ltd. http://www.stakeholder- management.com/Papers/P010_Project_Relationships.pdf. Neufville, R. De. (1994). “The Baggage System at Denver: Prospects and Lessons,” Journal of Air Transport Management, 1(4): 229-236. http://ardent.mit.edu/airports/ASP_papers/Bag%20System%20at%20Denver.PDF. Pinto, J. (2010). Project Management: Achieving Competitive Advantage. 2nd Ed. New Jersey: Pearson Educ In. Project Management Institute. (2004). A Guide to the Project Management Body of Knowledge. Newtown Square PA: Project Management Institute. Strategicppm. (2010, June 1). The Failure of Denver International Airport’s Automated Baggage System. Retrieved from http://strategicppm.wordpress.com/2010/06/01/the- failure-of-denver-international-airports-automated-baggage-system/. Swartz, J. A. (1996). Airport 95: Automated Baggage System? Software Engineering Notes 21(2): 79-83. http://dl.acm.org/citation.cfm?id=227544&coll=Portal&dl=GUIDE. Appendicies Appendix A: View of Denver International Airport Terminal Source: Denver website Appendix B: System failure during DIA demonstration in the presence of Media. Source: Denver website Appendix C: Project Life Cycle Source: (Pinto, 2010) Appendix D: Stake Holder Management Source: Pinto (2010). Read More