DIA: Integrated Baggage

Handling System by BAE

Essay on Critical Assessment and Action Plan
Harsh Baheti
S3672419

Project Initiation Management

BUSM 4411
Introduction:
Dysfunctional decision making is the poison that kills most of the technology projects and
Denver International Airport (DIA) from the 1990’s serves as a classic example. To meet the
needs of Denver’s booming economy the city of Denver decided to construct a new airport that
would put Denver at the top of the chart in aviation industry, accommodating all its operations.
DIA was set to be the world’s most efficient airport when it planned on incorporating an
integrated baggage handling system to serve its entire airport. It was expected that this
component would improve the airport’s overall efficiency, but this was also about to bring in a
lot of risks because of the enormous complexity of the system, the newness of the technology
and compact timeline of the project. Underestimation of this complex system, insufficient risk
management planning, change in leadership role, accommodation of constant changes (Scope
Creep), communication gaps and breakdowns along with excessive pressure of tight schedule
were some of the key reasons of many other that led to a dramatic failure of the project.

Dates Events
November 1989 Start of Airport construction work.
Early 1991 United Airlines signs on to use concourse B as a hub.
June 1991 United Airlines engages BAE Systems (a world leader in the supply,
installation and operation of baggage handling equipment) to build an
automated baggage system.
Summer 1991 Bids for an airport wide solution are requested as Airport’s Project
Management team recognizes that a baggage handling solution for the
complete airport was required.
Fall 1991 Only 3 out of 16 companies respond and review of proposals indicate none
could be ready in time for the Oct 1993 opening. All 3 bids are all rejected.
Early 1992 Airport Project Management team approach BAE directly requesting a bid
for the project.
April 1992 Denver Airport contracts with BAE to expand the United Airlines baggage
handling system into an integrated system handling all 3 concourses, all
airlines, departing as well as arriving flights. In addition, system is to
handle baggage transfer automatically. Contract is hammered out in 3
intense working sessions.
August 1992 United Airlines changes their plans and cuts out plans for the system to
transfer bags between aircraft resulting in redesigning of the United
Airlines portion of the system. More changes are added to automated
handling of oversized baggage and for the creation of a dedicated ski
equipment handling area.
October 1992 Chief Airport Engineer, Walter Singer dies, who had been one of the
driving forces behind the creation of the automated baggage system.
Early 1993 Target opening date shifted from 29th Oct ‘93 to 19th Dec ‘93 and soon
thereafter to 9th Mar ’94.

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September 1993 BAE’s claim gets rejected and BAE loses Maintenance Contract.
29th Oct 1993 Original target for opening.
19th Dec 1993 Second target for opening.
Jan 1994 United Airlines requests further changes to the oversize baggage input
area.
9th March 1994 Third target for opening.
March 1994 Problems establishing a clean electrical supply results in disruption of
testing and development. Solution requires installation of industrial filters
into the electrical system. Hence, ordering and installation of the filters is
now done after several months of delay.
April 1994 Airport authorities arrange a demonstration for the system for the media
(without any prior information to BAE). Demonstration results in a
disaster.
April 1994 Denver Mayor Webb announces an indefinite delay in opening.
May 1994 German firm Logplan is engaged to assess the state of the current system.
August 1994 Construction of a backup system is announced.
August 1994 City of Denver starts fining BAE $12K per day for delays.
Table 1: Event Chronology

Assessments:
Significant experience in the implementation of various airport systems had landed the
contract for airport wide integrated baggage handling system under Boeing Airport Equipment
(BAE) Automated Systems Inc. who was initially implementing the system specific to United
Airlines only. BAE had decided not to bid for the project initially as it identified the complexity of
integrated system and its stringent time schedule but were left with no options when the city of
Denver approached it; given its reputation. BAE was a world leader in airport’s manufacturing
and engineering systems and with company’s president Gene Di Fonso acting as the Project
Manager for the initial years indicates the importance and complexity of the automated
baggage handling system and provides a sense that a lot was on stake for the outcome to be
successful for all key stakeholders.

BAE started off cautiously by building up a small scale prototype to demonstrate the feasibility
of the integrated baggage handling system, but did not counter the pre-defined system
specifications such as weight considerations of the system over the structure, HVAC systems
to dissipate the generated heat, power supply, etc., which led to numerous errors on later
stages of the project, neither were there any limitations set at the start of the project which
resulted in an enormous scope of the project. Di Fonso led BAE put forward a few conditions on
accepting the contract which were very vital in completing the project within the given time
schedule; they decided to freeze dates after which no changes would have been entertained.

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Provision of uninterrupted power supply and priority access to all areas required for system
installation were a few other important conditions set by Di Fonso led BAE.

A Project Management Team (PMT) was set up by the City to coordinate directly with BAE’s
team but again with an improper structure, which forced Di Fonso to lose a lot of time as BAE’s
working team had to ask for the right-of-way from different area managers when the systems
traversed different work areas, who were not working collaboratively but independently. To
further add to it, an improper and overlapping manner of the scheduling of work activities
handled by different organizations made one of the initial conditions of work invalid, which was
the unrestricted and priority access to areas where system installation had to be done. To this
BAE and Di Fonso could have taken early action against but no significant measures were
taken, resulting in an unrecoverable delay.

It was a build-and-design project (building the project simultaneously with the design of the
project), neither did the City nor did BAE took any considerations for this knowing that it would
not have been a feasible option in terms of such vital and large scale project. BAE being an
experienced candidate should have asked the city to opt for the more common and safe
practice of design-and-build (designing a project before its implementation) which would
have eliminated the need of any major further changes that as known contributed to the delay.

Only about six months were left until the original date of opening for the airport and BAE was
still accommodating mechanical and software changes to the baggage handling system
coming in from the United Airlines and Continental Airlines (who had leased Concourse B and
Concourse A respectively), making their first and most important condition to freeze dates for
changes to result in timely finish of the project; null and void. Further complications aroused
when the city of Denver was unable to supply uninterrupted power to the baggage handling
system because a city worker had cancelled the contract of filters without knowing its use in
the project, this lack of support from the city had put any remaining hopes for project success
further down, also making another one of the conditions put forward by BAE, insignificant.

Rejected claims over hiring requirements, loss of maintenance contract and ultimately
demonstrating the system in the presence of media without notifying BAE created a further rift
and resulted in sour relations between the city of Denver’s Project Management Team and
Boeing Airport Equipment Automated Systems Inc. Neither did the City of Denver respond to
the conditions of contract nor did BAE take forward firm and necessary steps to counter the
lack of support. For BAE to deliver a successful project of this scale and complexity, the
extended support from the City of Denver and other key stakeholder was a must; which in

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actual was far below of what was expected. BAE was the primary player in delivering the
integrated system and should have set the terms and conditions of work according to its
comfort but were rather suppressed by the city of Denver which demonstrates a lack of
leadership from BAE required in tackling such large scale and complex projects.

Action Plan:
Going forward in regards to Mayor Webb’s letter is going to be tough for BAE and Di Fonso,
given it was not entirely their fault; but Di Fonso and BAE should take this up as a challenge to
plan and right the wrongs and consider it as a learning opportunity, which would also help not
creating any further dent in its on stake reputation.

Di Fonso should set up a meeting with Mayor Webb to negotiate the terms and cost of per day
penalty, putting forward the plan as suggested;

The way forward should be divided into three phases of 2 months each, summing it up to no
more than 6 months with a month’s time as buffer (this should be enough time considering per
day penalty; also now they have had an idea of what should be fixed and where preventing
them to start from the scratch), with a round the clock working structure. BAE should limit the
integrated system to Concourse A and Concourse B, whereas the developed tug and cart
system could later be entirely dedicated to Concourse C.

The first quarter of Phase 1 should be dedicated to creating a core technical and organizational
team including members from BAE and German firm Logplan answering directly to the Mayor
and requesting complete support from the Mayor directly and no interference of the Project
Management Team; for the second quarter a detailed and extensive study of the failure should
be carried out. The outcome of this study should be compiled in a report and along with it a risk
management report with risk mitigations should be developed. The second month of this initial
phase should be completely dedicated to all software related errors. This phase then ends with
a Stage Gate concept, where all remaining errors and risks are eliminated before moving onto
the next phase.

First half of Phase 2 should look forward to eliminate all mechanical and electrical errors
which have already been studied during Phase 1. Another Stage Gate should be set up here to
eliminate further errors. The second half of the second phase is to be spent on rigorous full
systems tests making sure all sections of the integrated systems works in a proper flow and if
any additional resource delivers a better outcome. A third Stage Gate is added here.

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The Last Phase is completely dedicated to supporting areas of the integrated baggage
handling systems such as the space allocation for baggage to assemble initially, systematic
movement of the telecars, proper baggage collection areas and various others. A final Stage
Gate here confirms a successful and reliable operation of this entire airport wide integrated
baggage handling system.

All the Stage Gates can be compared with action plan milestones and proves essential in
moving forward, making necessary that all issue be fixed before the next phase commences.
The buffer period may be utilised to safeguard the common interest if any unforeseen
circumstances appear during the implementation of this action plan.

Figure 1: Action Plan- Flowchart

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The image below shows a SWOT Analysis for the presented Action Plan;

Figure 2: Action Plan- SWOT Analysis

Conclusion:
The importance of Front End Planning (FEP) plays a very critical role in determining the
outcome of any project. The project of Denver International Airport certainly lacked the true
elements of FEP and had a rather ambitious approach to meet the ends which resulted in a
dramatic failure. Projects cannot be successfully done with knowledge alone, as do people a
project too needs a leader for efficiently and effectively delivering a successful outcome. BAE
should have taken control and get the things done its way rather than merely being a spectator
of the occurring events.