In your text, Information Technology for Management: On-Demand Strategies for Performance, Growth and Sustainability, Chapter 13, the opening case was “Denver International Airport (DIA) Learns from Mistakes Made in Failed Baggage-Handling System Project.” The project was intended to integrate baggage handling at all three of the airport’s concourses into one single reliable baggage system. The project was burdened with unrealistic expectations, but it was still approved for implementation despite expert warnings. The implementation proved to be a failure due to numerous delays that impacted the opening of Denver’s international airport.
There are many system development methodologies, including waterfall, iterative, DevOps, spiral, lean, object-oriented, and agile.
For this activity, review the case study from Chapter 13. In a 1- to 2-page written document:
- Summarize the SDLC steps taken in the case study.
- Describe at least three points of failure.
- Select one methodology you would use to yield a successful implementation andjustify its use.
- Explain how the points of failure would be successfully addressed by the new methodology.
Case 13.1 Opening Case
Denver International Airport Learns from Mistakes Made in Failed Baggage-Handling System Project
This classic project management case illustrates almost every possible project management mistake and the lessons that were learned from it. It documents a project disaster that occurred in the development of the baggage-handling system at Denver International Airport (DIA) in the late 1980s and early 1990s. The failure of the baggage-handling system propelled DIA into newspaper headlines across the country, and people joked that if you were flying to Denver, you had to go to Chicago to pick up your luggage! To this day, it remains the classic example of how not to conduct a project.
The purpose of the DIA project was to create the most advanced automated handling of baggage in the world by integrating baggage handling at all three concourses into a single system. The terms “most advanced, automated, and integrated” clearly indicate that the system was going to be extremely complex, risky, and subject to delays. Unfortunately, an unrealistic schedule was planned and the project approved despite the fact that experts warned that the project was infeasible and that any delay would postpone the opening of Denver’s new state-of-the-art international airport.
As a result of the project’s failure, the newly completed international airport designed to service multiple major airlines remained idle for 16 months while engineers dealt with the complexities of the baggage-handling system. During that time, the project had to be scaled down from the original project plan to servicing all concourses to servicing only one concourse. The system was working, but only in segments. Only baggage handling on outbound flights for one concourse was automated. Instead, baggage to/from other concourses had to be handled using a manual tug-and-trolley system that was quickly built when key players finally acknowledged that the automated system would never meet its goals. The problem appeared to be with the software required to get different systems to talk to each other.
The delay resulted in an additional $560 million to build DIA and a U.S. Securities and Exchange Commission probe into whether Denver officials had deliberately deceived bondholders about how equipment malfunctions would affect the opening of DIA. In addition, at least one major airline that was scheduled to occupy DIA pulled out, resulting in one entire concourse remaining unused for several years. The cost of maintaining the empty airport and interest charges on construction loans also cost the city of Denver $1.1 million per day throughout the delay. Ten years after its implementation, the automated baggage-handling system was scrapped because it still did not work correctly.
DIA’s $200 million baggage-handling system was designed to be state of the art. Conventional baggage-handling systems are manual, and each airline operates its own system. DIA wanted an automated one-baggage-system-fits-all configuration that it could lease back to multiple airlines.
The system would consist of 100 computers, 56 laser scanners, conveyor belts, and thousands of motors. The system would contain 400 fiberglass carts, each carrying a single suitcase through 22 miles of steel track. Operating at 20 miles per hour, the system would deliver 60,000 bags per hours from dozens of gates. The system was designed to carry luggage from airplane to baggage carousel in less than 10 minutes. The goal was that the luggage would be waiting at the carousel for deplaning passengers. No more waiting for baggage at the end of a long trip—so customer satisfaction would soar.
The baggage-handling system would be centered on track-mounted cars that slow down, but don’t stop, as a conveyor ejects bags onto their platform. A scanner reads the bar-coded label and transmits the data through a programmable logic controller to an RFID tag on a passing car. In this way, the car knows the destination of the bag it’s carrying, as does the computer software that routes the car to its destination. Imagine thousands of driverless taxi cabs in New York City being controlled by a computer as they pick up and dispatch passengers throughout the streets.
The city of Denver selected two companies to assist in the project management process. Greiner Engineering—an engineering, architecture, and airport planning company—and Morrison-Knudsen Engineering—a design-construction organization. The City of Denver, Greiner, and MKE made up the project management team that coordinated schedules, controlled costs, managed information, and administered approximately 100 design contract, 160 general contractors, and more than 2,000 subcontractors.
What Went Wrong
DIA’s baggage-handling system was a critical component in the city of Denver’s plan to construct a new state-of-the-art airport that would position Denver as an air transportation hub. By automating baggage handling, aircraft turnaround time was to be cut to as little as 30 minutes. Faster turnaround meant airlines could minimize on-ground time, which would be DIA’s competitive advantage.
Following is the timeline of the major events and project management mistakes:
November 1989: DIA construction work starts.
Ignored experts In 1990, the City of Denver hired Breier Neidle Patrone Associates to do a feasibility analysis to build a fully integrated baggage system. Reports advised that complexity made the project unfeasible. Experts from Munich airport advised that the much simpler Munich system had taken two full years to build and that it had run 24/7 for 6 months prior to opening to allow bugs to be ironed out.
Summer 1991: A decision is made to go ahead with the DIA project and the DIA project management team asked for bids for the automated baggage-handling system.
Underestimated complexity Fall 1991: Of the 16 companies included in the bidding process, only 3 responded. None could complete the project in time for the October 1993 opening. All three bids were rejected, and the urgent search for a company that would meet the deadline continued.
Poor planning and impossible expectations In April 1992, DIA went to contract with BAE Systems to complete the project in time for the October 1993 opening—ignoring expert evidence that the timeline was impossible to achieve.
Lack of due diligence Contract terms between DIA and BAE and project specifications were hammered out in only three meetings. The rush to contract ignored the feasibility analysis. The pressure to move quickly drove them to skip critical due-diligence steps.
Excluded key stakeholders BAE and the airport project management team excluded key stakeholders—the airlines that had contracted with DIA—during the negotiations. Excluding stakeholders from discussions in which key project decisions are made is always a losing strategy.
Scope creep 1992–1993: Numerous changes in the scope of the project are made. For instance, Continental Airlines requested ski equipment handling facilities be added to its concourse, and the scope of the baggage-handling system expanded from handling only Concourse “B” baggage to handling baggage for the entire airport.
Ignored interface design The baggage-handling system had to interface with the airport. That is, because the design of the building was started before the baggage system design was known, the designers of the physical building only made general allowances for where they thought the baggage system would go. The allowance of spaces in which the baggage system would operate represented the interface between the design of DIA and the baggage system. To make effective decisions about how to design DIA, the DIA designers should have worked with experts in designing the baggage system. DIA had sharp corners that required turns that baggage carts cannot navigate. To keep carts from falling off the rails, the speed of the system had to be decreased to 30 cars per minute. This change frustrated passengers who had to wait inordinately long times to pick up their baggage, thus eliminating DIA’s competitive advantage of fast baggage turnaround time.
Despite the fact that they are 6 months into formal negotiations for the project, as of March 7, 2017, DIA officials are still not ready to ink the deal with the bid team for a massive planned renovation of Jeppesen Terminal. Although 6 months was the length of time allotted for negotiations as part of a “predevelopment agreement,” DIA spokesman Heath Montgomery said airport officials are still working out project details and design that could be worth hundreds of millions of dollars. When asked how much longer it would take to complete the deal, Montgomery declined to estimate how soon the two sides would propose a full development agreement for public scrutiny and said “We have the ability to stretch it out as long as we need to.” Under the council-approved predevelopment contract, DIA CEO Kim Day can extend the negotiations period by up to six additional months without council approval.
From a project management perspective, the baggage-handling system was doomed from the start. Nobody knew how to design the baggage-handling system or realized the complexity of the software requirements. The decision to proceed with a single integrated system at DIA knowing that the deadline could not be met, not considering possible risks and making other irrational decisions, contributed heavily to project failure.
As a result, the DIA baggage-handling project was a spectacular failure that teaches us a lot about project communication and scope creep and has become the classic example of how not to manage a project. And, at DIA, the massive project failure has led to better project management practices.