Denver Case Study

I. View Point

I will be assuming the Management Consultant expert in production's view point.

II. Definition of the Problem

The opening of the Denver International Airport had to be delayed four times due to problems in the baggage handling system. The enormous increase in complexity of the baggage handling system is the root of the problem. The total delay was 16 months. The total costs were $4.5 billion.

III. Statement of Objectives

 To improve ground efficiency

 To reduce close-out times for hub operations

 To minimize time - consuming manual sorting and handling

IV. Areas of Consideration

A. Strengths

New Denver Airport

 Represents a model of the airport of the future

 Planned to be the second largest hub.

 huge local commitment

 DIA was financed by a lot of different sources

Baggage Handling System

 Uniqueness of the technology being integrated and automated

BAE Automated systems

 Had enjoyed the reputation of being among the best and, on the strength of it good work, has been responsible for most of the major baggage systems recently installed in the United States.

B. Weaknesses

Baggage Handling System

 Poor scheduling

 New and untested technology

 complexity of the system and changing requirements

 Highly visible mechanical problems

 does not deliver productivity and efficiency

 lower cost-effectiveness of the system.

Denver Airport

 Did not open as scheduled

 Enormous costs on the part of the owners due to delays

 Costs of maintaining the new airport

Management System

 Resignation of the head of the DIA project assigned

 Death of Chief Airport Engineer Walter Slinger who was the key player in the negotiations.

 Communication was a problem from the beginning channels between: (a) The City, (b)The Project Management Team and (c) Consultants, were never well defined

 The City did not get airlines together to ask them what they wanted or needed to operate.

 The management team had no experience of baggage handling systems and treated it as being similar to pouring in concrete or fitting air-conditioning ducts.

 Poor management relationships

BAE

 BAE had to change its working structure to conform to DIA's project management team structure.

 BAE felt restricted with the breaking over their agreement on unrestricted access which occurred everywhere. Other contractors' work was impeding BAE progress. (key point in original negotiation).

C. Opportunities

 The City of Denver's 1983 mayoral race precipitated initiatives to improve the airfield infrastructure.

 Mayor of Denver put a very high emphasis on jobs and trade for the city

 Denver's geographic location and the growing size of its population and commerce made it and attractive location for airline hubbing operations.

 The growth of the determination of the " pro New Airport"

D. Threats

 Expensive for the airlines due to delays

 Economic free-fall in 1987

 Airlines are likely to limit operations below the level for which the airport was designed. Fewer flights and passengers increase the cost per passenger, thus encouraging airlines to route connecting traffic through alternative, competitive hubs.

 The new mayor was elected who inherited the project with no commitment to it by the major airlines.

 City of Denver invited reporters to observe the first test of the baggage system without notifying BAE.

V. Alternative Courses of Action

1. Denver Airport considering automated baggage systems should start out by assessing

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