Case Study #1 - BAE and DIA Student Paper Requirements Required Format: ' Paper should be between 3 to 5 pages. 1" margins, 11 pt Arial, 1.5 line spacing Title Page does not count toward page limit ' References do not count toward page limit (in text citations do count) ' Please submit all papers as a .doc or .docx le Name the le "LastName_Firstlnitial_Case# -- for example: 0 Tyre_P_Case 'l.docx or Tyre_P_Scrum.doc ' Please upload to OAKS by the due date. This is an easy Case Study, I expect this one to be on time. ' For each 12-hour increment past the end of class, you will receive a V2 point reduction in grade. Case Study Sections: 1. Title Page with Student name, name of case and date 2. Executive Summary (1 or 2 paragraphs) 3. Answer the following questions with a strong argument by listing facts in the case that support your thesis, andlor the concepts covered in the class. 1. Critique the development of the Project Scope for the BAE baggage handling technology that was to be installed in the Denver Airport. What do you think were the top 3 reasons for unclear scope details? 2. Who do you feel is most at fault (Pena, Webb, DiFonso, others)? 3. Name at least 3 stakeholders or stakeholder groups who were involved with the DIN BAE implementation and their impact on the scope of the project? 4. Was DiFonso, as the Project Manager, able to effectively manage \"up, down, and across\"? Cite example that support your answer. 5. In creating a Scope Checklist for this Project how would you complete the following sections? Scope Checklist definitions are found in the Larson Text, Pages 107 to 109 ' Name of the Project ' Project Objective ' Project Scope description ' Justification ' Deliverables ' Milestones ' Technical Requirements ' Limits and exclusions ' Acceptance Criteria Case Study #1- Evaluation Criteria (Rubric) (25%) Does the student understand the questions asked, and can they come up with the required number of concepts to answer the question? ' (25 %) Is the paper clear, easy to read and conforms to the guideline for submission? ' (25 %) Could the student correctly assess the challenges to project from the case? ' (25%) Did the student apply the concepts learned in class to BAE Automation accurately? company could demonstrate that flaws in the overall design of the airport and the unsystematic approach to project changes had affect implementation ofthe integrated baggage system. He wondered whether he should just cancel the contract and cut his losses or attempt to negotiate with the city for support required to finish this system as specified, Despite the severe deterioration in communication and rising hostility. Could the problems with the automated system be overcome with the dedication of additional resources?? Given that the system represented a significant departure from conventional technology, would reducing the size and complexity facilitate resolution ofthe problems that plagued it? And if, if the city could be persuaded to accept a simplified system, with the tenant airlines, particularly those with hubbing operations that had been promised more advanced functionality and better performance, be likely to sue? Building the Most Efficient Airport in the World Until about 1970, Denver Stapleton Airport had managed to accommodate an ever-growing number of airplanes and passengers. Its operational capacity was severely limited by a runway layout. Sta pleton had two parallel North] South runways and two additional parallel East/ West runways, and this limited the commitment to only commuter aircraft. Conversely, geographic location and the growing size of its population and commerce made it an attractive location for any airlines \"hubbing\" operations. At one point, Stapleton had housed 4 airline hubs, more than any other airport in the United States. In poor weather and during periods of high traffic volume, however, its limitations disrupted connection schedules that were important to maintaining smooth operations. A local storm could easily congest air traffic across the entire United States. Economic Considerations A number of trends and events in the mid-1980s alarmed bank economists and other of the region's business leaders. In the mid-19805. The collapse of oil shale ventures between 1982 and 1986 saw mining employment fall from 42,000 to 26,000 jobs, while service support jobs fell from 25,300 jobs to. 13,700 jobs. Construction jobs fell from 50,700 to 36,600 jobs and the value of private construction plummeted from $24 billion to $9.5 billion. A lackluster economy led many government officials. In countries and municipalities, as well as in Denver, to embark upon an unprecedented policy of massive public construction to save the region from what was regarded in 1987 as an economic freefall. All 180 million plus municipal bond was issued for public improvements, including a new downtown library neighborhood and major roadway improvements and a host of overdue infrastructure investments. During the same. The Pena administration moved decisively to confront an increasingly aggressive Chamber of Commerce leadership that was promoting airport relocation. Case Study #1 BAE and DIA 2 Per the Chamber of Commerce: \"The Chamber of Commerce, members of the City Council, the mayor and the state legislators participated in informal discussions with other cities that had recently built airports. This enabled everybody to understand the magnitude of the project. So, we started the two other airports that had been built in the United States in the last 50 years and said tell us that you went tell us everything you went through and all the places you think there would be problems. We were not going into it blindly\" The Master Plan Following a bid that controls the consulting contract was awarded to the joint venture of Grenier and Morrison, Knudsen engineers for their combined expertise in the field of transportation and construction. The construction tea m, the consulting team. Working under the direction of the DIA, Director of Aviation, focused first on four Elements site selection, the Master Plan, Environmental assessment and developing support by educating the public on economic benefits. The final master plan presented to the city by the team in the fall of 1987 called for the construction of the world's most efficient airport. It was to be created from the ground up with no predetermined limitations. The plan was to allow the airport to grow and expand without compromising efficiency twice the size of Manhattan at 53 square miles, the nation's largest airport, was to be designed for steady flow of traffic in all weather conditions. It was to comprise a terminal with East and West buildings joining by an atrium structure, 3 concourses and automatic underground people mover and five parallel 12,000foot-long runways on which as many as 1750 planes could take off and land daily, it's flowing through traffic pattern with allow planes to land., taxi to the concourse gates, and take off in one direction. The ultimate build out, projected for the year 2020, was to include up to 12 full service runways, more than 200 gates, and a capacity of 110 million passengers annually. Estimated costs (excluding land acquisition and pre 1990 planning costs) was $2 billion by the end of 1991, the estimated cost had increased to $2.65 billion. Plans called for the project's completion by the fall of 1993. Build Design Build Project By the time construction began at a in November 1989, a transfer of authority was ta king place at the city of Denver. Wellington Webb was elected the new mayor. According to one of his assistants, The Pena administration had announced that the airport would be operational in October 1993. \"This was a building design build design project, which means that we were building the airport while we were designing it, \" he explained " because of delays early on the project, we had to accelerate construction immediately. There was a lot of pressure and too many players. It was an airport built by committee. We had regular meetings to straighten things out, but it didn't always work.\" Case Study #1 - BAE and DIA 3 Although the Web administration inherited an airport project without a commitment on the part of the major carriers, the support and input of concerned airlines were absolutely key, not only financially, but also in terms of input on overall airport layout., scope, and capacity, and supporting systems such as fueling and baggage handling. Denver launched the program without specific commitments from either of Stapleton Airport's two major tenants, United and Delta Airlines, which together account for more than 70% of existing passenger traffic. Delta committed to the new airport in February 1990, United in December 2019. In 1991 fundamental changes were made to the airport layout plan and facilities (some already under construction's) to accommodate the operational needs of the carriers. The Webb administration followed the predecessor administrations emphasis on assuring that the project's greatest beneficiaries would be local businesses. The desire was to involve as many individual firms as practical and used Denver area talent. It was reasoned that local talent was easily accessible to the program management tea m, known as PMT knew Denver building codes and practices, and had made available the necessary professional labor pool to accomplish the design accordance with the demanding scheduled. In addition, existing law stated that 30% minority owned firms and 6% women owned firms had to participate in the Public Works program. Results was a contracting philosophy that maximized opportunities for regional businesses and local workforce to compete for the work. At least five of 60 contracts awarded from the design of went to Denver area firms. These 60 design contracts generated 110 construction contracts. 88 professional services contracts also had to be coordinated. Many local firms had to be hired and the program was chopped up into many small projects. Hiring local talent originally involved a total of 200 to 300 firms and reached 400 during the construction phase. Five different firms design the runways for the terminal. The cities emphasis on encouraging everyone to compete and yet be part of the project increased potential for interference and coordination problems. Denver's flat economy led the administration to keep construction money within the city, although this benefit in the city, it introduced additional burden on administration. As many as 40 to 50 concurrent contracts involve many interrelated milestones. End contiguous or overlapping operational areas. The estimated daily on-site workforce populations exceeding 2000 to 2500 workers for a 15-to18-month period beginning mid-1991 and peaked at between 9000 and 10,000 in mid-1992. Adding to the human resource coordination problem was a forecasted 4000 deliveries. Daily construction volume for six months in mid-1992 exceeded $100 million per month. Moreover, communication channels between The City of Denver PMIT (Project management team) and consultants when neither well defined nor controlled. \"If a contractor fell behind, \"a resident engineer who reported said, Case Study #1 BAE and DIA 4 \"The resident engineer would alert the contractor and document this. The resident engineer would document what he would have done an what would HAVE to be done or additional resources were needed to get back on schedule and finish the contract. As a public agency, it was enormous, the amount of documentation that we did. I don't know how many trees we cut down just for this project. The resident engineer had about 5 to 8 12-drawer ling cabinets of documentation and was nothing compared to what the area manager had. It was just incredible. There were at least fourto six copies of everything\". The scheduling manager describe the evolution of the tracking system that was used. \"One ofthe biggest problems we had was keeping track of all the changes. 50, we developed the database system that was installed at each one. Each of the resident engineers' trailers and each contract administrator was then charged with keeping that system up to date and feeding us disks, which we would have had then merged together periodically. To produce an integrated report. But every party had developed their own tracking system before the start of the project. That worked well for each group, but there was no way to take each one ofthese divergent systems and combine it into one, comprehensive report. So, when we introduced the change tracking system, everybody said \A United project manager, concurred. \"BAE told them from the beginning that they were going to need at least one more year to get the system up and running, but no one wanted to hear that\" The City of Denver was getting much the same story from a technical advisor to the Franz Josef Strauss Airport in Munich. The Munich airport had an automated baggage system but one far less complex than DIAs. Nonetheless, Munich's technical advisors had spent over two years testing the system. The system had been running 24 hours a day for six months before the airport opened. Formulating Intentions Automated system was more expensive initially than simple tugs and baggage carts, it was expected that it would reduce the manpower which was required to distribute bags to the current locations. Bags unloaded from an aircraft arriving at a particular concourse would barely be touched by human hands. Moved through the airport at speeds of up to 20 mph, they would be waiting when passengers arrive at the terminal period. To prove the capacity of its mechanical aspects and demonstrate the proposed system to the airlines in politicians, BAE build a prototype automated baggage handling system in a 50,000 square foot warehouse near its manufacturing plant, in Carrollton, Texas. The prototype seemed convinced Chief Airport Engineer Walter Slinger that the automated system would work. \"The City of Denver approached us based on one core concept\" recalled Di Fonzo. \"Th ey wanted to have a fully integrated, airport wide baggage system. The city had two major concerns. First, they had no acceptable proposal. Second United was probably going to go ahead and build what it needed. And the rest the airport would have been equipped with something else,\" D Fonzo continued. When we arrived on the scene, we are faced with a fully defined project specs, which obviously in the long run proved to be a major planning error. The city had fallen into a trap, which, historically architects and engineers tend to fall into, as they severely underplay the importance and significance of some of the requirements of a baggage system that is arranging things for the space into which it must fit. Accommodating the weight, it may impose on the building structure, the power it requires to run, and the ventilation and air conditioning that may be necessary to dissipate the heat it generates In April 1992, BA E was awarded the $175.6 million contract to build the entire airport system according to Di Fonzo, company executives and city officials hammered out a deal in three Design was not to be changed beyond a given date, and there would be number of freeze dates from mechanical design, software design, permanent power requirements and the like. The contract made it obvious that both signatory parties were very concerned about the ability to complete. The provisions dealt mostly with all around access, timely completion of certain areas, provisions of permanent power, provisions of computer rooms. All these elements were delineated as milestones Case Study #1 - BAE and DIA 6 intense working sessions. \"We placed a number of conditions on accepting the job, \"he observed Denver officials accepted these requirements and in addition, committed to unrestricted access from BEA equipment. Because of the tight deadlines, BAE would have priority in any area it needed to install the system. Di Fonzo elaborated. \"When we entered into the contract, Delta Airlines was still under bankruptcy law protection. The City of Denver was very concerned that they would be unable to pay for their concourse. They only contracted for about 40% ofthe equipment that is now in Concourse A, which was the concourse that Delta had leased. Beyond that Concourse C had no signatory airlines as leaseholders at the time. The city, therefore, wanted one of the simplest, most elementary baggage system possible for Concourse C. The outputs and inputs were very very crude. Intentionally crude to keep costs down because the city had no assurance of revenue stream at that point in time, the city did not get airlines together or asked them what they wanted or needed to operate. The approach was more of along the lines of \"we will build the apartment building and then you will come in and rent a set of rooms\". Project Organization and Management No major organizational changes to accommodate the new baggage system were deemed necessary, although some managerial adjustments were made on the DIA project. Design of the United baggage system was frozen on May 15, 1992, when the PMT assumed managerial responsibility for the integrated system. The direct relationship with BAE was delegated to Working Area 4, which also had the responsibility for building design efforts such as the people mover, astride concourse building, passenger bridge, main landslide building complex and parking garage, and various other smaller structures. The area manager, although he had no experience in airport construction, baggage system technologies, or introduction of new technologies, possessed vast experience in construction project management control. Case Study #1 - BAE and DIA 7 BAE had to change its working structure to conform to DIA's project management structure, Di Fonzo explained. Per Di Fonso, \"There was a senior manager for each of the concourses and a manager for the main terminal. The baggage system, however, traversed all ofthem. If I had to argue a case for right of way, I would have had to go to all the managers, because I was traversing all four empires. In addition, because changes were happening fast at each ofthese sites, there was no time to have an information system to see what Concourse A is deciding and what is Concourse B deciding. We had to be personally involved to understand what was going on. There was no one to tie it all together and overlap all these efforts because the basic organization was to manage it as discrete areas. It was pa ndemonium. We would keep saying that over and over again. \"Who is in charge?\" For the first two years of the project, Di Fonzo was the project manager. The project was divided into three general areas of expertise, mechanical engineering, industrial control and software design. Mechanical engineering was responsible for all medical mechanical components and their installation. Industrial control for industrial control, design, logic, controller programming and motor control panels and software design for writing real time process control software to manage the system. At the time the contract with BAE was signed, construction had already begun on the terminal and concourses. Substantial changes had to be made to the overall design ofthe terminal, and some construction already completed had been taken out and re installed to accommodate the expanded system. Installation of the expanded system was initially estimated to require more than $100 million in construction work. Walls had to be removed and a new floor installed in the terminal building to support the new system. Moreover, major change in the project governance were taking place during the baggage system negotiations. In May 1992, shortly after the baggage system negotiations commenced, the head of the DIA project resigned. The death in October 1992 of Chief Airport Engineers Slinger, who had been a strong proponent of the baggage system and closely involved in negotiations with BAE, also exerted a significant impact on the project. His cooperation had been essential because the amount of heavy machinery and track that had to be moved and installed, and the amount of construction work required to accommodate the system. His replacement, Gail Edmund, was selected because she had worked closely with him and knew all the players. Her managerial style, however, was quite different from Slingers. A public works manager recalled his first reaction to the change, \"the airport is not going to be open on time,\" A United Airlines project manager summarized Edmonds challenge thus: Case Study #1 - BAE and DIA 8 Slinger was a real problem solver. He was controversial because his attitude. He was never afraid to address problems. He had a lot of autonomy and could get things done. Gail was in a completely different position. Basically, she had good understanding of how the project was organized and who the key players but didn't know much about the actual construction. Also, the City Council didn't give her anywhere near the autonomy and the authority that Slinger had, and she had to get approval from the Council on just about all decisions. They really tie her hands, and everyone knew it. Di Fonzo echoed the project managers assessment: Walter Slinger understood that one of the things we had to have was unrestricted access. I think he clearly understood the problem the city was facing, and he understood the short timeframe under which we were operating. He was the one that accepted all of the contractual conditions, all the milestones of the original contract. He really had no opportunity to influence the outcome of the project, however, because he died within months after the contract was signed. I think Gail did an excellent job, but she was overwhelmed. Shejust had too much on her plate. The layers below her focused inward, worrying about their own little corners of the world. \"Not only did we get the unrestricted access that we agreed upon\complete loops of track, United would only have one period. This change saved approximately $20 million but required systems redesign. In addition, additional ski claim device is odd size baggage elevators add in. Added in four of the six sections of the terminal, added $1.6 million to the cost to the system. One month later, Delta requested that the automatic bag sorting systems be added to its West basement at an additional cost of $4.6 million. The ski claim area length was first changed from 60 from 94 feet to 127 feet and then January 1993 shortened 212 feet. This first change added $295,800. The second subtracted $125,000 from the cost. The same month, maintenance tracks were added to permit the Telecars to be serviced without having to lift them off the main track at an additional cost of $912,000 one year later, United request alterations to its odd size baggage inputs. The cost of the change is $432,000 Another problem with the City of Denver's inability to supply \"clean\" electricity. The baggage system, motors and circuitry used in the system works extremely sensitive to power surges and fluctuations. When electrical feedback tripped circuit breakers on hundreds of motors an engineer was called in to design filters to correct the problem. Although ordered at the time, the filter still had not arrived seven months later. A city worker had cancelled a contract without realizing that the filters were part of it. The filters finally arrived in March. 1994. A third, albeit disputed complication related to Denver's requirement and city law is that certain percentage of the jobs be contracted to minority owned companies. The City of Denver had denied BAE original contract because it did not comply with hiring requirements where upon BAE engage some outside contractors, in lieu of BAE employees. Di Fonzo estimated that this increased cost, by approximately $6 million, a claim rejected by the Mayor's Office of Contract Compliance. Then in September 1993, BAE contract negotiations with the City of Denver over maintenance of the system resulted in a two-day strike of 300 millwrights, that was joined by some 200 electricians. BAE negotiated with Denver for maintenance workers to earn $12.00 an hour on certain jobs, the Union contended, should be worth $20 per hour. As a result, BAE lost the maintenance contract. Project Relations Much of the effort for implementing the baggage system was directed within one of the four working areas, quote the relationship with the management team was very poor quote, recalled Di Fonzo. Case Study #1 BAE and DIA 10 The management team had no prior baggage handling competence or experience. It was treated as a major public works projects. The management team treated the baggage system as similar to pouring concrete or putting in air conditioning ducts. When we would make our complaints about delays and access, and so forth, other contractors would argue their position. The standard answer was, "go work it out amongst yourselves.\" with contractors basically on their own., This led to almost anarchy. Everyone was doing their own thing. Another perspective was offered by a project manager from Stone and Webster, a consultant to the PMT, reflecting on the work done by BAE: \"This contractor simply did not respond to the obvious, incredible workload they were faced with. Their inexperienced Project Management vastly underestimated their task. Their work ethic was deplorable.\" PMT management insisted that access and mechanical issues weren't the problem. \"They were running cars in Concourse B all summer (1993), \"Edmond observed. \"The project was that the programming was not done, and BAE had full control ofthe programming.\" Lawsuits and a Backup Baggage System In February 1993, Mayor Webb delayed scheduled October 1993 airport opening to December 19, 1993. Later, this December date was changed to March 9, 1994. \"Everybody got into a panic mode of trying to get to this magical date that no one was ready for\After the test, Mayor Webb delayed the airports opening yet again, this time indefinitely. \"Clearly, the automatic baggage system now underway at DIA is not yet at a level that meets the requirements ofthe city, the airlines, or the traveling public, \"the mayor stated. The city set the costs of the delay $330,000 per month. Recognizing this reputation was staked on his ability to have a baggage system performing to a point at which the new airport could be opened, Mayor Webb engaged, in May 1994, a German firm Logplan to assess the state of the automated baggage system. In July, Logplan isolated a loop oftrack that contained every feature of the automated baggage system and intended to run it for extended period to test the reliability of the Telecars. Jams on the conveyor belts and collisions between cars cause the test to be halted. The system did not run long enough to determine ifthere was a basic design flaw or to analyze where the problems were. Logplan recommended construction of a backup baggage system and suggested using Rapistan Demag, a firm that had worked in the past. Construction of a backup system was announced in August 1994. The system itself cost $10.5 million, but electrical upgrades and major building modifications raised the project cost to $50 million. In the meantime, the City of Denver as well as many of the major airlines, hired legal firms to assist with negotiations and future litigation. \"We have enough legal action for the rest ofthis century,\" a city administrator mused. The City of Denver had to communicate with such parties as the United States Federal Grand jury, Securities Exchange Commission (SEC) , and the General Accounting Office (GAO). The federal grand jury was conducting a general investigation concerning DIA. The SEC was investigating the sale. Of $3.2 billion in bonds to finance DIA's construction and the GAO the use of Congressional funds. Di Fonzo, reviewing Mayor Webb's letter and request that BAE pay $12,000 a day penalty for missing DlA's original October 29, 1993, completion date, as well as assuming the cost ofthe building. That 50 million conventional tug and cart baggage system summed up the situation thus: \"we have gotten to the point with the city that literally we are not talking to each other. Consultants recommended a bag of backup baggage system and the minute that decision was made, the city had to defend it. We are left out in limbo.\" Case Study #1 - BAE and DIA 12 Case Study #1 - BAE and DIA BAE Baggage Handling System and DIA (Denver International Airport) \"No airport anywhere in the world is as technologically advanced as the Denver International Airport\" \"Its dramatic: If your bag [got] on the tract, your bag was in pieces\" In November 1989, ground was broken to build the Denver International Airport (DIA), located 25 miles from the downtown Denver, Co, was the first major airport to be built in the United States. With the opening of the Dallas Fort Worth Airport in 1974, in 1992, two years into construction, the project stop managers recommend inclusion ofan airport wide integrated baggage handling system that could dramatically improve the efficiency of luggage delivery. Originally contracted by United Airlines to cover its operation, the system must be expanded to serve the entire airport. It was expected that the integrated system would improve ground time efficiency, reduce closeout time for hub operations, and decrease time-consuming manual baggage sorting and handling. There were, however, a number of risks inherent in the in the endeavor.; The scale of the large project size.: the enormous complexity of the expanding system: the newness of the technology: the large number of resident entities to be served by the same system: the high degree of technical and project definition uncertainty, and the short time span for completion. Due to its significant experience implementing baggage handling technology on a smaller scale, BAE Automated Systems Inc and engineering consulting and manufacturing company, based in Carrollton, TX, was awarded the contract. Construction funds kept the new airport from opening on the originally scheduled opening date in October 1993. Subsequently, problems with the implementation of the baggage system, forced delays in the opening ofthe airport, another three times in seven months. In May 1994, under the growing pressure from shareholders, the business community, Denver residents, Federal Aviation Ad ministration commissioners, and the tenant airlines and concessionaires, Denver Mayor Wellington Webb announced that he was hiring the German firm Logplan to help assess the state ofthe automated baggage system. In July. Logplan issued 311-page report through the City of Denver that characterized BAE System as \"highly adva nced\" and \"theoretically capable of living up to its promise, capabilities, services, and performance, but acknowledge mechanical and electrical problems that made it most improbable to achieve a stable and reliable operation Log plans suggested that it would take approximately 5 months to get the completed BA E system working reliably. It also suggested that a backup system of tugs carts and conveyor belts could be constructed in less than five months. In August 1994, Mayor Webb approved the construction of a backup baggage system. At the same time, he notified BAE ofan $12,000 a day penalty for not finishing the baggage system by DIA original October 29, 1993 completion date. Webb also demanded that BAE pay for the $50 million conventional tug and cart baggage system. Jean Di Fonzo, president of BAE, whose Case Study #1 BAE and DIA 1