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Background

What was to be the world’s largest automated airport baggage handling system, became a classic story in how technology projects can go wrong. Faced with the need for greater airport capacity, the city of Denver elected to construct a new state of the art airport that would cement Denver’s position as an air transportation hub. Covering a land area of 140 Km2, the airport was to be the largest in the United States and have the capacity to handle more than 50m passengers annually. A mechanized baggage system is at the heart of the New Denver Airport, as for all major new airports. In the case of Denver, this was to be something unique: the “Integrated

Automated Baggage Handling System”, originally designed to distribute all baggage including transfers automatically between check-in, the aircraft and pick-up on arrival. Unfortunately, massive problems plagued this automated baggage system. Consequently, the New Denver Airport did not open in October 1993 as scheduled. After missing later opening dates in April and May 1994, the Airport seems as of January likely to be open in March 1995.

The delay would then be around 16 months. Expenditure to maintain the empty airport and interest charges on construction loans cost the city of Denver $1.1M per day throughout the delay. When opening day finally arrived, the system was just a shadow of the original plan. Rather than automating all 3 concourses into one integrated system, the system was used in a single concourse, by a single airline and only for outbound flights. All other baggage handling was performed using simple conveyor belts plus a manual tug and trolley system that was hurriedly built when it became clear that the automated system would never achieve its goals. Although the remnants of the system soldiered on for 10 years, the system never worked well and in August 2005, United Airlines announced that they would abandon the system completely. The $1 million per month maintenance costs exceeded the monthly cost of a manual tug and trolley system.

Design of the automated baggage system

The fully automated baggage system originally planned for the New Denver Airport was unique in its complexity, its novel technology, and its anticipated capacity. It was designed to deliver each bag, including transfers, individually from check-in or the unloading of the aircraft to the outward bound aircraft or baggage reclaim. “The delivery mechanism consists of about 9 km of conveyors and over 27 km of track on which circulate 4000 individual, radio-controlled carts, the so-called “destination coded vehicles”” (Auguston 1994) . The capacity of each track supposed to be 60 “destination coded vehicles” per minute.

Speed in handling baggage is critical to achieving acceptable boarding and transfer times at Denver, since the distances are much greater those at other airports. The space between the midfield concourses provides for two taxiways (one is standard) between the tails of the aircraft parked at the concourses, and the terminal building in which passengers check-in and pick up their bags is separated from the first concourse by an office block, a garage, and the Customs and Immigration facilities. Speed has been considered crucial to the commercial success of the New Denver Airport, which the owners have marketed to the airlines as a highly efficient platform for hubbing operations because of its multiple parallel runways and prospective ability to turn around aircraft flights very rapidly.

Despite the central importance of the automated baggage system, its design was largely an afterthought. This is a common practice, unfortunately. The Denver system was detailed well after the construction of the airport was under way and only about two years before the airport was to open. Being late, the design was thus subject to two important constraints. First, the geometry was tight. The automated system had to fit within the confines of the airport passenger buildings and the underground tunnel connecting the concourses and the terminal; in many instances it was shoe-horned in at considerable inconvenience. Second, the schedule was tight. The system was to be implemented within 21 months, since Denver executed the contract only in January 1992. This schedule precluded extensive simulation or physical testing of the full design.

Remarkably, the design of the fully automated baggage system at Denver did not include a meaningful backup system. The planners provided neither a fleet of tugs and carts that could cope with the level of baggage expected, nor even access roads between the check-in facilities and the aircraft.

Denver International Airport (DIA) Baggage System Development Timeline

Nov 1989 Work starts on the construction of the airport

Oct 1990 City of Denver engages Breier Neidle Patrone Associates to analyse feasibility of building an integrated baggage system. Reports advises that complexity makes the proposition unfeasible

Feb 1991 Continental Airlines signs on and plans on using Denver as a hub

Jun 1991 United Airlines engages BAE Systems to build an automated baggage system for Concourse A.

BAE was a world leader in the supply, installation and operation of baggage handling equipment

Summer 1991 Airport’s Project Management team recognizes that a baggage handling solution for the complete airport was required. Bids for an airport wide solution are requested

Fall 1991 Of the 16 companies included in the bidding process only 3 respond and review of proposals indicate none could be ready in time for the Oct 1993 opening. The 3 bids are all rejected

Early 1992 Denver Airport Project Management team approach BAE directly requesting a bid for the project

Apr 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 transfer baggage automatically. Contract is hammered out in 3 intense working sessions

Aug 1992 United Airlines changes their plans and cuts out plans for the system to transfer bags between aircraft. Resulting changes save $20m, but result in a major redesign of the United Airlines portion of the system. Change requests are raised to add automated handling of oversized baggage and for the creation of a dedicated ski equipment handling area

Sep 1992 Continental requests ski equipment handling facilities be added to their concourse as well

Oct 1992 Chief Airport Engineer, Walter Singer dies. Mr Singer had been one of the driving forces behind the creation of the automated baggage system

Jan 1993 Change orders raised altering size of ski equipment claim area and adding maintenance tracks so carts could be serviced without having to be removed from the rails

Feb 1993 Target opening date shifted from 31 Oct 93 to 19 Dec 93 and soon thereafter to 9 Mar 94

Sep 1993 Target opening date is shifted again, new target date is 15 May 1994

31 Oct 1993 Original target for opening

19 Dec 1993 Second target for opening

Jan 1994 United Airlines requests further changes to the oversize baggage input area

9 Mar 1994 Third target for opening

Mar 1994 Problems establishing a clean electrical supply results in continual power outages that disrupt testing and development. Solution requires installation of industrial filters into the electrical system. Ordering and installation of the filters takes several months

Apr 1994 Airport authorities arrange a demonstration for the system for the media (without first informing BAE). Demonstration is a disaster as clothes are disgorged from crushed bags

Apr 1994 Denver Mayor cancels 15 May target date and announces an indefinite delay in opening

May 1994 Logplan Consulting engaged to evaluate the project

15 May 1994 Fourth target for opening

May 1994 BAE Systems denies system is malfunctioning. Instead they say many of the issues reported to date had been caused by the airport staff using the system incorrectly

Aug 1994 System testing continues to flounder. Scope of work is radically trimmed back and based on Logplan’s recommendation airport builds a manual tug and trolley system instead

Aug 1994 City of Denver starts fining BAE $12K per day for further delays

28 Feb 1995 Actual opening

Aug 2005 In order to save costs the system is scrapped in favour of a fully manual system. Maintenance costs were running at $1M per month at the time.

Key decisions that led to disaster

Key decision 1: a change in strategy

At the start of a project strategic decisions are made that set the project’s direction. In the Denver international airport case, a strategic error was made that resulted in “flip-flop” being made part way through the project. Prior to requesting bids for an integrated system in the summer of 1991, the airport’s Project Management team had assumed that individual airlines would make their own baggage handling arrangements. United Airlines had indeed proceeded with their own plan by engaging BAE (Boeing Airport Equipment Automated Systems Incorporated) directly. Continental Airlines had however not made any arrangements and given that the airport was not yet fully leased out, other sections of the airport were not being addressed. In the summer of 1991, the airport’s Project Management team changed their strategy and realised that if an integrated system was to be built, they needed to take responsibility back from the individual airlines and run the project themselves. This change in strategy came a little more than two years prior to the airport’s planned opening date and the timing of the decision was in large part the trigger behind the excessive schedule pressure the project was exposed to. In broader terms, the mistake made was a failure to link the airport’s overall strategy (the goal of having one of the world’s most efficient airports) with the sub-strategy of how to build the baggage system.

Key decision 2: the decision to proceed

Both the airport Project Management team and BAE decided to proceed with the full scale project despite clear indications that there was insufficient time left for the project to be completed successfully. Prior to entering into the BAE contract, there were at least three indications that the project required more than two years or was simply not feasible

1. “The 1990 Breier Neidle Patrone Associates report indicated the complexity was too high for the system to be built successfully” (Neufville 1994)

2. “Analysis of the three bids received indicated that none of the vendors could build the system in time for the October 1993 opening

3. “Experts from Munich airport advised that the much simpler Munich system had taken 2 full years to build and that it had run 24 / 7 for 6 months prior to opening to allow bugs to be ironed out”(Cal Poly & M. Schloh 1996)

Reports indicate that the decision to proceed was based on the communications between the airport’s Chief Engineer (Walter Slinger) and BAE’s Senior Management team. While BAE had initially chosen not to bid for the airport wide contract, the rejection of the three official bids resulted in the airport team speaking directly to BAE about the possibility of expanding the United Airlines system that was already under development. Demonstration of the prototype to is said to have been the factor that convinced Slinger that the system was feasible. “Despite the fact that BAE was talking directly to Slinger about the possibility of building the system, some reports indicate that within BAE several managers were voicing concern. Again the issues related to whether or not it was feasible to build such a large system in such a short period of time. Reports indicate that several managers advised the BAE Senior Management team that the project was at minimum a four year project, not a two year project” ( Cal Poly & M. Schloh 1996)

Key decision 3: schedule, scope and budget commitments