Bae Automated Systems Case Study

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BAE AUTOMATED SYSTEMS CASE STUDY

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TABLE OF CONTENTS

Table of Contents        Page 1        

Executive Summary        Page 2        

Issue Identification        Page 3        

Environment & Root Cause Analysis        Page 4        

Alternatives        Page 6        

Recommendations        Page 7

Implementation        Page 8

Monitor and Control        Page 9        

Executive Summary

Denver International Airport (DIA) began construction in November 1989.  In 1992, two project managers recommended a automatic baggage system be implemented to create efficiency to the airport.  Without any qualified bidders, the City of Denver contracted out to a reputable company, BAE Automated Systems Inc. (BAE).  While the DIA was already in construction BAE was brought in late where the automated baggage system design could not fit in current layout.

The issues that BAE run into compose of team cooperation, procurement challenges and project management complications.  DIA was planned to open October 1993; however, due to the system complexity, build design of the project, political pressure and other problems, the airport opened in February 1995.

Gene Di Fonso, President of BAE, had three alternatives; 1) Abandon the Contract, 2) Continue with the Contract or 3) Modify the Contract.

A combination of Alternatives 1 & 3 is recommended.  BAE should cut their losses and pay the fines to abandon the contract as there were too many issues that were out of their control and very little cooperation from the City of Denver.  BAE will modify the contract and continue to work with United Airlines to build a baggage system in their concourse. Implementation will begin after the legal team signs off on documentation. BAE will have success in implementing a less complex system for United.  To monitor performance, BAE will help with reports that indicate transit time for luggage from terminal to airplane and reports on any discrepancies

Issue Identification

The construction of Denver International Airport (DIA) began in November 1989 and was planned to cover a land mass of 140 square kilometers which was suppose to handle over 50 million passengers annually.  Two years into construction in 1992, the projects top managers recommended to include an integrated baggage handling system as it could dramatically improve the efficiency of delivering luggage. The City of Denver selected and contracted out the baggage handling system to BAE Automated Systems Inc. (BAE).  

Gene Di Fonso, President of BAE, understood the complexity and approach of implementing a baggage system; however, as they were brought late into the project, BAE already faced major planning errors as project specifications were fully defined and arranging for the space and accommodating the weight of a baggage system may impose on the building structure. Furthermore, other factors for the baggage system had to be considered such as the power it requires to run, and the ventilation and air conditioning that would be necessary to dissipate the heat it generates.

BAE faced planning and system complexities as the size and requirement for DIA was a first of its kind.  In order for an automated baggage system to be implemented at DIA, faced issues that include the following:

• Team Cooperation

BAE was suppose to have unrestricted access; however, this was not the case and going through the city’s channels delayed the project. Communication amongst the teams was a challenge; there was a senior manager for each of the concourses and a manager for the main terminal.  Changes were happening fast that there was no time to have an information system and there was no one to tie decisions together.

• Procurement Challenges

Denver’s requirement and city law outlined that a certain percentage of jobs be contracted to minority-owned companies. The City of Denver had denied BAE’s original contract because it did not comply with hiring requirements, where upon BAE engaged some outside contractors in lieu of BAE employees.

• Project Management

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

The City of Denver had unrealistic due dates, the build-design method for the project was according to a DIA official which was unusual because projects with this complexity will normally happen in separate stages.  Failure to recognize the complexity and risk contributed to poor project management.

Environmental & Root Cause Analysis

By automating baggage handling, the turnaround time for an aircraft can be reduced to 30 minutes; faster turnaround meant more efficient operations and a competitive advantage for an airport. In December 1991, United Airlines, commissioned BAE to develop an automated baggage handling system for its B Concourse at DIA.  The City of Denver’s decision to contract BAE to design and implement an automated baggage handling system in 1992 was because there were no suitable candidates in the competitive bid process.  BAE had in-house engineering, manufacturing, and field support capabilities which enabled BAE to develop, design, manufacture, install, and support projects that they undertook from start to finish; however, they were unable to utilize all of their resources.  Denver’s city law outlined that a certain percentage of jobs be contracted to minority-owned companies which caused long delays and increased costs upward to $6 million.  Being unable to utilize BAEs resources resulted in higher costs and delays.

A Build-Design project was used which involved too many parties and no effective method to communicate dependencies and milestones. This was a big project and involvement totaled 200 to 300 firms and reached 400 during the construction phase. One of the biggest problems was keeping track of all the changes, engineer’s, contract administrator, project managers had their own methods to keep track of their work; however,  there was no system to combine all reports.  It was difficult to assess completion as this a build design complicated progress.

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