Bae Automated Systems Case Study

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Wellington Webb was elected the new mayor and was pressured to meet the completion date of October 1993; however, the two major tenant airlines Continental and United which represented 70% of existing passengers did not make a commitment until February 1990 and December 1991. The input capacity, support system and fueling and baggage handling was key to airlines and their input is required. Due to late commitment changes were made to the airport layout plan and facilities in which some already under construction to accommodate the operational needs of these carriers. This further proves that the build-design was not the correct method and the late construction and delays, could not possibility meet the October 1993 deadline.

The baggage system was to take top priority and BAE employees were to get unrestricted access to DIA concourses. Chief Airport Engineer Slinger was a strong proponent of the baggage system and closely involved in negotiations with BAE. He was an advocate for BAE and exerted a significant impact on the project; his cooperation had been essential because of the amount of heavy machinery and track that had to be moved and installed to accommodate the system. Unfortunately, Slinger passed in October of 1992 and his replacement, Gail Edmond did not much about the actual construction. The City Council did not give Edmond the same autonomy or authority that Slinger had as she had to get approval from the council on almost all decisions. This was a drawback for BAE as more time was consumed in waiting for approvals; the projects were getting further delayed. Furthermore, the unrestricted access that BAE once had became a concern and was removed. Approvals and ability to gain access became a burden and caused delays which compromised the project.

In September 1993, BAE’s 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 lost the maintenance contract and possibility the confidence of workers.

The city was unable to supply “clean “electricity to the baggage system, the motors and circuits used in the system were sensitive to power surges and fluctuations. An engineer assessed the situation and filters were designed to correct the problem; however, a city worker had cancelled the contract without knowing the filters were part of it. This was clearly the fault of the city worker and the city should take some accountability as it was several months late.

Another challenge that BAE faced was airlines requesting changes to the system’s design six months prior to opening the airport. The mechanical and software designs were supposed to be frozen with no changes to occur. It was not feasible to make the necessary requested changes by October 1993. The late changes requested by airlines and electrical issues impacted the workload and was impossible to meet deadlines.

Alternatives

- BAE to Abandon Contract

BAE should pay fines, cancel the contract and cut their losses. This is one airport and the time, resources and money consumed may not be worth it.

Pros:

- Move on to more profitable ventures

- Stop investing time to a project without reasonable help or assistance from the city

- Save money and resources for other projects

Cons:

- Reputation may be tarnished for not being able to complete a project

- Loss of money and time already invested

- Possible long legal battle

- BAE to Continue with Contract

Attempt to negotiate with the city for the support required to finish the system as specified

Pros:

- Ability to showcase that BAE was able to complete one of the most complex baggage system → Recognition and reputation

- Would not be a total loss of time and money

Cons:

- Time consuming process and City has been slow to act

- Ineffective project management causing number of unknown delays which creates backlogs

- Too many layers of communication with various departments to be able to coordinate deadlines/milestones.

- Inability to gain approval and access in a timely manner

- Too many people without actual people being accountable

- BAE to Modify Contract

Make changes that result in success for both parties. BAE can change the contract and work only with one client and use their own resources and use a construction management method.

Pros:

- Able to coordinate activities with own resources resulting in real-time information and ability to associate accountability

- Less system complexity with a manageable project

- Ability to control costs (City contract had city law where local business had to be hired)

- Ability to use own resources, experience in managing projects mitigates risk

- Communication with less parties could be more efficient

Cons:

- Loss of revenue and time from project contracted from the City

- Need to redesign layout again

Recommendation

It is recommended to use a combination of Alternatives 1 & 3.

- BAE to Abandon Contract & 3) BAE to Modify Contract

The City of Denver has not been cooperating with BAE and has made it difficult for them to complete tasks. BAE was brought in after construction was started; with airlines requesting constant changes coupled with long delays for city approval it is not in BAEs best interest to continue as the completion date of October 1993 was not feasible.

Furthermore, Mayor Webb requests that BAE pay a $12,000-a-day penalty for missing DIA’s