1. Project Concept and Strategy
1.1 Is the decision to build a new airport at Denver a strategically sound decision? Give Reasons for your opinion.
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Yes, the decision to build a new airport at Denver is a strategically sound one. This is because Denverâ€™s Stapleton Airport was experiencing brisk growth prior to deregulations. Deregulation meant open market competition that would bring air travel within the reach of average person thereby increasing air traffic at the Stapleton Airport. Moreover, the regional council of governments predicted that the airport would not be able to handle the necessary traffic by 2000.
Stapleton could have been modernized giving it a lease of life for another five years but Denverâ€™s remote location meant that the insufficient capacity problem would still persest and could cause city to lose valuable business.
Denver Stapleton airport was also one of the major connecting airports and was ranked in top ten worst air traffic bottlenecks in United States. These bottlenecks at Denver affected other airports as it had only two runways located very closely to each other which in bad weather were considered one. The new airport was meant to solve this bottleneck problem for Denver city.
Stapleton airport was affected by high velocity winds which resulted in operations being shifted from one direction to the other, this procedure wasted 45 minutes. The new airport would bring this time to 4 minutes thereby saving cost and time for the airport.
Constructing a world class international airport that would serve the needs of the city for at least fifty to sixty years with an estimated cost of $1.7 billon.
Building a world class international airport for Denver City.
Ten 12,000 runways and two 16,000 foot runway.
327 foot FAA air traffic control and a base building structure.
Runway/taxiway lighting system.
Creation of a buffer zone to protect surrounding residents.
Building three concourses with 72 airline gates and 18 commuter gates.
DCV baggage handling system for the entire airport.
Passing of Airport Referendum.
Land Selection and other legal clearance
Project Management teams selection
Construction of the runways
Construction of airport facilities
Continuos noise monitoring and limits on business which are in direct competition with the existing business in Adams County.
Prohibiting residential development within 60 LDN noise level.
Translucent tent-like roof for the Airport.
Runway/taxiway lighting system.
All three concourses to provide 70 airline gates and 18 commuter gates.
Fully automated baggage handling system.
BAE would design and build the automated baggage handling system.
U.S. West Communication Services was responsible for Airportâ€™s telephone services.
The City of Denver, Greiner Engineering and Morrison-Kundse Engineering will comprise the project management team and will be responsible for information management, managing costs, scheduled coordination and administration of the contractors.
New Orleans Architectural firm responsible for creating standards that would unify the whole airport and to do the schematics and design development of the main terminal.
Review is to be done with the Denver City Council.
DIA project plan did not explain how risk management or any other changes in the project would be controlled. Project Management teams often use Statement of work (SWO) or Project Charter to establish risk limits (Larson & Gray, 2011). DIA case study does not provide any evidence as to the use of these documents to establish risk and to manage them.
Risk are always perceived to have negative impact but they can also be positive (Turbit, 2011). Therefore, Risk management is very crucial part in project planing as the future is uncertain and what risk management can do is to identify all the potential risk and assign contingence plan for the same. Turbit (2011), has given the basic steps for risk management, these are:-
Risk Monitoring and control
By following these simple steps, risks can be identified and appropriate contingencies plans for them same can be made. These steps if followed correctly justify the importance of risk management in project management.
Project Scope is â€œThe work that needs to be accomplished to deliver a product, Service, or result with the specified features and functions.â€? Going by this definition the scope of DIA has been changed seven times thereby extending the deadline of the project. These are as follows:-
In March 1993:- Denver Mayor announced that opening would be postponed to December of 1993. The effect of this is the rise in cost form $1.7 billion to $2.7 billion.
In October 1993:- Opening date pushed to March 1994. Delay associated with problems in Baggage handling system and fire- security system. The effect of this was the projects cost rising to $3.1 billion and upset cargo carriers.
In December 1993:- Due to incomplete baggage handling system another delay announced.
In February 1994:- Opening rescheduled to May 1994 due to the incomplete baggage handling system.
In May 1994:- Another delay in opening and Hiring of two German experts who had worked on a similar baggage handling system at Frankfurt airport.
In August 1994:- Indefinite delay in opening announced, manual backup baggage handling system. The effect is, rising costs now estimated at over $4 billion.
The effect of scope changes on project management is scope creep and rising costs. DIA project managers have incorporate so many small changes giving rise to so much additional work that the budget in hand and the time needed to accomplish the project is now insufficient resulting in seven delays in project completion.
The project organisation structure that I would recommend for DIA project is Organising projects as dedicated teams. Following are the reasons for my choice:-
Simple: – As the project teams comprise of specialists the functional organisations working is not affected by the formation of such project organisational structures (Larson & Gray, 2011). If this structure was adopted the City of Denver would have been kept out of Project management and only the specialist team would have been responsible for the project
Fast: – It has been observed that dedicates teams accomplish the projects much more quickly as every team memberâ€™s effort is dedicated to one common goal (Larson & Gray, 2011). In DIA this was not the case as three Project Management teams were coordinating there effort.
Staff adhesion and high motivation: – Team members show high degree of motivation, adhesion and responsibility as everyone in the team is working for a common goals (Larson & Gray, 2011). If DIA had followed this structure the responsibility and ownership of task would have been much easier.
Cross Functional Integration: – People with different skill set work towards the optimisation of project even if it is not there area of expertise (Larson & Gray, 2011).
Freedom to project manager: – compared to other to form of project organisation structure the project manager has comparatively more freedom to control their team resulting in better and quicker decision making (Larson & Gray, 2011).
According to Larson & Gray (2011) Communication is one of the main components in project management. However, in DIAâ€™s case the communication was rather poor.
Examples of two communication mishaps are as follows:-
No inputs from the two major Airlines in the design phase: – 80% of the flights at Stapleton airport were controlled by United and Continental yet no inputs or their involvement in design face was never sought. This was a major communication mishap, because these two would be the major controllers of flights at the new Denver International Airport. Failure to get their vital input in the design phase was a failure on the part of PMT.
DCV system: – Good project communication plan would have told the team member about the issues and risks associated with this complex baggage handling system. But communication in regards to DCA system was a diaster in project management perspective. The terminal construction had already begun and no one knew what the design of DCV system was. No one was aware of the risks and complexity associated with such system. This is an instance of a major failure of communication in the DIA project.
UPS wanted to build a regional hub at the Front Range Airport. This required federal funds. If FAA granted funds for UPS regional hub then a commercial airlines could not be prohibited from setting up shops in the Front Range Airport. As costs were already fixed the threat to United Airlines was from the low cost carriers who would have operated at Front Range Airport. If this happened it would reduce the passenger traffic at DIA which equated to less profit for United Airlines. To curb UPS ambitions United filed a lawsuit. Moreover, it also secured the passenger number at the new DIA airport.
Stakeholders includes everyone whose interest the project affects negatively or positively (Larson & Gray, 2011). This definition of the stakeholder makes it very clear how important stakeholders are to a project. If the Project Manager does not understand how different stakeholders affect the project it can de detrimental for the projectâ€™s completion. Therefore, it is important to manage their dependency on the project.
Adams County: – Adam County is interested in DIA because it is being constructed in their area. Their objective is to ensure the interests and safety of people living in its area. This is being done by creating buffer zones, keeping the noise pollution down and the limits on new business opening as a consequence of DIAâ€™s construction.
New Orleans-based architectural firm:- One of the contractors of DIA. Their objectives are:- Creating standards for the unification of the airport and taking the design of main terminal through design development and schematics.
BAE:- One of the contractors for DIA. Their objectives are to design and build the baggage handling system within two years.
U.S. West Communication Services: – Is one of the contractors in the DIA project. They are responsible for the telephone services of DIA.
The single greatest risk in the decision to building DIA is that the construction of the Airport began 1989 without a signal contract being signed between DIA and the two major airlines, Continental and United.
These two airlines were the main stakeholder in the project and were likely to control 80% of the flights at DIA as they did in Stapleton airport, they convinced DIA to make some substantial changes and addition to the originally plans. DIA did oblige to their request but without any agreement between them. If the two later on decided not to operate at DIA they could not be forced to do so as they were not legally bound by any contracts.
DIA only did the preliminary risk analysis which involved only three areas, these were weather, cost and human resources. Apart form this no risks analysis were done. These risks analysis were not that effective as it was seen in cost risk analysis where the bids for construction were received below cityâ€™s own estimates. DIA project did not have a proper risk management programme. After Mr Waddles left DIA to join State of Colorado the project was without a full-time risk manager for several months and eventually a replacement was found in Molly Austin Flaherty. To sum up whatever endeavours DIA undertook in regards to risk management were unsuccessful.
To manage risks more effectively DIA should have undertaken the risk management process. This process includes four steps, these are (Larson & Gray, 2011):-
Risk Response Development
Risk Response Control
If DIA had diligently followed these steps it would have been in a far better position to identify all the risk involved with the project and develop appropriate responses for them.
Continental and United were the main stakeholders in the DIA project; together both controlled 80% of the flights at the Stapleton airport. Given their existing presence in the Denver air space it was given that they would be the major users of the new DIA airport.
Denver City Council should have formally involved Continental and United in the DIA project as they could have given vital inputs at the design phase and should have sign an agreement with them. Instead, DIA project planners made important changes to the original design on suggestions made by the two airlines. Moreover, these changes were made to the original plan without any contract being signed between them and the two airlines. DIA should have signed agreement with both of them as this would have lead to the sharing of risk that would have risen through the changes proposed by the two airlines (Larson & Gray, 2011). The commitment would also have assured a commitment of maintaining a certain number of flights at the new DIA airport.
However, DIA opted for not having any agreement with the two airlines. This left DIA venerable, as both could reduce their operations at the new DIA airport or withdraw from the new venture altogether. This meant that the very companies on whose base the billion dollar investment was planned and constructed could walk out at will as they were not binded by any formal agreements.
The Contractors that were involved in the DIA project are:-
Morrision-Knudseb Engineering (MKE):- Contracted for Project Management Team.
Greiner Engineering: – Contracted for Project Management Team.
New Orleans Based Architecture firm: – Contracted for creating unified standards for airport and taking the design of main terminal through schematics and design developments.
BAE: – Contracted for the design and building of baggage handling system.
US West Communication Services: – Contracted for DIAâ€™s telephone services.
Union Pacific: – Contracting for designing track for the train that would connect Denver to DIA.
Bechtel Corporation: – Responsible for transferring of airport facilities from Stapleton airport to DIA, this has to be done over night.
BAE: – They were responsible for designing and building the automated baggage handing system. BAE was brought into the project after 3 years of construction and still BAE miscalculated the time it needed to complete the project and committed to do the entire work in two years which otherwise would have taken eight years. BAE miscalculated the work involved which resulted in the baggage handling system not being delivered at the required time. To sum up BAEâ€™s performance was unsatisfactory for this project.
Greiner Engineering: – Was one of the firms in the project management team (PMT). The PMT did not perform satisfactorily. Things such as risk management, project communication biding, to name few, were not performed satisfactorily by the PMT.
No, the project did not follow a systematic bid process. Case litterateur does give some evidence in regards to the biding process but it is not strong enough to classify the biding process as systematic. There is an instance in case where the New Orleans based architecture firm was selected on their past experience with Denver city council thereby providing further evidence that a systematic biding process was not followed.
DIA should have followed the RFP process. The first step the Project manager should have done was to develop the Request of Proposal (RFP) for the project or for parts of it (Larson & Gray, 2011). Then the RFP/s should have been announced to the outside contractors with adequate capabilities and expertise (Larson & Gray, 2011). The next step would have sees the interested contractors submitting written bids which would have been followed by DIA project mangers selecting the bid that best meet the requirements of RFP/s (Larson & Gray, 2011). This process would have ended by providing explanations to contractors as to why they were not selected (Larson & Gray, 2011).
Numbers of causes were associated with the scheduled variation of the DIA project but the main ones are listed as follows:-
DCV baggage handling system: – according to case literature the baggage handling system delayed the DIA project four times. Two specialists were hired from Germany to iron out the problems with the baggage handling system at the DIA airport. Ultimately a back manual system was financed by DIA authorities as the reliability and completion of the automated system could not be guaranteed by the contactors.
Frequent Scope Changes: – The scope of project was changed on a number of occasions, though the changes were minor but their aggregated effects on the project cost and its completion were immense.
Communication Plan: – The project did not have an effective communication plan. There was no communication between the different stakeholders resulting in scheduled variation of DIA project.
Risk Management planning: – The project managers of DIA did not evaluate the risks involved with the project nor did they develop an effective communication plan to tackle the identified risks. This also led to the scheduled variation of the project.
If I saw that the project would not meet its deadline I would have done the following things:-
Conducted an in-process Audit: – In-process audit would have been used by me if I saw the project would not meet its deadline. This is because it allows for corrective actions if the situation changes keeping a strong focus on project advancement and performance (Larson & Gray, 2011). This would also help to identify constraints in the project.
Implementing Integrated Cost/schedule system: – The major problems that the builders of DIA had were the costs, time and communication in the project which were beyond their control. According to Larson & Gray (2011), as time passes the ability to influence a particular cost decreases. Therefore, a well integrated cost/schedule system will be able to keep the costs and schedule in check through timely reporting of the same. This will also aid in better decision making as all the stakeholders will be provided with the same facts and figures.
Resource levelling: – DIA is a time constraint project. I can use resource levelling technique to delay non-critical activities and concentrate on critical ones (Larson & Gray, 2011).
7.1 Highlight the major areas of strength in the management of this project.
DIA project did not have much to speak about, but a couple of things do deserve to be mentioned, these are:-
Even though DIA failed to involved all the stakeholders effectively into the project. They however, did work efficiently with stakeholders, whom they were involved with, to resolve their queries and objections.
The original Airport design had four concourses but DIA project plannerâ€™s had efficient WBS to build only three concourses in order to keep the budget down.
Yes, the DIA project was evidently not well run. The reasons are as follows:-
Inadequate Risk Management: – Though DIA project managers did under take risk management it was not sufficient for the project. The risk management process failed to identify critical risks which resulted in waste of time and money to cope up with such risks. Moreover, the project was without a full time Risk Manger for several months.
Lack of effective communication plan: – DIA did not have a well executed communication plan. Consistent and timely information about the project was not given to various stakeholders. This effected the decision making process as everyone was not on the same wave length.
Scope creep: – DIA project managers kept on including small tasks without realising the impact it was having on the scope of the project resulting in increased costs.
The lessons learnt from the DIA project are as follows:-
Involvement of main stakeholders: – It is very important and crucial for a projects success to involve the main stakeholders in the project. DIA made a blunder by not involving the Continental and United in the design phase ad these two could have given vital inputs in the design phase. Moreover, their involvement in the inception stage would have meant that the later changes made by each of them to the design would not have happened.
Importance of Risk Management Process:- A proper well execute risk management process is very important for an project as it prepares and makes the management about all the risk that may arise and equips them with options to tackle the risks as and when they may arise.
Importance of communication plan: – A well executed communication plan delivers consistent information to the various stakeholders thereby increasing the speed of decision making process.
Setting realistic goals: – Management should take into account the budget and the time before setting up any goals. Prime example in the case is of the automated baggage handling system. The system involved eight years of work but the contractor committed to complete it in two years which was not a realistic goal.
Proper biding process should be followed: – A proper RFP process should be followed. This given equal chance for all the external contractors to participate in the biding process and ensures that deserving contractors will be selected which ultimately will be beneficial for the project.
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