All around the globe on a daily basis projects ranging from the smallest to the biggest are embarked upon but a disturbingly high number of these projects are destined for failure – right from the start. Some of these projects may be couple of hundred dollars, but most of them run into millions and billions of dollars hence failure could be catastrophic. A promising project if not carefully handled could turn out as a colossal failure. The importance and the popularity of IT projects within various businesses in the twenty-first century cannot be over-emphasised however; the high rate of failures is worrying. The fact is despite the popularity and the benefits of IT projects, most of them have failed due to a myriad of problems which besets such projects. Robust planning is very essential before starting a project. However, most don’t run according to plan experiencing overrun budgets, problem with stakeholders, missed deadlines and some are abandoned outright. This essay is to discuss the underlying causes of project failure and the remedial actions to be taken to rectify the problem. This will be done with reference to Denver International Airport Baggage Handling System (Denver International Airport).
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Denver International Airport Baggage Handling project started when the city of Denver set out to build the largest state of the art airport in the history of the United States of America covering a land area of 140 kilometres and handling more than 50 million air passengers annually. The Denver International Airport (DIA) system was designed to house 88 airport gates in 3 concourses, 5 miles of conveyor belts and 17 miles of tracks, 3100 standard carts and 450 oversized carts. It also included more than 100 networked PCs to control carts flow, 2,700 photo cells plus 400 radio receivers and 59 laser arrays, 5,000 electric motors and 14 million feet of wiring. Therefore, the need to have the largest automated airport baggage handling system in the world to match the new airport, second to none, arose. The authority at Denver were only familiar with the use of conveyor belts with manual tug and trolley system, so they have no previous experience about the modern baggage handling system being contemplated nor its complexity, and neither have they manage a project of this size in the past, resulting in serious underestimation of the project. As a result, what was meant to be a huge success and pacesetter in baggage handling system turned to a nightmare, plagued with catalogue of failures at every stage of the project. This will be supported by examples of other projects, highlighting their failures and successes (Calleam Consulting Ltd, 2008).
“A good plan today is better than a perfect plan tomorrow” (Patton, 1945). There is a saying that failure to plan is planning to fail, as proper planning prevents poor performance. Having a robust and credible plan of your intended project is an essential foundational stone in project management which should include the project objectives (what the project set out to achieve), the scope, resource needed to successfully complete the project, major deliverables and the project schedule with key delivery dates (Barker and Cole, 2009). As vast resources are committed to projects, there is more emphasis on the planning skills of project managers than ever before to have a robust plan in place and the ability to rescue a project in problem. The genesis of the problem at Denver International Airport (DIA) stem from lack of adequate planning and the complexity of the project were terribly underestimated by the decision makers. They embarked on building the most complex baggage handling system ever attempted in airports history but failed to factor this into the overall airport plan at the beginning, until it’s almost too late. The work on the construction of the new airport started in November 1989 but the recognition to have an automated baggage handling system by the airport project management team was raised in the summer of 1991. The contract was eventually signed with Boeing Airport Equipment Automated Systems Incorporated (BAE) in April 1992 after a hurriedly arranged three intense working sessions. The underestimation of the project complexity at DIA triggered the chains of problems at every stage including the time, resources and efforts required for successful completion. This haphazard planning was therefore a major contributor to the project failure (Denver International Airport).
“Strategy is the pattern or plan that integrates an organisation’s major goals, policies and actions into a cohesive whole. In other words, it pulls together and gives meaning to everything an organisation does” (Quinn, 1991). The need to have the right strategy in place cannot be over-emphasised. It is therefore important that the top management think strategically right from the start. “Strategic thinking means to take the long-term view and to see the big picture, including the organization and the competitive environment, and to consider how they fit together” (Daft, 2006).
At DIA, there are strategic blunders that seriously called into questions the decision-making abilities of the people at key post. The project management team, prior to making request for bids for the baggage handling system in 1991, assumed that each airline would find solution to their baggage handlings, hence Continental Airlines failed to make any arrangement whatsoever whilst United Airlines approached BAE to construct theirs. However, after two years that work had started on the construction of the new airport, the project management team in 1991 changed their strategic approach when they decided to take the overall responsibility for the construction of the integrated baggage handling system, rather than allowing individual airline to construct one separately. Although, it was necessary that the project management team have the control of the whole system but two years have lapsed before this decision was taken, so time and resources had been wasted. As the airport was due to open in the next two years and time is of essence, the change in strategy and its timing undoubtedly pushed the project into further serious problems (Cerpa and Verner, 2008).
One of the fundamental landmarks of any major project is the time taken to complete each phase as any delay along its critical path could have a serious knock on effect on the whole project and may even lead to its failure. There is need to establish that there is enough time to complete the project successfully, in other words, to ensure that the project is technically feasible. Strategic implementation according to Daft (2006) is about using the organisational and managerial tools to direct resources toward achieving strategic outcomes. The decision of the DIA project management team to change their strategy and take overall control is understandable; however, the decision to proceed with the construction of the integrated baggage handling system with just two years left (whilst in possession of three different adverse reports) was incomprehensible. The reports of the three bids received made it clear that the project cannot be completed within two years, secondly the Munich airport expert advised that a less complex system they have took two full years to complete with a test run for another six months to debug, and thirdly the report produced by Breier Neidle Patrone Associates in 1990 (two years earlier) stated that such complex system cannot be completed successfully within the timeframe. The decision to proceed with the project once again put a question mark on the decision-making ability of those involved.
However, according to the case study carried out by Calleam Consulting Ltd, it was highlighted that the DIA Chief Engineer (Walter Singer) was solely responsible for communicating with the BAE’s senior management team and the decision to proceed with the project, despite the fact that as a civil engineer his experience was in structures and buildings and not complex IT systems, reported to be single-minded who rarely seek independence advice when it comes to decision making, personalised the project because he was responsible for the new state of the art airport under construction and had a false impression on the project feasibility based on the large scale prototype created. On the other hand, BAE had no previous experience of handling an integrated system of this size but they saw it as an opportunity to boost their revenue, grow their business and put them in prime position to win other major contracts around the world (Chua, 2009).
Also it should be noted that there is no project that is completely risk-free; they all carry certain amount of risks. However, the acceptance of risks and the way and manner they are managed is very important as this may determine whether the project is heading towards success or failure. In project management, managing risk has become increasingly important due to the size and complexity of most projects putting a greater demand on skills, project management techniques and technology to achieve the desired result (Cadle and Yeates, 2008). The inability of the project team to identify, analyse and quantify the risks involve could prove costly. According to a joint research carried out by Oxford University and Computerweekly.com (2003) showed risk factors as one of the main reasons why IT projects have a high rate of failure.
BAE failed to adequately analyse the scope, schedule and budgets of the DIA project before committing itself to a fixed scope, fixed schedule and fixed budget arrangement, and with a promise to deliver within the two years period thus pushing them into a very tight corner with no space to manoeuvre. Ironing out the contractual conditions, scope, and schedule and budget arrangement of a project of this magnitude is by no means a wise decision, and it once again called into question the professional judgement and the decision-making abilities of BAE top management. The BAE management failed to recognise the enormity and the implication of the risk they have taken. Had they, they could have finds ways of limiting the risks by reducing the scope, schedule and rearrange the budgets to make the project more technically feasible and commercially viable. Both the DIA project management team and BAE made another crucial mistake by excluding key stakeholders, the airlines, from their discussions during negotiations. The airlines were key stakeholders whose concerns need to be addressed and resolved, hence their presence and contribution is vital to the outcome of the project. Failure to invite them to negotiations and discussions where key decisions concerning the project were taken was a backward step for the whole project (Cadle and Yeates, 2008).
Buttrick (1997) defined stakeholders as those “who are affected by the project. All those involved in the project are, therefore, stakeholders. However, there are also those who take no direct part in the project as team members, but whose activities will in some way be changed as a result”. According to Calleam Consulting Ltd (2008), whenever key stakeholders who ought to be at the major discussions and negotiations were primarily excluded and later admitted, the trend showed that they normally made requests and the acceptance of these change requests may completely alter the course of the project.
It was therefore not surprising when the airlines requested that oversized baggage tracks, ski equipment tracks and maintenance tracks be added causing significant changes to work already completed thereby compounding the problems of a project already in trouble. Although, the changes made by United Airlines for example, cutting off bags transfer between aircraft saved $20m but resulted in redesigning and redoing some work already completed. BAE management team had primarily stated that there would be no changes mid-way into the project but finally gave in to the pressure from the airlines. However, the acceptance of these changes and its implication for the project and BAE credibility need much to be desire, and there seems to be a major communication gap between the BAE’s project team and its top management responsible for making major decisions (Chua, 2009).
“The functions of a project team leader are to define and achieve the task, build and co-ordinate the team, develop and motivate the individuals” (Anon 1). When embarking on a project, it is ideal that the project manager or the project team have a broad view of the whole project or know at least the requirements from the start to finish, to successfully completing the project. Bringing everyone connected with the project into the same team is very essential rather than having pockets of smaller team that are completely disconnected. At DIA, there was a team that was responsible for the physical construction of the new airport and another team was responsible for the baggage handling project. As a result, when the new airport was designed and constructed, the space provided for the baggage handling system had sharp corners and was smaller than what was needed, causing bags being thrown off the carts. To reduce the speed and force especially when negotiating tight corners, the baggage handling project team have no alternative than to halve the cars speed from 60 to 30 cars per minute. This is another indication that there are planning problems right at beginning, as the two teams ought to have been brought together and operate as one integrated team. Amending, adjusting and making major changes to a project mid-way puts a lot of pressure on the project team, the scope, the schedule, the deliverables, stretch the budgets and put the project at risk (NetoAlvarez, 2003).
“Leadership is the ability to influence people towards the attainment of organizational goals” (Daft, 2006). A project manager is a leader – leading the team towards the attainment of the objectives of the project and in this case an integrated baggage handling system at DIA. However, any leadership without a credible succession plan is failure. When the DIA Chief Airport Engineer (Walter Singer) died in 1992, the project encountered series of major problems chiefly for lack of credible successor to take charge and give clear direction. Mr. Singer’s successor lacked the required knowledge and experience to handle the complex system. As a result, many changes were made to the project, several attempts were made to open the system as a big-bag instead of incremental or phased roll out, the target opening dates were cancel four times, BAE were fined $12,000.00 per day for delays by City of Denver, the cost of maintaining the empty airport was at $1m per month and at the end in 2005, the system was scrapped and replaced with manual system which is still working perfectly up till today (Calleam Consulting Ltd, 2008).
According to Standish report carried out in 1994, 31% of IT projects were cancelled mid-way, 53% were challenged with a budget overrun of 180%. The same group in 2007 reported IT projects failure of 19%, and 46% were challenged due to time/cost overrun or not meeting the user’s requirements. However, IT projects failed due to different reasons but some are common.
The Australian public service board’s MANDATA project failed due to the retirement of the influential project champion, unstable political and national economic standards, shortage of key staff, poor user support and funding restriction.
The Wessex Regional Health Authority’s Regional Information System Plan (RISP) failed due to lack of relevant experience in IT projects, budget overrun, Sky-rocketing cost of implementation – the original budget was £25.8m but £43m had been spent when abandoned, and very weak internal audit.
The London stock exchange ‘s transfer and automated registration of uncertified stock (TAURUS) system failed as a result of its complexity, ambitious target opening day that was too short, inability to meet up with catalogue of shareholders unrealistic demands, schedule and budget overrun with £500m wasted when the project was aborted.
The AMR Information system (AMRIS) CONFIRM failed due to unclear specifications, project complexity, communication gaps among users, concealment of information by managers, test failures, time and budget overrun- $55.7m budgeted but $125m had been spent when scrapped.
The Federal Bureau Investigation (FBI) Virtual Case File (VCF) failed owing to lack of accuracy and completeness in information provided by FBI, too many minute details lacking system integration, unrealistic completion date, lack of clearly specified milestones or schedule, poor management, lack of coordination and control.
The FoxMeyer Drug’s Delta 111 Project failed due to unrealistic expectation placed on the system, incompatibility of the two systems – Delta111 and ERP, increased complexity of the project, and lack of skilled personnel.
The London Ambulance Service Computer-Aided Dispatch System (LASCAD) failed owing to the developer lack of previous experience in building similar system, unrealistic project schedule, users’ lack of training and mistakes, and ignoring professional advice which led to its crash.
No two projects are exactly the same. Each project has its own challenges and it is left to the project manager and the project management team to bring together all their expertise and ensure that they have a robust plan (including contingency plan) in place to safely guide the project to achieve the organisation’s objectives (Chua, 2009).
To ensure the success of project delivery, organisations must act proactively (rather than reactively) when undertaking projects, the time of sitting on the fence and doing nothing has passed as project managers and project management teams are appraised based on results. To maximise the success of project delivery, there are measures that can be taken by organisations. The project management team as a whole and key decision makers (as in DIA) must recognise the complexity of the project and the risks involved. This can be achieved through good planning which must be carry out before any attempt to embark on the project or committing resources. There is no substitute for having a robust plan in place – it is a must. The plan must consider and address any likely eventuality before, during and after the project including contingencies (Matta and Ashkenas, 2003).
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“Strategy formulation is the stage of strategic management that involves the planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan” (Daft, 2006). A carefully formulated working strategy organises resources into a unique force propelling the organisation to gain maximum advantage. Strategic decisions are crucial and should be in place right from the start to give direction to the whole project. Frequent changes in strategic approach will only derail the project, hence the project management team must carefully analyse any change request considering its implication on the scope, schedule and budget of the project and therefore resist it to keep the project on track. This is what the DIA project management team ought to do rather than assuming that each airline would make provisions for their baggage handlings. They based their judgement on ‘assumptions’ rather than ‘facts and figures’. Projects consume organisation’s resources and it is therefore too risky and unwise to assume as the saying goes that “Assumption is the father of mess-ups” (Anon 2).
Change and risk management are inter-dependent and closely related, hence the need to integrate both into a singular methodology. “If changes are unmanaged, then more time and money are needed to perform risk management, which often takes on the appearance of and behaviour of crisis management” (Kerzner, 2003). At every stage of a project crucial decision(s) would need to be made. It is therefore necessary that the project management team engage and listen to all key players (such as sponsors, team members, stakeholders, expert advice etc) connected with the project before making an important and irreversible decisions (Dorsey, 2005).
Change management, risk management and stakeholders management is pivotal to the success of any project. The catastrophic decision to proceed with the project was reached by the DIA Chief Engineer (Walter Slinger) and the BAE’s senior management team without taken into account the level of risk involved, the reservation voiced by several of their manager that the project required a minimum of four years and not two years, and completely ignoring the experts’ advice from Munich airport and Neidle Patrone Associates report on complexity. “Negotiation is a process for reaching an agreement in situation where there are both common and conflicting interests” (Anon 3). All key stakeholders must be involved in project discussions and negotiations as their participation is central to the successful completion and obtaining the desired results. The DIA decision to exclude the airlines from major discussions and negotiations before the project commenced was inexplicable, this shouldn’t have happened. Lack of users’ involvement is one of the major problems of project failure. Had they been involved right from the start the costly mistakes which ended with stretched scope and schedule, budget and time overrun would have been avoided (Cerpa and Verner, 2009).
“Successful information systems development and deployment requires the interaction of organisational, human and technical factors. The project manager and team need to manage the relationships between these three factors to ensure a favourable outcome” (Anon 4). When embarking on a complex project, it is of paramount importance that teams are properly integrated. A disjointed pocket of teams working separately on the same project would serve no purpose but rather lead to communication gaps, misunderstanding and waste of resources (Cadle and Yeates, 2008).
The designers of the new airport physical building and the designers of the baggage system at DIA worked as a separate team. This, in effect, created a communication gaps between the two teams. The designers of the physical building only made a general space allowance for the baggage handling system which was unsuitable as bags were ejected from carts whilst navigating sharp turns, creating another major problem for a project that is already in trouble. This led to the speed of the carts being halved. However, this problem could have been averted by bringing together both the designers of the physical building and the designers of the baggage handling system to work together as one integrated team. It is more beneficial if all the teams working on the same project are brought together into one big team and work together as communication gaps would be bridged, improving understanding amongst team members and better utilization of resources (Calleam Consulting Ltd, 2008).
Most of the IT projects are complex and careful consideration must be given to how the system is delivered. “Well managed projects plan incremental delivery because they understand that it is only when the customer begins to actually evaluate the product that the organisation begins to learn at anything like the necessary rate” (Henderson, 2010).
The attempt to roll out the DIA baggage handling system as a big bang failed on four different occasions because the system testing continue to flounder (as it had not been properly debugged) resulting in huge cost to BAE and City of Denver, and the eventual abandonment of the project. According to Barker and Cole (2009) reports have shown than incremental roll-out of complex projects are more successful than a big bang, as it gives room for the system to be debug at different stages based on the feedback from the users and secondly, misunderstanding between customer and supplier can be dealt with on time as they occur, thus minimising the effects on the project.
IT projects would experience a better success rate if organisations could plan more strategically by clearly defining the project objectives, build a well structured and integrated team, understand and manage risks, technical issues and stakeholders, encourage user involvement, credible leadership succession plan, secure top management support and commitment, define strategy and success criteria, ensure good management of resources and understand the complexity of the project. As organisations continue to invest a huge amount of money on IT projects and the pressure to deliver on time and within budget is on, the adoption of these criteria would greatly increase and maximise their success rate (Dorsey, 2005).
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