Bae Automated Systems Case Study

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In the early 1980’s, Denver experienced significant economic growth due to the booming oil, real estate, and tourism industries. The major airport that operated within Denver during that time was the Stapleton Airport. Up to 1970, the Stapleton Airport was able to accommodate the demands of Denver but in subsequent years it was unable to meet the ever growing needs of the city. The Stapleton Airport was seen as a liability and limited the attractiveness of businesses that were swarming to it. Issues with handling high traffic volume, disruptions in connection schedules, and an overall poor airport layout led the city of Denver to decide whether they wanted to expand or replace the Stapleton Airport. A study performed in 1983 determined that an expansion of Stapleton’s capacity was needed.

In the mid-1980s, there were some changes in the financial climate that caused concern among both economists and business leaders. The dreary economy forced Denver to embark on a major public construction mission to try and save the region from the economic freefall. This also caused a push for a new airport to stimulate new business to the area, import federal capital, and help in the creation of new jobs to help offset the short-term loss in the economy.

In November 1989, ground was broken on the construction of the Denver International Airport (DIA). A typical master plan approach was taken by the City of Denver during the initial conception of the DIA project, and eventually a consulting team was awarded a contract to help due to their expertise in the fields of transportation and construction. A final master plan was created and presented to the City of Denver that called for the construction of the world’s most efficient airport. The new airport was to be built from the ground up with no limitations. The plan was to allow for growth and expansion without compromising efficiency. The high costs associated in building this new airport were understated initially at $2 billion. By the end 1991, the estimated costs had risen to $2.66 billion. In order to pay for the new airport, large revenue bonds and federal grants were provided by Federal officials. Bond repayment was to begin on January 1, 1994, which was deemed the “Date of Beneficial Occupancy”. The DIA thought that they would be able to meet that deadline, but in retrospect it caused the project to be rushed to a point of lost control.

The main issue that caused the DIA project to become problem laden was that it was originally a build-design project, which means that they was building the airport while designing it. This was due to the fact that there were so many delays in the project outset. There was a lot of pressure to begin construction immediately which led to a critical design flaw in the baggage-handling system at DIA. The initial project design did not take into consideration an airport-wide baggage-handling system. The airport expected each individual airline to build their own baggage systems. Two years into the construction of the DIA, the project management team (PMT) recommended that an airport wide baggage-handling system should be implemented. The inclusion of a complex baggage-handling system was determined to be a key to ensuring that the DIA would operate at the highest level possible. This was a great idea, but one that was poorly planned and led to several other issues with the DIA project.

United Airlines, in December 1991, contracted BAE Automated Systems to develop an automated baggage handling system for its own concourse at DIA. BAE Automated Systems was a world leader in the design and implementation of material handling systems. BAE had the capability to develop, design, manufacture, install, and support any project that it undertook from inception to completion. BAE accounted for 90% of U.S. baggage sorting equipment sales in 1994. Between 1972 and 1994, BAE was able to successfully design, manufacture, and install...
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