Project Management-Denver Airport Baggage Handling System Case Study

Denver Airport Baggage Handling System Case Study – Calleam ConsultingCase Study – Denver International Airport Baggage Handling System – Anillustration of ineffectual decision makingCalleam Consulting Ltd – Why Technology Projects FailSynopsisDysfunctional decision making is the poison that kills technology projects and the Denver AirportBaggage System project in the 1990’s is a classic example. Although several case studies have beenwritten about the Denver project, the following paper re-examines the case by looking at the keydecisions that set the project on the path to disaster and the forces behind those decisions.BackgroundWhat was to be the world’s largest automated airport baggage handling system, became a classic storyin how technology projects can go wrong. Faced with the need for greater airport capacity, the city ofDenver elected to construct a new state of the art airport that would cement Denver’s position as an airtransportation hub. Covering a land area of 140 Km2, the airport was to be the largest in the UnitedStates and have the capacity to handle more than 50m passengers annually [1,2].The airport’s baggage handling system was a critical component in the plan. By automating baggagehandling, aircraft turnaround time was to be reduced to as little as 30 minutes [1]. Faster turnaroundmeant more efficient operations and was a cornerstone of the airports competitive advantage.Despite the good intentions the plan rapidly dissolved asunderestimation of the project’s complexity resulted insnowballing problems and public humiliation for everyoneinvolved. Thanks mainly to problems with the baggage system,the airport’s opening was delayed by a full 16 months.Expenditure to maintain the empty airport and interest chargeson construction loans cost the city of Denver $1.1M per daythroughout the delay [3].System at a glance:1.2.3.4.88 airport gates in 3concourses17 miles of track and 5 miles ofconveyor belts3,100 standard carts + 450oversized carts14 million feet of wiringNetwork of more than 100 PC’sto control flow of carts5,000 electric motors2,700 photo cells, 400 radioreceivers and 59 laser arraysThe embarrassing missteps along the way included an impromptu5.demonstration of the system to the media which illustrated howthe system crushed bags, disgorged content and how two carts6.moving at high speed reacted when they crashed into each other7.[4]. When opening day finally arrived, the system was just ashadow of the original plan. Rather than automating all 3concourses into one integrated system, the system was used in asingle concourse, by a single airline and only for outbound flights [5]. All other baggage handling wasperformed using simple conveyor belts plus a manual tug and trolley system that was hurriedly builtwhen it became clear that the automated system would never achieve its goals.Although the remnants of the system soldiered on for 10 years, the system never worked well and inAugust 2005, United Airlines announced that they would abandon the system completely [6]. The $1million per month maintenance costs exceeded the monthly cost of a manual tug and trolley system.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingChronology of events:Denver International Airport (DIA) Baggage System Development Timeline [1, 2, 3, 4, 5, 6]Nov 1989Oct 1990Feb 1991Jun 1991Jun 1991Summer 1991Fall 1991Early 1992Apr 1992Aug 1992Sep 1992Oct 1992Jan 1993Feb 1993Sep 199331 Oct 199319 Dec 1993Jan 19949 Mar 1994Mar 1994Apr 1994Apr 1994May 199415 May 1994May 1994Aug 1994Aug 199428 Feb 1995Aug 2005Work starts on the construction of the airportCity of Denver engages Breier Neidle Patrone Associates to analyse feasibility of building anintegrated baggage system. Reports advises that complexity makes the proposition unfeasibleContinental Airlines signs on and plans on using Denver as a hubUnited Airlines signs on and plans on using Concourse A as a hubUnited Airlines engages BAE Systems to build an automated baggage system for Concourse A.BAE was a world leader in the supply, installation and operation of baggage handling equipmentAirport’s Project Management team recognizes that a baggage handling solution for the completeairport was required. Bids for an airport wide solution are requestedOf the 16 companies included in the bidding process only 3 respond and review of proposalsindicate none could be ready in time for the Oct 1993 opening. The 3 bids are all rejectedDenver Airport Project Management team approach BAE directly requesting a bid for the projectDenver Airport contracts with BAE to expand the United Airlines baggage handling system into anintegrated system handling all 3 concourses, all airlines, departing as well as arriving flights. Inaddition system is to handle transfer baggage automatically. Contract is hammered out in 3intense working sessionsUnited Airlines changes their plans and cuts out plans for the system to transfer bags betweenaircraft. Resulting changes save $20m, but result in a major redesign of the United Airlinesportion of the system. Change requests are raised to add automated handling of oversizedbaggage and for the creation of a dedicated ski equipment handling areaContinental requests ski equipment handling facilities be added to their concourse as wellChief Airport Engineer, Walter Singer dies. Mr Singer had been one of the driving forces behindthe creation of the automated baggage systemChange orders raised altering size of ski equipment claim area and adding maintenance tracks socarts could be serviced without having to be removed from the railsTarget opening date shifted from 31 Oct 93 to 19 Dec 93 and soon thereafter to 9 Mar 94Target opening date is shifted again, new target date is 15 May 1994Original target for openingSecond target for openingUnited Airlines requests further changes to the oversize baggage input areaThird target for openingProblems establishing a clean electrical supply results in continual power outages that disrupttesting and development. Solution requires installation of industrial filters into the electricalsystem. Ordering and installation of the filters takes several monthsAirport authorities arrange a demonstration for the system for the media (without first informingBAE). Demonstration is a disaster as clothes are disgorged from crushed bagsDenver Mayor cancels 15 May target date and announces an indefinite delay in openingLogplan Consulting engaged to evaluate the projectFourth target for openingBAE Systems denies system is malfunctioning. Instead they say many of the issues reported todate had been caused by the airport staff using the system incorrectlySystem testing continues to flounder. Scope of work is radically trimmed back and based onLogplan’s recommendation airport builds a manual tug and trolley system insteadCity of Denver starts fining BAE $12K per day for further delaysActual openingIn order to save costs the system is scrapped in favour of a fully manual system. Maintenancecosts were running at $1M per month at the time.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingBasic Mode of FailureAs with all failures the problems can be viewed from a number of levels. In its simplest form, the DenverInternational Airport (DIA) project failed because those making key decision underestimated thecomplexity involved. As planned, the system was the most complex baggage system ever attempted.Ten times larger than any other automated system, the increased size resulted in an exponential growthin complexity. At the heart of the complexity lay an issue know as “line balancing” [1]. To optimizesystem performance, empty carts had to be distributed around the airport ready to pick up new bags.With more than 100 pickup points (check in rows and arrival gates) each pickup needed to be fed withenough empty carts to meet its needs. The algorithms necessary to anticipate where empty cartsshould wait for new bags represented a nightmare in the mathematic modeling of queue behaviours.Failure to anticipate the number of carts correctly would result in delays in picking up bags that wouldundermine the system’s performance goals.Failure to recognise the complexity and the risk involved contributed to the project being initiated toolate. The process of requesting bids for the design and construction of the system was not initiated untilsummer of 1991 [7]. Based on the original project schedule, this left a little over two years for thecontracts to be signed and for the system to be designed, built, tested and commissioned. The closestanalogous projects were the San Francisco system and one installed in Munich. Although much smallerand simpler, those systems took two years to implement [7]. Given the quantum leap in terms of sizeand complexity, completing the Denver system in two years was an impossible task.The underestimation of complexity led to a corresponding underestimation of the effort involved. Thatunderestimation meant that without realising it, the Project Management team had allowed thebaggage system to become the airport’s critical path. In order to meet the airport’s planned openingdate, the project needed to be completed in just two years. This clearly was insufficient time and thatmisjudgement resulted in the project being exposed to massive levels of schedule pressure. Many ofthe project’s subsequent problems were likely a result of (or exacerbated by) shortcuts the team tookand the mistakes they made as they tried to meet an impossible schedule.Key Decisions that Led to DisasterAlthough the basic mode of failure is fairly clear, to understand the root cause and what should havebeen done differently we need to examine how the critical decisions that triggered the failure weremade. Project failures usually involve numerous flawed decisions, but within those many missteps,certain key decisions are the triggers that set in motion the sequence of events that lead to disaster.Key Decision 1 – A change in strategyAt the start of a project strategic decisions are made that set the project’s direction. In the DIA case, astrategic error was made that resulted in “flip-flop” being made part way through the project.Prior to requesting bids for an integrated system in the summer of 1991, the airport’s ProjectManagement team had assumed that individual airlines would make their own baggage handlingarrangements [5]. United Airlines had indeed proceeded with their own plan by engaging BAE (BoeingAirport Equipment Automated Systems Incorporated) directly. Continental Airlines had however not© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade any arrangements and given that the airport was not yet fully leased out, other sections of theairport were not being addressed.In the summer of 1991, the airport’s Project Management team changed their strategy and realised thatif an integrated system was to be built, they needed to take responsibility back from the individualairlines and run the project themselves. This change in strategy came a little more than two years priorto the airport’s planned opening date and the timing of the decision was in large part the trigger behindthe excessive schedule pressure the project was exposed to.In one way the change in strategy made sense because an integrated system required centralizedcontrol and the airport’s Project Management team was the only central group that could run theproject. Clearly the timing of the decision was however extremely poor. Had the correct strategy beenset at the outset, there would have been two additional years in which to develop the system. Thosetwo years may well have been enough to allow designers to understand the complexity issue moredeeply and to find ways to either overcome it or agree with the stakeholders on a simpler design.The delay in setting the correct strategy is likely rooted in the history of how prior airport constructionprojects had been run. Because earlier generation baggage facilities were dedicated to individualairlines, airlines had historically built their own systems when a new airport was built [5]. The advent ofthe integrated airport wide system required a change in mindset. The integrated nature of the newsystems meant that instead of airlines looking after their own facilities, airport’s needed to take control.The key point the airport’s Project Management team failed to see was that the shift in technologyrequired a corresponding shift in organizational responsibilities. The failure to recognise that shiftrepresents a planning failure that dated back to the very start of the construction project. The publicrecord does not detail how the original strategy was set or even if the topic had been directlyconsidered. However, people typically see the world through the eyes of their prior experiences andgiven that almost all prior airport projects had left this responsibility to the airline, it is very likely thatthe question was simply never discussed.In broader terms, the mistake made was a failure to link the airport’s overall strategy (the goal of havingone of the world’s most efficient airports) with the sub-strategy of how to build the baggage system.The mode in which that failure occurred may well simply have been a failure to ask the critical questionof where responsibility for development of the baggage system needed to be.Key Decision 2 – The decision to proceedAlthough the change in strategy is somewhat understandable, what is less understandable is why boththe airport Project Management team and BAE decided to proceed with the full scale project despiteclear indications that there was insufficient time left for the project to be completed successfully.Prior to entering into the BAE contract, there were at least three indications that the project requiredmore than two years or was simply not feasible;1. The 1990 Breier Neidle Patrone Associates report indicated the complexity was too high for thesystem to be built successfully [1],© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consulting2. Analysis of the three bids received indicated that none of the vendors could build the system in timefor the Oct 1993 opening [4],3. Experts from Munich airport advised that the much simpler Munich system had taken 2 full years tobuild and that it had run 24 / 7 for 6 months prior to opening to allow bugs to be ironed out [5].Reports indicate that the decision to proceed was based on the communications between the airport’sChief Engineer (Walter Slinger) and BAE’s Senior Management team. While BAE had initially chosen notto bid for the airport wide contract, the rejection of the three official bids resulted in the airport teamspeaking directly to BAE about the possibility of expanding the United Airlines system that was alreadyunder development. Those discussions resulted in the preparation of a specification and the creation ofa large scale prototype (reported to have filled up a 50,000 sq ft warehouse) [7]. Demonstration of theprototype to is said to have been the factor that convinced Slinger that the system was feasible.Despite the fact that BAE was talking directly to Slinger about the possibility of building the system,some reports indicate that within BAE several managers were voicing concern. Again the issues relatedto whether or not it was feasible to build such a large system in such a short period of time. Reportsindicate that several managers advised the BAE Senior Management team that the project was atminimum a four year project, not a two year project [5].The failure by both Slinger and BAE’s Senior Management team to heed the advice they were receivingand the failure of the airport’s Project Management team to have the BAE proposal and prototypeindependently reviewed is the epicentre of the disaster.Although published reports do not indicate why the expert advice was ignored, it is clear that bothSlinger and BAE’s Senior Management team underestimated the complexity of the project and ignoredinformation that may have corrected their positions. Many factors may have led them into that trapand likely issues that may have influenced the decision making include;1. From Slinger’s perspectivea. Denver was to be a state of the art airport and as such the desire to have the most advancedbaggage system would likely have been a factor behind Slinger’s willingness to proceed,b. Slinger’s prior experiences with baggage handling will have been based on simple conveyorbelts combined with manual tug and trolley systems. Those prior experiences may have ledSlinger to underestimate the complexity of moving to a fully automated system,c. As a Civil Engineer, Slinger was used to the development of physical buildings and structuresrather than complex technology systems, this may have predisposed him to underestimatethe mathematical complexity associated with an issue such as “line balancing”,d. Slinger is reported to have been a hands-on leader who liked to solve problems himself. Assuch Slinger may have been inclined to make decisions on his own rather than seekingindependent advise,e. Slinger dealt with the discussions with BAE personally, given that he was responsible for thecomplete airport, he will have had considerable other duties that would have limited theamount of time he had to focus on the baggage system,f. On the surface the prototype may well have made it look as if BAE had overcome thetechnical challenges involved in building the system and as such Slinger may have beenlured into a false sense of security.2. From BAE’s perspectivea. The project was a big revenue opportunity and represented a chance to grow the business,© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingb. The prestige of securing the DIA contract would position BAE to secure other large contractsaround the world. New airports or terminals were planned for Bangkok, Hong Kong,Singapore, London and Kuala Lumpur and BAE would be a strong contender if they couldwin the DIA project.3. Other factorsa. Both BAE and Slinger will have recognized that they were working within a tight timeframeand the pressure to move quickly may have caused them to put due diligence to one side.b. The belief that due to the airport’s size, a manual system would not be fast enough to meetaircraft turnaround requirements. Note however that this belief was unfounded as theairport functions happily today using a manual system.Key Decision 3 – Schedule, scope and budget commitmentsThe schedule, budget and scope commitments a team enter into are amongst the most critical decisionsthey will make. The seeds of project success or failure often lie in the analysis that goes into makingthose decisions and the way such commitments are structured.In the DIA case, BAE committed to deliver the complete system under a fixed scope, schedule andbudget arrangement. The decision to give a firm commitment to scope, schedule and budgettransferred considerable risk onto BAE’s shoulders. This move indicates strongly that those in thehighest level of BAE’s management structure had completely failed to recognize the level of risk theywere entering into. Had they been more aware, they almost certainly would have taken steps to limitthe risk and to find ways to limit the scope to something that was more achievable in the time available.Again the finger prints of excessive schedule pressure can be seen in the commitments BAE enteredinto. The contractual conditions for the agreement and the scope of work were hammered out in justthree “intense” working sessions [7]. Although BAE had some level of understanding because of theircontract with United Airlines, clearly the three working sessions will not have provided sufficient timefor the different parties to develop an in-depth understanding of what was involved or for them to fullyunderstand the risks they were taking.BAE and the airport Project Management team made another major mistake during the negotiations.Although the airlines were key stakeholders in the system they were excluded from the discussions.Excluding stakeholders from discussions in which key project decisions are made is always a losingstrategy. When previously excluded stakeholders are finally engaged, they usually ask for significantchanges that can negate much of the previous work done on the project.Key Decision 4 – Acceptance of change requestsNot surprisingly, as the project progressed the airlines did indeed ask for a number of significantchanges. Although in the original negotiations, BAE had made it a condition that no changes would bemade, the pressure to meet stakeholder needs proved to be too strong and BAE and the airport’sProject Management team were forced into accepting them. Among the major changes were; theadding of ski equipment racks, the addition of maintenance tracks to allow carts to be serviced withoutbeing removed from the rails and changes to the handling of oversized baggage. Some of the changes© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade required significant redesign of portions of work already completed.Accepting these changes into a project that was already in deep trouble raises some further troublingquestions. Did the team fail to understand the impact the changes might have? Did they fail torecognise how much trouble the project was already in? Although answers to those questions are notavailable from the public record, the acceptance of the change requests again hints at thecommunications disconnects that were occurring inside the project. Clearly some of the peopleinvolved will have understood the implications, but those voices appear not to have connected withthose who were making the overall decisions.Key Decision 5 – Design of the physical building structureRather than being separate entities, the baggage system and the physical building represented a singleintegrated system. Sharing the physical space and services such as the electrical supply the designers ofthe physical building and the designers of the baggage system needed to work as one integrated team.Largely because the design of the building was started before the baggage system design was known,the designers of the physical building only made general allowances for where they thought the baggagesystem would go. When the baggage system design was eventually started, the baggage system designteam was forced to work within the constraints left to them by the designers of the physical building(estimates to change the physical structure to suit the needs of the baggage system are reported tohave been up to $100M).The resulting design meant that the baggage system had to accommodate sharp turns that were farfrom optimal and increased the physical loads placed on the system [1]. Those stresses were keycontributors to the system’s reliability problems. In particular, navigating sharp turns is reported tohave been one of the major problems that lead to bags being ejected from their carts. These problemsultimately proved so severe that the speed of the system was halved from 60 cars per minute to 30 carsin order to reduce the physical forces when negotiating tight turns. That quick fix however had the sideaffect that it began to undermine the performance goals the system was trying to meet.Although the designers of the physical building likely did their best to make allowance for the baggagesystem, this portion of the story once again illustrates a breakdown in the overall planning of theproject. The allowance of spaces in which the baggage system would operate represented a keyinterface between the design of the physical building and the baggage system. To make effectivedecisions about how to design the physical building, the designers of the physical building needed to beworking alongside people who had expertise in designing baggage systems. Clearly this did not happen.What is not clear is if the designers of the physical building requested such expertise be provided or ifthey just went ahead in isolation. In either case, the Project Management team should have recognisedthe significance of the interface between the baggage system and the physical building and arranged forthe appropriate people to work together.Key Decision…

Denver Airport Baggage Handling System Case Study – Calleam ConsultingCase Study – Denver International Airport Baggage Handling System – Anillustration of ineffectual decision makingCalleam Consulting Ltd – Why Technology Projects FailSynopsisDysfunctional decision making is the poison that kills technology projects and the Denver AirportBaggage System project in the 1990’s is a classic example. Although several case studies have beenwritten about the Denver project, the following paper re-examines the case by looking at the keydecisions that set the project on the path to disaster and the forces behind those decisions.BackgroundWhat was to be the world’s largest automated airport baggage handling system, became a classic storyin how technology projects can go wrong. Faced with the need for greater airport capacity, the city ofDenver elected to construct a new state of the art airport that would cement Denver’s position as an airtransportation hub. Covering a land area of 140 Km2, the airport was to be the largest in the UnitedStates and have the capacity to handle more than 50m passengers annually [1,2].The airport’s baggage handling system was a critical component in the plan. By automating baggagehandling, aircraft turnaround time was to be reduced to as little as 30 minutes [1]. Faster turnaroundmeant more efficient operations and was a cornerstone of the airports competitive advantage.Despite the good intentions the plan rapidly dissolved asunderestimation of the project’s complexity resulted insnowballing problems and public humiliation for everyoneinvolved. Thanks mainly to problems with the baggage system,the airport’s opening was delayed by a full 16 months.Expenditure to maintain the empty airport and interest chargeson construction loans cost the city of Denver $1.1M per daythroughout the delay [3].System at a glance:1.2.3.4.88 airport gates in 3concourses17 miles of track and 5 miles ofconveyor belts3,100 standard carts + 450oversized carts14 million feet of wiringNetwork of more than 100 PC’sto control flow of carts5,000 electric motors2,700 photo cells, 400 radioreceivers and 59 laser arraysThe embarrassing missteps along the way included an impromptu5.demonstration of the system to the media which illustrated howthe system crushed bags, disgorged content and how two carts6.moving at high speed reacted when they crashed into each other7.[4]. When opening day finally arrived, the system was just ashadow of the original plan. Rather than automating all 3concourses into one integrated system, the system was used in asingle concourse, by a single airline and only for outbound flights [5]. All other baggage handling wasperformed using simple conveyor belts plus a manual tug and trolley system that was hurriedly builtwhen it became clear that the automated system would never achieve its goals.Although the remnants of the system soldiered on for 10 years, the system never worked well and inAugust 2005, United Airlines announced that they would abandon the system completely [6]. The $1million per month maintenance costs exceeded the monthly cost of a manual tug and trolley system.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingChronology of events:Denver International Airport (DIA) Baggage System Development Timeline [1, 2, 3, 4, 5, 6]Nov 1989Oct 1990Feb 1991Jun 1991Jun 1991Summer 1991Fall 1991Early 1992Apr 1992Aug 1992Sep 1992Oct 1992Jan 1993Feb 1993Sep 199331 Oct 199319 Dec 1993Jan 19949 Mar 1994Mar 1994Apr 1994Apr 1994May 199415 May 1994May 1994Aug 1994Aug 199428 Feb 1995Aug 2005Work starts on the construction of the airportCity of Denver engages Breier Neidle Patrone Associates to analyse feasibility of building anintegrated baggage system. Reports advises that complexity makes the proposition unfeasibleContinental Airlines signs on and plans on using Denver as a hubUnited Airlines signs on and plans on using Concourse A as a hubUnited Airlines engages BAE Systems to build an automated baggage system for Concourse A.BAE was a world leader in the supply, installation and operation of baggage handling equipmentAirport’s Project Management team recognizes that a baggage handling solution for the completeairport was required. Bids for an airport wide solution are requestedOf the 16 companies included in the bidding process only 3 respond and review of proposalsindicate none could be ready in time for the Oct 1993 opening. The 3 bids are all rejectedDenver Airport Project Management team approach BAE directly requesting a bid for the projectDenver Airport contracts with BAE to expand the United Airlines baggage handling system into anintegrated system handling all 3 concourses, all airlines, departing as well as arriving flights. Inaddition system is to handle transfer baggage automatically. Contract is hammered out in 3intense working sessionsUnited Airlines changes their plans and cuts out plans for the system to transfer bags betweenaircraft. Resulting changes save $20m, but result in a major redesign of the United Airlinesportion of the system. Change requests are raised to add automated handling of oversizedbaggage and for the creation of a dedicated ski equipment handling areaContinental requests ski equipment handling facilities be added to their concourse as wellChief Airport Engineer, Walter Singer dies. Mr Singer had been one of the driving forces behindthe creation of the automated baggage systemChange orders raised altering size of ski equipment claim area and adding maintenance tracks socarts could be serviced without having to be removed from the railsTarget opening date shifted from 31 Oct 93 to 19 Dec 93 and soon thereafter to 9 Mar 94Target opening date is shifted again, new target date is 15 May 1994Original target for openingSecond target for openingUnited Airlines requests further changes to the oversize baggage input areaThird target for openingProblems establishing a clean electrical supply results in continual power outages that disrupttesting and development. Solution requires installation of industrial filters into the electricalsystem. Ordering and installation of the filters takes several monthsAirport authorities arrange a demonstration for the system for the media (without first informingBAE). Demonstration is a disaster as clothes are disgorged from crushed bagsDenver Mayor cancels 15 May target date and announces an indefinite delay in openingLogplan Consulting engaged to evaluate the projectFourth target for openingBAE Systems denies system is malfunctioning. Instead they say many of the issues reported todate had been caused by the airport staff using the system incorrectlySystem testing continues to flounder. Scope of work is radically trimmed back and based onLogplan’s recommendation airport builds a manual tug and trolley system insteadCity of Denver starts fining BAE $12K per day for further delaysActual openingIn order to save costs the system is scrapped in favour of a fully manual system. Maintenancecosts were running at $1M per month at the time.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingBasic Mode of FailureAs with all failures the problems can be viewed from a number of levels. In its simplest form, the DenverInternational Airport (DIA) project failed because those making key decision underestimated thecomplexity involved. As planned, the system was the most complex baggage system ever attempted.Ten times larger than any other automated system, the increased size resulted in an exponential growthin complexity. At the heart of the complexity lay an issue know as “line balancing” [1]. To optimizesystem performance, empty carts had to be distributed around the airport ready to pick up new bags.With more than 100 pickup points (check in rows and arrival gates) each pickup needed to be fed withenough empty carts to meet its needs. The algorithms necessary to anticipate where empty cartsshould wait for new bags represented a nightmare in the mathematic modeling of queue behaviours.Failure to anticipate the number of carts correctly would result in delays in picking up bags that wouldundermine the system’s performance goals.Failure to recognise the complexity and the risk involved contributed to the project being initiated toolate. The process of requesting bids for the design and construction of the system was not initiated untilsummer of 1991 [7]. Based on the original project schedule, this left a little over two years for thecontracts to be signed and for the system to be designed, built, tested and commissioned. The closestanalogous projects were the San Francisco system and one installed in Munich. Although much smallerand simpler, those systems took two years to implement [7]. Given the quantum leap in terms of sizeand complexity, completing the Denver system in two years was an impossible task.The underestimation of complexity led to a corresponding underestimation of the effort involved. Thatunderestimation meant that without realising it, the Project Management team had allowed thebaggage system to become the airport’s critical path. In order to meet the airport’s planned openingdate, the project needed to be completed in just two years. This clearly was insufficient time and thatmisjudgement resulted in the project being exposed to massive levels of schedule pressure. Many ofthe project’s subsequent problems were likely a result of (or exacerbated by) shortcuts the team tookand the mistakes they made as they tried to meet an impossible schedule.Key Decisions that Led to DisasterAlthough the basic mode of failure is fairly clear, to understand the root cause and what should havebeen done differently we need to examine how the critical decisions that triggered the failure weremade. Project failures usually involve numerous flawed decisions, but within those many missteps,certain key decisions are the triggers that set in motion the sequence of events that lead to disaster.Key Decision 1 – A change in strategyAt the start of a project strategic decisions are made that set the project’s direction. In the DIA case, astrategic error was made that resulted in “flip-flop” being made part way through the project.Prior to requesting bids for an integrated system in the summer of 1991, the airport’s ProjectManagement team had assumed that individual airlines would make their own baggage handlingarrangements [5]. United Airlines had indeed proceeded with their own plan by engaging BAE (BoeingAirport Equipment Automated Systems Incorporated) directly. Continental Airlines had however not© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade any arrangements and given that the airport was not yet fully leased out, other sections of theairport were not being addressed.In the summer of 1991, the airport’s Project Management team changed their strategy and realised thatif an integrated system was to be built, they needed to take responsibility back from the individualairlines and run the project themselves. This change in strategy came a little more than two years priorto the airport’s planned opening date and the timing of the decision was in large part the trigger behindthe excessive schedule pressure the project was exposed to.In one way the change in strategy made sense because an integrated system required centralizedcontrol and the airport’s Project Management team was the only central group that could run theproject. Clearly the timing of the decision was however extremely poor. Had the correct strategy beenset at the outset, there would have been two additional years in which to develop the system. Thosetwo years may well have been enough to allow designers to understand the complexity issue moredeeply and to find ways to either overcome it or agree with the stakeholders on a simpler design.The delay in setting the correct strategy is likely rooted in the history of how prior airport constructionprojects had been run. Because earlier generation baggage facilities were dedicated to individualairlines, airlines had historically built their own systems when a new airport was built [5]. The advent ofthe integrated airport wide system required a change in mindset. The integrated nature of the newsystems meant that instead of airlines looking after their own facilities, airport’s needed to take control.The key point the airport’s Project Management team failed to see was that the shift in technologyrequired a corresponding shift in organizational responsibilities. The failure to recognise that shiftrepresents a planning failure that dated back to the very start of the construction project. The publicrecord does not detail how the original strategy was set or even if the topic had been directlyconsidered. However, people typically see the world through the eyes of their prior experiences andgiven that almost all prior airport projects had left this responsibility to the airline, it is very likely thatthe question was simply never discussed.In broader terms, the mistake made was a failure to link the airport’s overall strategy (the goal of havingone of the world’s most efficient airports) with the sub-strategy of how to build the baggage system.The mode in which that failure occurred may well simply have been a failure to ask the critical questionof where responsibility for development of the baggage system needed to be.Key Decision 2 – The decision to proceedAlthough the change in strategy is somewhat understandable, what is less understandable is why boththe airport Project Management team and BAE decided to proceed with the full scale project despiteclear indications that there was insufficient time left for the project to be completed successfully.Prior to entering into the BAE contract, there were at least three indications that the project requiredmore than two years or was simply not feasible;1. The 1990 Breier Neidle Patrone Associates report indicated the complexity was too high for thesystem to be built successfully [1],© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consulting2. Analysis of the three bids received indicated that none of the vendors could build the system in timefor the Oct 1993 opening [4],3. Experts from Munich airport advised that the much simpler Munich system had taken 2 full years tobuild and that it had run 24 / 7 for 6 months prior to opening to allow bugs to be ironed out [5].Reports indicate that the decision to proceed was based on the communications between the airport’sChief Engineer (Walter Slinger) and BAE’s Senior Management team. While BAE had initially chosen notto bid for the airport wide contract, the rejection of the three official bids resulted in the airport teamspeaking directly to BAE about the possibility of expanding the United Airlines system that was alreadyunder development. Those discussions resulted in the preparation of a specification and the creation ofa large scale prototype (reported to have filled up a 50,000 sq ft warehouse) [7]. Demonstration of theprototype to is said to have been the factor that convinced Slinger that the system was feasible.Despite the fact that BAE was talking directly to Slinger about the possibility of building the system,some reports indicate that within BAE several managers were voicing concern. Again the issues relatedto whether or not it was feasible to build such a large system in such a short period of time. Reportsindicate that several managers advised the BAE Senior Management team that the project was atminimum a four year project, not a two year project [5].The failure by both Slinger and BAE’s Senior Management team to heed the advice they were receivingand the failure of the airport’s Project Management team to have the BAE proposal and prototypeindependently reviewed is the epicentre of the disaster.Although published reports do not indicate why the expert advice was ignored, it is clear that bothSlinger and BAE’s Senior Management team underestimated the complexity of the project and ignoredinformation that may have corrected their positions. Many factors may have led them into that trapand likely issues that may have influenced the decision making include;1. From Slinger’s perspectivea. Denver was to be a state of the art airport and as such the desire to have the most advancedbaggage system would likely have been a factor behind Slinger’s willingness to proceed,b. Slinger’s prior experiences with baggage handling will have been based on simple conveyorbelts combined with manual tug and trolley systems. Those prior experiences may have ledSlinger to underestimate the complexity of moving to a fully automated system,c. As a Civil Engineer, Slinger was used to the development of physical buildings and structuresrather than complex technology systems, this may have predisposed him to underestimatethe mathematical complexity associated with an issue such as “line balancing”,d. Slinger is reported to have been a hands-on leader who liked to solve problems himself. Assuch Slinger may have been inclined to make decisions on his own rather than seekingindependent advise,e. Slinger dealt with the discussions with BAE personally, given that he was responsible for thecomplete airport, he will have had considerable other duties that would have limited theamount of time he had to focus on the baggage system,f. On the surface the prototype may well have made it look as if BAE had overcome thetechnical challenges involved in building the system and as such Slinger may have beenlured into a false sense of security.2. From BAE’s perspectivea. The project was a big revenue opportunity and represented a chance to grow the business,© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingb. The prestige of securing the DIA contract would position BAE to secure other large contractsaround the world. New airports or terminals were planned for Bangkok, Hong Kong,Singapore, London and Kuala Lumpur and BAE would be a strong contender if they couldwin the DIA project.3. Other factorsa. Both BAE and Slinger will have recognized that they were working within a tight timeframeand the pressure to move quickly may have caused them to put due diligence to one side.b. The belief that due to the airport’s size, a manual system would not be fast enough to meetaircraft turnaround requirements. Note however that this belief was unfounded as theairport functions happily today using a manual system.Key Decision 3 – Schedule, scope and budget commitmentsThe schedule, budget and scope commitments a team enter into are amongst the most critical decisionsthey will make. The seeds of project success or failure often lie in the analysis that goes into makingthose decisions and the way such commitments are structured.In the DIA case, BAE committed to deliver the complete system under a fixed scope, schedule andbudget arrangement. The decision to give a firm commitment to scope, schedule and budgettransferred considerable risk onto BAE’s shoulders. This move indicates strongly that those in thehighest level of BAE’s management structure had completely failed to recognize the level of risk theywere entering into. Had they been more aware, they almost certainly would have taken steps to limitthe risk and to find ways to limit the scope to something that was more achievable in the time available.Again the finger prints of excessive schedule pressure can be seen in the commitments BAE enteredinto. The contractual conditions for the agreement and the scope of work were hammered out in justthree “intense” working sessions [7]. Although BAE had some level of understanding because of theircontract with United Airlines, clearly the three working sessions will not have provided sufficient timefor the different parties to develop an in-depth understanding of what was involved or for them to fullyunderstand the risks they were taking.BAE and the airport Project Management team made another major mistake during the negotiations.Although the airlines were key stakeholders in the system they were excluded from the discussions.Excluding stakeholders from discussions in which key project decisions are made is always a losingstrategy. When previously excluded stakeholders are finally engaged, they usually ask for significantchanges that can negate much of the previous work done on the project.Key Decision 4 – Acceptance of change requestsNot surprisingly, as the project progressed the airlines did indeed ask for a number of significantchanges. Although in the original negotiations, BAE had made it a condition that no changes would bemade, the pressure to meet stakeholder needs proved to be too strong and BAE and the airport’sProject Management team were forced into accepting them. Among the major changes were; theadding of ski equipment racks, the addition of maintenance tracks to allow carts to be serviced withoutbeing removed from the rails and changes to the handling of oversized baggage. Some of the changes© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade required significant redesign of portions of work already completed.Accepting these changes into a project that was already in deep trouble raises some further troublingquestions. Did the team fail to understand the impact the changes might have? Did they fail torecognise how much trouble the project was already in? Although answers to those questions are notavailable from the public record, the acceptance of the change requests again hints at thecommunications disconnects that were occurring inside the project. Clearly some of the peopleinvolved will have understood the implications, but those voices appear not to have connected withthose who were making the overall decisions.Key Decision 5 – Design of the physical building structureRather than being separate entities, the baggage system and the physical building represented a singleintegrated system. Sharing the physical space and services such as the electrical supply the designers ofthe physical building and the designers of the baggage system needed to work as one integrated team.Largely because the design of the building was started before the baggage system design was known,the designers of the physical building only made general allowances for where they thought the baggagesystem would go. When the baggage system design was eventually started, the baggage system designteam was forced to work within the constraints left to them by the designers of the physical building(estimates to change the physical structure to suit the needs of the baggage system are reported tohave been up to $100M).The resulting design meant that the baggage system had to accommodate sharp turns that were farfrom optimal and increased the physical loads placed on the system [1]. Those stresses were keycontributors to the system’s reliability problems. In particular, navigating sharp turns is reported tohave been one of the major problems that lead to bags being ejected from their carts. These problemsultimately proved so severe that the speed of the system was halved from 60 cars per minute to 30 carsin order to reduce the physical forces when negotiating tight turns. That quick fix however had the sideaffect that it began to undermine the performance goals the system was trying to meet.Although the designers of the physical building likely did their best to make allowance for the baggagesystem, this portion of the story once again illustrates a breakdown in the overall planning of theproject. The allowance of spaces in which the baggage system would operate represented a keyinterface between the design of the physical building and the baggage system. To make effectivedecisions about how to design the physical building, the designers of the physical building needed to beworking alongside people who had expertise in designing baggage systems. Clearly this did not happen.What is not clear is if the designers of the physical building requested such expertise be provided or ifthey just went ahead in isolation. In either case, the Project Management team should have recognisedthe significance of the interface between the baggage system and the physical building and arranged forthe appropriate people to work together.Key Decision…

Denver Airport Baggage Handling System Case Study – Calleam ConsultingCase Study – Denver International Airport Baggage Handling System – Anillustration of ineffectual decision makingCalleam Consulting Ltd – Why Technology Projects FailSynopsisDysfunctional decision making is the poison that kills technology projects and the Denver AirportBaggage System project in the 1990’s is a classic example. Although several case studies have beenwritten about the Denver project, the following paper re-examines the case by looking at the keydecisions that set the project on the path to disaster and the forces behind those decisions.BackgroundWhat was to be the world’s largest automated airport baggage handling system, became a classic storyin how technology projects can go wrong. Faced with the need for greater airport capacity, the city ofDenver elected to construct a new state of the art airport that would cement Denver’s position as an airtransportation hub. Covering a land area of 140 Km2, the airport was to be the largest in the UnitedStates and have the capacity to handle more than 50m passengers annually [1,2].The airport’s baggage handling system was a critical component in the plan. By automating baggagehandling, aircraft turnaround time was to be reduced to as little as 30 minutes [1]. Faster turnaroundmeant more efficient operations and was a cornerstone of the airports competitive advantage.Despite the good intentions the plan rapidly dissolved asunderestimation of the project’s complexity resulted insnowballing problems and public humiliation for everyoneinvolved. Thanks mainly to problems with the baggage system,the airport’s opening was delayed by a full 16 months.Expenditure to maintain the empty airport and interest chargeson construction loans cost the city of Denver $1.1M per daythroughout the delay [3].System at a glance:1.2.3.4.88 airport gates in 3concourses17 miles of track and 5 miles ofconveyor belts3,100 standard carts + 450oversized carts14 million feet of wiringNetwork of more than 100 PC’sto control flow of carts5,000 electric motors2,700 photo cells, 400 radioreceivers and 59 laser arraysThe embarrassing missteps along the way included an impromptu5.demonstration of the system to the media which illustrated howthe system crushed bags, disgorged content and how two carts6.moving at high speed reacted when they crashed into each other7.[4]. When opening day finally arrived, the system was just ashadow of the original plan. Rather than automating all 3concourses into one integrated system, the system was used in asingle concourse, by a single airline and only for outbound flights [5]. All other baggage handling wasperformed using simple conveyor belts plus a manual tug and trolley system that was hurriedly builtwhen it became clear that the automated system would never achieve its goals.Although the remnants of the system soldiered on for 10 years, the system never worked well and inAugust 2005, United Airlines announced that they would abandon the system completely [6]. The $1million per month maintenance costs exceeded the monthly cost of a manual tug and trolley system.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingChronology of events:Denver International Airport (DIA) Baggage System Development Timeline [1, 2, 3, 4, 5, 6]Nov 1989Oct 1990Feb 1991Jun 1991Jun 1991Summer 1991Fall 1991Early 1992Apr 1992Aug 1992Sep 1992Oct 1992Jan 1993Feb 1993Sep 199331 Oct 199319 Dec 1993Jan 19949 Mar 1994Mar 1994Apr 1994Apr 1994May 199415 May 1994May 1994Aug 1994Aug 199428 Feb 1995Aug 2005Work starts on the construction of the airportCity of Denver engages Breier Neidle Patrone Associates to analyse feasibility of building anintegrated baggage system. Reports advises that complexity makes the proposition unfeasibleContinental Airlines signs on and plans on using Denver as a hubUnited Airlines signs on and plans on using Concourse A as a hubUnited Airlines engages BAE Systems to build an automated baggage system for Concourse A.BAE was a world leader in the supply, installation and operation of baggage handling equipmentAirport’s Project Management team recognizes that a baggage handling solution for the completeairport was required. Bids for an airport wide solution are requestedOf the 16 companies included in the bidding process only 3 respond and review of proposalsindicate none could be ready in time for the Oct 1993 opening. The 3 bids are all rejectedDenver Airport Project Management team approach BAE directly requesting a bid for the projectDenver Airport contracts with BAE to expand the United Airlines baggage handling system into anintegrated system handling all 3 concourses, all airlines, departing as well as arriving flights. Inaddition system is to handle transfer baggage automatically. Contract is hammered out in 3intense working sessionsUnited Airlines changes their plans and cuts out plans for the system to transfer bags betweenaircraft. Resulting changes save $20m, but result in a major redesign of the United Airlinesportion of the system. Change requests are raised to add automated handling of oversizedbaggage and for the creation of a dedicated ski equipment handling areaContinental requests ski equipment handling facilities be added to their concourse as wellChief Airport Engineer, Walter Singer dies. Mr Singer had been one of the driving forces behindthe creation of the automated baggage systemChange orders raised altering size of ski equipment claim area and adding maintenance tracks socarts could be serviced without having to be removed from the railsTarget opening date shifted from 31 Oct 93 to 19 Dec 93 and soon thereafter to 9 Mar 94Target opening date is shifted again, new target date is 15 May 1994Original target for openingSecond target for openingUnited Airlines requests further changes to the oversize baggage input areaThird target for openingProblems establishing a clean electrical supply results in continual power outages that disrupttesting and development. Solution requires installation of industrial filters into the electricalsystem. Ordering and installation of the filters takes several monthsAirport authorities arrange a demonstration for the system for the media (without first informingBAE). Demonstration is a disaster as clothes are disgorged from crushed bagsDenver Mayor cancels 15 May target date and announces an indefinite delay in openingLogplan Consulting engaged to evaluate the projectFourth target for openingBAE Systems denies system is malfunctioning. Instead they say many of the issues reported todate had been caused by the airport staff using the system incorrectlySystem testing continues to flounder. Scope of work is radically trimmed back and based onLogplan’s recommendation airport builds a manual tug and trolley system insteadCity of Denver starts fining BAE $12K per day for further delaysActual openingIn order to save costs the system is scrapped in favour of a fully manual system. Maintenancecosts were running at $1M per month at the time.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingBasic Mode of FailureAs with all failures the problems can be viewed from a number of levels. In its simplest form, the DenverInternational Airport (DIA) project failed because those making key decision underestimated thecomplexity involved. As planned, the system was the most complex baggage system ever attempted.Ten times larger than any other automated system, the increased size resulted in an exponential growthin complexity. At the heart of the complexity lay an issue know as “line balancing” [1]. To optimizesystem performance, empty carts had to be distributed around the airport ready to pick up new bags.With more than 100 pickup points (check in rows and arrival gates) each pickup needed to be fed withenough empty carts to meet its needs. The algorithms necessary to anticipate where empty cartsshould wait for new bags represented a nightmare in the mathematic modeling of queue behaviours.Failure to anticipate the number of carts correctly would result in delays in picking up bags that wouldundermine the system’s performance goals.Failure to recognise the complexity and the risk involved contributed to the project being initiated toolate. The process of requesting bids for the design and construction of the system was not initiated untilsummer of 1991 [7]. Based on the original project schedule, this left a little over two years for thecontracts to be signed and for the system to be designed, built, tested and commissioned. The closestanalogous projects were the San Francisco system and one installed in Munich. Although much smallerand simpler, those systems took two years to implement [7]. Given the quantum leap in terms of sizeand complexity, completing the Denver system in two years was an impossible task.The underestimation of complexity led to a corresponding underestimation of the effort involved. Thatunderestimation meant that without realising it, the Project Management team had allowed thebaggage system to become the airport’s critical path. In order to meet the airport’s planned openingdate, the project needed to be completed in just two years. This clearly was insufficient time and thatmisjudgement resulted in the project being exposed to massive levels of schedule pressure. Many ofthe project’s subsequent problems were likely a result of (or exacerbated by) shortcuts the team tookand the mistakes they made as they tried to meet an impossible schedule.Key Decisions that Led to DisasterAlthough the basic mode of failure is fairly clear, to understand the root cause and what should havebeen done differently we need to examine how the critical decisions that triggered the failure weremade. Project failures usually involve numerous flawed decisions, but within those many missteps,certain key decisions are the triggers that set in motion the sequence of events that lead to disaster.Key Decision 1 – A change in strategyAt the start of a project strategic decisions are made that set the project’s direction. In the DIA case, astrategic error was made that resulted in “flip-flop” being made part way through the project.Prior to requesting bids for an integrated system in the summer of 1991, the airport’s ProjectManagement team had assumed that individual airlines would make their own baggage handlingarrangements [5]. United Airlines had indeed proceeded with their own plan by engaging BAE (BoeingAirport Equipment Automated Systems Incorporated) directly. Continental Airlines had however not© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade any arrangements and given that the airport was not yet fully leased out, other sections of theairport were not being addressed.In the summer of 1991, the airport’s Project Management team changed their strategy and realised thatif an integrated system was to be built, they needed to take responsibility back from the individualairlines and run the project themselves. This change in strategy came a little more than two years priorto the airport’s planned opening date and the timing of the decision was in large part the trigger behindthe excessive schedule pressure the project was exposed to.In one way the change in strategy made sense because an integrated system required centralizedcontrol and the airport’s Project Management team was the only central group that could run theproject. Clearly the timing of the decision was however extremely poor. Had the correct strategy beenset at the outset, there would have been two additional years in which to develop the system. Thosetwo years may well have been enough to allow designers to understand the complexity issue moredeeply and to find ways to either overcome it or agree with the stakeholders on a simpler design.The delay in setting the correct strategy is likely rooted in the history of how prior airport constructionprojects had been run. Because earlier generation baggage facilities were dedicated to individualairlines, airlines had historically built their own systems when a new airport was built [5]. The advent ofthe integrated airport wide system required a change in mindset. The integrated nature of the newsystems meant that instead of airlines looking after their own facilities, airport’s needed to take control.The key point the airport’s Project Management team failed to see was that the shift in technologyrequired a corresponding shift in organizational responsibilities. The failure to recognise that shiftrepresents a planning failure that dated back to the very start of the construction project. The publicrecord does not detail how the original strategy was set or even if the topic had been directlyconsidered. However, people typically see the world through the eyes of their prior experiences andgiven that almost all prior airport projects had left this responsibility to the airline, it is very likely thatthe question was simply never discussed.In broader terms, the mistake made was a failure to link the airport’s overall strategy (the goal of havingone of the world’s most efficient airports) with the sub-strategy of how to build the baggage system.The mode in which that failure occurred may well simply have been a failure to ask the critical questionof where responsibility for development of the baggage system needed to be.Key Decision 2 – The decision to proceedAlthough the change in strategy is somewhat understandable, what is less understandable is why boththe airport Project Management team and BAE decided to proceed with the full scale project despiteclear indications that there was insufficient time left for the project to be completed successfully.Prior to entering into the BAE contract, there were at least three indications that the project requiredmore than two years or was simply not feasible;1. The 1990 Breier Neidle Patrone Associates report indicated the complexity was too high for thesystem to be built successfully [1],© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consulting2. Analysis of the three bids received indicated that none of the vendors could build the system in timefor the Oct 1993 opening [4],3. Experts from Munich airport advised that the much simpler Munich system had taken 2 full years tobuild and that it had run 24 / 7 for 6 months prior to opening to allow bugs to be ironed out [5].Reports indicate that the decision to proceed was based on the communications between the airport’sChief Engineer (Walter Slinger) and BAE’s Senior Management team. While BAE had initially chosen notto bid for the airport wide contract, the rejection of the three official bids resulted in the airport teamspeaking directly to BAE about the possibility of expanding the United Airlines system that was alreadyunder development. Those discussions resulted in the preparation of a specification and the creation ofa large scale prototype (reported to have filled up a 50,000 sq ft warehouse) [7]. Demonstration of theprototype to is said to have been the factor that convinced Slinger that the system was feasible.Despite the fact that BAE was talking directly to Slinger about the possibility of building the system,some reports indicate that within BAE several managers were voicing concern. Again the issues relatedto whether or not it was feasible to build such a large system in such a short period of time. Reportsindicate that several managers advised the BAE Senior Management team that the project was atminimum a four year project, not a two year project [5].The failure by both Slinger and BAE’s Senior Management team to heed the advice they were receivingand the failure of the airport’s Project Management team to have the BAE proposal and prototypeindependently reviewed is the epicentre of the disaster.Although published reports do not indicate why the expert advice was ignored, it is clear that bothSlinger and BAE’s Senior Management team underestimated the complexity of the project and ignoredinformation that may have corrected their positions. Many factors may have led them into that trapand likely issues that may have influenced the decision making include;1. From Slinger’s perspectivea. Denver was to be a state of the art airport and as such the desire to have the most advancedbaggage system would likely have been a factor behind Slinger’s willingness to proceed,b. Slinger’s prior experiences with baggage handling will have been based on simple conveyorbelts combined with manual tug and trolley systems. Those prior experiences may have ledSlinger to underestimate the complexity of moving to a fully automated system,c. As a Civil Engineer, Slinger was used to the development of physical buildings and structuresrather than complex technology systems, this may have predisposed him to underestimatethe mathematical complexity associated with an issue such as “line balancing”,d. Slinger is reported to have been a hands-on leader who liked to solve problems himself. Assuch Slinger may have been inclined to make decisions on his own rather than seekingindependent advise,e. Slinger dealt with the discussions with BAE personally, given that he was responsible for thecomplete airport, he will have had considerable other duties that would have limited theamount of time he had to focus on the baggage system,f. On the surface the prototype may well have made it look as if BAE had overcome thetechnical challenges involved in building the system and as such Slinger may have beenlured into a false sense of security.2. From BAE’s perspectivea. The project was a big revenue opportunity and represented a chance to grow the business,© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingb. The prestige of securing the DIA contract would position BAE to secure other large contractsaround the world. New airports or terminals were planned for Bangkok, Hong Kong,Singapore, London and Kuala Lumpur and BAE would be a strong contender if they couldwin the DIA project.3. Other factorsa. Both BAE and Slinger will have recognized that they were working within a tight timeframeand the pressure to move quickly may have caused them to put due diligence to one side.b. The belief that due to the airport’s size, a manual system would not be fast enough to meetaircraft turnaround requirements. Note however that this belief was unfounded as theairport functions happily today using a manual system.Key Decision 3 – Schedule, scope and budget commitmentsThe schedule, budget and scope commitments a team enter into are amongst the most critical decisionsthey will make. The seeds of project success or failure often lie in the analysis that goes into makingthose decisions and the way such commitments are structured.In the DIA case, BAE committed to deliver the complete system under a fixed scope, schedule andbudget arrangement. The decision to give a firm commitment to scope, schedule and budgettransferred considerable risk onto BAE’s shoulders. This move indicates strongly that those in thehighest level of BAE’s management structure had completely failed to recognize the level of risk theywere entering into. Had they been more aware, they almost certainly would have taken steps to limitthe risk and to find ways to limit the scope to something that was more achievable in the time available.Again the finger prints of excessive schedule pressure can be seen in the commitments BAE enteredinto. The contractual conditions for the agreement and the scope of work were hammered out in justthree “intense” working sessions [7]. Although BAE had some level of understanding because of theircontract with United Airlines, clearly the three working sessions will not have provided sufficient timefor the different parties to develop an in-depth understanding of what was involved or for them to fullyunderstand the risks they were taking.BAE and the airport Project Management team made another major mistake during the negotiations.Although the airlines were key stakeholders in the system they were excluded from the discussions.Excluding stakeholders from discussions in which key project decisions are made is always a losingstrategy. When previously excluded stakeholders are finally engaged, they usually ask for significantchanges that can negate much of the previous work done on the project.Key Decision 4 – Acceptance of change requestsNot surprisingly, as the project progressed the airlines did indeed ask for a number of significantchanges. Although in the original negotiations, BAE had made it a condition that no changes would bemade, the pressure to meet stakeholder needs proved to be too strong and BAE and the airport’sProject Management team were forced into accepting them. Among the major changes were; theadding of ski equipment racks, the addition of maintenance tracks to allow carts to be serviced withoutbeing removed from the rails and changes to the handling of oversized baggage. Some of the changes© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade required significant redesign of portions of work already completed.Accepting these changes into a project that was already in deep trouble raises some further troublingquestions. Did the team fail to understand the impact the changes might have? Did they fail torecognise how much trouble the project was already in? Although answers to those questions are notavailable from the public record, the acceptance of the change requests again hints at thecommunications disconnects that were occurring inside the project. Clearly some of the peopleinvolved will have understood the implications, but those voices appear not to have connected withthose who were making the overall decisions.Key Decision 5 – Design of the physical building structureRather than being separate entities, the baggage system and the physical building represented a singleintegrated system. Sharing the physical space and services such as the electrical supply the designers ofthe physical building and the designers of the baggage system needed to work as one integrated team.Largely because the design of the building was started before the baggage system design was known,the designers of the physical building only made general allowances for where they thought the baggagesystem would go. When the baggage system design was eventually started, the baggage system designteam was forced to work within the constraints left to them by the designers of the physical building(estimates to change the physical structure to suit the needs of the baggage system are reported tohave been up to $100M).The resulting design meant that the baggage system had to accommodate sharp turns that were farfrom optimal and increased the physical loads placed on the system [1]. Those stresses were keycontributors to the system’s reliability problems. In particular, navigating sharp turns is reported tohave been one of the major problems that lead to bags being ejected from their carts. These problemsultimately proved so severe that the speed of the system was halved from 60 cars per minute to 30 carsin order to reduce the physical forces when negotiating tight turns. That quick fix however had the sideaffect that it began to undermine the performance goals the system was trying to meet.Although the designers of the physical building likely did their best to make allowance for the baggagesystem, this portion of the story once again illustrates a breakdown in the overall planning of theproject. The allowance of spaces in which the baggage system would operate represented a keyinterface between the design of the physical building and the baggage system. To make effectivedecisions about how to design the physical building, the designers of the physical building needed to beworking alongside people who had expertise in designing baggage systems. Clearly this did not happen.What is not clear is if the designers of the physical building requested such expertise be provided or ifthey just went ahead in isolation. In either case, the Project Management team should have recognisedthe significance of the interface between the baggage system and the physical building and arranged forthe appropriate people to work together.Key Decision…

Denver Airport Baggage Handling System Case Study – Calleam ConsultingCase Study – Denver International Airport Baggage Handling System – Anillustration of ineffectual decision makingCalleam Consulting Ltd – Why Technology Projects FailSynopsisDysfunctional decision making is the poison that kills technology projects and the Denver AirportBaggage System project in the 1990’s is a classic example. Although several case studies have beenwritten about the Denver project, the following paper re-examines the case by looking at the keydecisions that set the project on the path to disaster and the forces behind those decisions.BackgroundWhat was to be the world’s largest automated airport baggage handling system, became a classic storyin how technology projects can go wrong. Faced with the need for greater airport capacity, the city ofDenver elected to construct a new state of the art airport that would cement Denver’s position as an airtransportation hub. Covering a land area of 140 Km2, the airport was to be the largest in the UnitedStates and have the capacity to handle more than 50m passengers annually [1,2].The airport’s baggage handling system was a critical component in the plan. By automating baggagehandling, aircraft turnaround time was to be reduced to as little as 30 minutes [1]. Faster turnaroundmeant more efficient operations and was a cornerstone of the airports competitive advantage.Despite the good intentions the plan rapidly dissolved asunderestimation of the project’s complexity resulted insnowballing problems and public humiliation for everyoneinvolved. Thanks mainly to problems with the baggage system,the airport’s opening was delayed by a full 16 months.Expenditure to maintain the empty airport and interest chargeson construction loans cost the city of Denver $1.1M per daythroughout the delay [3].System at a glance:1.2.3.4.88 airport gates in 3concourses17 miles of track and 5 miles ofconveyor belts3,100 standard carts + 450oversized carts14 million feet of wiringNetwork of more than 100 PC’sto control flow of carts5,000 electric motors2,700 photo cells, 400 radioreceivers and 59 laser arraysThe embarrassing missteps along the way included an impromptu5.demonstration of the system to the media which illustrated howthe system crushed bags, disgorged content and how two carts6.moving at high speed reacted when they crashed into each other7.[4]. When opening day finally arrived, the system was just ashadow of the original plan. Rather than automating all 3concourses into one integrated system, the system was used in asingle concourse, by a single airline and only for outbound flights [5]. All other baggage handling wasperformed using simple conveyor belts plus a manual tug and trolley system that was hurriedly builtwhen it became clear that the automated system would never achieve its goals.Although the remnants of the system soldiered on for 10 years, the system never worked well and inAugust 2005, United Airlines announced that they would abandon the system completely [6]. The $1million per month maintenance costs exceeded the monthly cost of a manual tug and trolley system.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingChronology of events:Denver International Airport (DIA) Baggage System Development Timeline [1, 2, 3, 4, 5, 6]Nov 1989Oct 1990Feb 1991Jun 1991Jun 1991Summer 1991Fall 1991Early 1992Apr 1992Aug 1992Sep 1992Oct 1992Jan 1993Feb 1993Sep 199331 Oct 199319 Dec 1993Jan 19949 Mar 1994Mar 1994Apr 1994Apr 1994May 199415 May 1994May 1994Aug 1994Aug 199428 Feb 1995Aug 2005Work starts on the construction of the airportCity of Denver engages Breier Neidle Patrone Associates to analyse feasibility of building anintegrated baggage system. Reports advises that complexity makes the proposition unfeasibleContinental Airlines signs on and plans on using Denver as a hubUnited Airlines signs on and plans on using Concourse A as a hubUnited Airlines engages BAE Systems to build an automated baggage system for Concourse A.BAE was a world leader in the supply, installation and operation of baggage handling equipmentAirport’s Project Management team recognizes that a baggage handling solution for the completeairport was required. Bids for an airport wide solution are requestedOf the 16 companies included in the bidding process only 3 respond and review of proposalsindicate none could be ready in time for the Oct 1993 opening. The 3 bids are all rejectedDenver Airport Project Management team approach BAE directly requesting a bid for the projectDenver Airport contracts with BAE to expand the United Airlines baggage handling system into anintegrated system handling all 3 concourses, all airlines, departing as well as arriving flights. Inaddition system is to handle transfer baggage automatically. Contract is hammered out in 3intense working sessionsUnited Airlines changes their plans and cuts out plans for the system to transfer bags betweenaircraft. Resulting changes save $20m, but result in a major redesign of the United Airlinesportion of the system. Change requests are raised to add automated handling of oversizedbaggage and for the creation of a dedicated ski equipment handling areaContinental requests ski equipment handling facilities be added to their concourse as wellChief Airport Engineer, Walter Singer dies. Mr Singer had been one of the driving forces behindthe creation of the automated baggage systemChange orders raised altering size of ski equipment claim area and adding maintenance tracks socarts could be serviced without having to be removed from the railsTarget opening date shifted from 31 Oct 93 to 19 Dec 93 and soon thereafter to 9 Mar 94Target opening date is shifted again, new target date is 15 May 1994Original target for openingSecond target for openingUnited Airlines requests further changes to the oversize baggage input areaThird target for openingProblems establishing a clean electrical supply results in continual power outages that disrupttesting and development. Solution requires installation of industrial filters into the electricalsystem. Ordering and installation of the filters takes several monthsAirport authorities arrange a demonstration for the system for the media (without first informingBAE). Demonstration is a disaster as clothes are disgorged from crushed bagsDenver Mayor cancels 15 May target date and announces an indefinite delay in openingLogplan Consulting engaged to evaluate the projectFourth target for openingBAE Systems denies system is malfunctioning. Instead they say many of the issues reported todate had been caused by the airport staff using the system incorrectlySystem testing continues to flounder. Scope of work is radically trimmed back and based onLogplan’s recommendation airport builds a manual tug and trolley system insteadCity of Denver starts fining BAE $12K per day for further delaysActual openingIn order to save costs the system is scrapped in favour of a fully manual system. Maintenancecosts were running at $1M per month at the time.© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam ConsultingBasic Mode of FailureAs with all failures the problems can be viewed from a number of levels. In its simplest form, the DenverInternational Airport (DIA) project failed because those making key decision underestimated thecomplexity involved. As planned, the system was the most complex baggage system ever attempted.Ten times larger than any other automated system, the increased size resulted in an exponential growthin complexity. At the heart of the complexity lay an issue know as “line balancing” [1]. To optimizesystem performance, empty carts had to be distributed around the airport ready to pick up new bags.With more than 100 pickup points (check in rows and arrival gates) each pickup needed to be fed withenough empty carts to meet its needs. The algorithms necessary to anticipate where empty cartsshould wait for new bags represented a nightmare in the mathematic modeling of queue behaviours.Failure to anticipate the number of carts correctly would result in delays in picking up bags that wouldundermine the system’s performance goals.Failure to recognise the complexity and the risk involved contributed to the project being initiated toolate. The process of requesting bids for the design and construction of the system was not initiated untilsummer of 1991 [7]. Based on the original project schedule, this left a little over two years for thecontracts to be signed and for the system to be designed, built, tested and commissioned. The closestanalogous projects were the San Francisco system and one installed in Munich. Although much smallerand simpler, those systems took two years to implement [7]. Given the quantum leap in terms of sizeand complexity, completing the Denver system in two years was an impossible task.The underestimation of complexity led to a corresponding underestimation of the effort involved. Thatunderestimation meant that without realising it, the Project Management team had allowed thebaggage system to become the airport’s critical path. In order to meet the airport’s planned openingdate, the project needed to be completed in just two years. This clearly was insufficient time and thatmisjudgement resulted in the project being exposed to massive levels of schedule pressure. Many ofthe project’s subsequent problems were likely a result of (or exacerbated by) shortcuts the team tookand the mistakes they made as they tried to meet an impossible schedule.Key Decisions that Led to DisasterAlthough the basic mode of failure is fairly clear, to understand the root cause and what should havebeen done differently we need to examine how the critical decisions that triggered the failure weremade. Project failures usually involve numerous flawed decisions, but within those many missteps,certain key decisions are the triggers that set in motion the sequence of events that lead to disaster.Key Decision 1 – A change in strategyAt the start of a project strategic decisions are made that set the project’s direction. In the DIA case, astrategic error was made that resulted in “flip-flop” being made part way through the project.Prior to requesting bids for an integrated system in the summer of 1991, the airport’s ProjectManagement team had assumed that individual airlines would make their own baggage handlingarrangements [5]. United Airlines had indeed proceeded with their own plan by engaging BAE (BoeingAirport Equipment Automated Systems Incorporated) directly. Continental Airlines had however not© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade any arrangements and given that the airport was not yet fully leased out, other sections of theairport were not being addressed.In the summer of 1991, the airport’s Project Management team changed their strategy and realised thatif an integrated system was to be built, they needed to take responsibility back from the individualairlines and run the project themselves. This change in strategy came a little more than two years priorto the airport’s planned opening date and the timing of the decision was in large part the trigger behindthe excessive schedule pressure the project was exposed to.In one way the change in strategy made sense because an integrated system required centralizedcontrol and the airport’s Project Management team was the only central group that could run theproject. Clearly the timing of the decision was however extremely poor. Had the correct strategy beenset at the outset, there would have been two additional years in which to develop the system. Thosetwo years may well have been enough to allow designers to understand the complexity issue moredeeply and to find ways to either overcome it or agree with the stakeholders on a simpler design.The delay in setting the correct strategy is likely rooted in the history of how prior airport constructionprojects had been run. Because earlier generation baggage facilities were dedicated to individualairlines, airlines had historically built their own systems when a new airport was built [5]. The advent ofthe integrated airport wide system required a change in mindset. The integrated nature of the newsystems meant that instead of airlines looking after their own facilities, airport’s needed to take control.The key point the airport’s Project Management team failed to see was that the shift in technologyrequired a corresponding shift in organizational responsibilities. The failure to recognise that shiftrepresents a planning failure that dated back to the very start of the construction project. The publicrecord does not detail how the original strategy was set or even if the topic had been directlyconsidered. However, people typically see the world through the eyes of their prior experiences andgiven that almost all prior airport projects had left this responsibility to the airline, it is very likely thatthe question was simply never discussed.In broader terms, the mistake made was a failure to link the airport’s overall strategy (the goal of havingone of the world’s most efficient airports) with the sub-strategy of how to build the baggage system.The mode in which that failure occurred may well simply have been a failure to ask the critical questionof where responsibility for development of the baggage system needed to be.Key Decision 2 – The decision to proceedAlthough the change in strategy is somewhat understandable, what is less understandable is why boththe airport Project Management team and BAE decided to proceed with the full scale project despiteclear indications that there was insufficient time left for the project to be completed successfully.Prior to entering into the BAE contract, there were at least three indications that the project requiredmore than two years or was simply not feasible;1. The 1990 Breier Neidle Patrone Associates report indicated the complexity was too high for thesystem to be built successfully [1],© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consulting2. Analysis of the three bids received indicated that none of the vendors could build the system in timefor the Oct 1993 opening [4],3. Experts from Munich airport advised that the much simpler Munich system had taken 2 full years tobuild and that it had run 24 / 7 for 6 months prior to opening to allow bugs to be ironed out [5].Reports indicate that the decision to proceed was based on the communications between the airport’sChief Engineer (Walter Slinger) and BAE’s Senior Management team. While BAE had initially chosen notto bid for the airport wide contract, the rejection of the three official bids resulted in the airport teamspeaking directly to BAE about the possibility of expanding the United Airlines system that was alreadyunder development. Those discussions resulted in the preparation of a specification and the creation ofa large scale prototype (reported to have filled up a 50,000 sq ft warehouse) [7]. Demonstration of theprototype to is said to have been the factor that convinced Slinger that the system was feasible.Despite the fact that BAE was talking directly to Slinger about the possibility of building the system,some reports indicate that within BAE several managers were voicing concern. Again the issues relatedto whether or not it was feasible to build such a large system in such a short period of time. Reportsindicate that several managers advised the BAE Senior Management team that the project was atminimum a four year project, not a two year project [5].The failure by both Slinger and BAE’s Senior Management team to heed the advice they were receivingand the failure of the airport’s Project Management team to have the BAE proposal and prototypeindependently reviewed is the epicentre of the disaster.Although published reports do not indicate why the expert advice was ignored, it is clear that bothSlinger and BAE’s Senior Management team underestimated the complexity of the project and ignoredinformation that may have corrected their positions. Many factors may have led them into that trapand likely issues that may have influenced the decision making include;1. From Slinger’s perspectivea. Denver was to be a state of the art airport and as such the desire to have the most advancedbaggage system would likely have been a factor behind Slinger’s willingness to proceed,b. Slinger’s prior experiences with baggage handling will have been based on simple conveyorbelts combined with manual tug and trolley systems. Those prior experiences may have ledSlinger to underestimate the complexity of moving to a fully automated system,c. As a Civil Engineer, Slinger was used to the development of physical buildings and structuresrather than complex technology systems, this may have predisposed him to underestimatethe mathematical complexity associated with an issue such as “line balancing”,d. Slinger is reported to have been a hands-on leader who liked to solve problems himself. Assuch Slinger may have been inclined to make decisions on his own rather than seekingindependent advise,e. Slinger dealt with the discussions with BAE personally, given that he was responsible for thecomplete airport, he will have had considerable other duties that would have limited theamount of time he had to focus on the baggage system,f. On the surface the prototype may well have made it look as if BAE had overcome thetechnical challenges involved in building the system and as such Slinger may have beenlured into a false sense of security.2. From BAE’s perspectivea. The project was a big revenue opportunity and represented a chance to grow the business,© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingb. The prestige of securing the DIA contract would position BAE to secure other large contractsaround the world. New airports or terminals were planned for Bangkok, Hong Kong,Singapore, London and Kuala Lumpur and BAE would be a strong contender if they couldwin the DIA project.3. Other factorsa. Both BAE and Slinger will have recognized that they were working within a tight timeframeand the pressure to move quickly may have caused them to put due diligence to one side.b. The belief that due to the airport’s size, a manual system would not be fast enough to meetaircraft turnaround requirements. Note however that this belief was unfounded as theairport functions happily today using a manual system.Key Decision 3 – Schedule, scope and budget commitmentsThe schedule, budget and scope commitments a team enter into are amongst the most critical decisionsthey will make. The seeds of project success or failure often lie in the analysis that goes into makingthose decisions and the way such commitments are structured.In the DIA case, BAE committed to deliver the complete system under a fixed scope, schedule andbudget arrangement. The decision to give a firm commitment to scope, schedule and budgettransferred considerable risk onto BAE’s shoulders. This move indicates strongly that those in thehighest level of BAE’s management structure had completely failed to recognize the level of risk theywere entering into. Had they been more aware, they almost certainly would have taken steps to limitthe risk and to find ways to limit the scope to something that was more achievable in the time available.Again the finger prints of excessive schedule pressure can be seen in the commitments BAE enteredinto. The contractual conditions for the agreement and the scope of work were hammered out in justthree “intense” working sessions [7]. Although BAE had some level of understanding because of theircontract with United Airlines, clearly the three working sessions will not have provided sufficient timefor the different parties to develop an in-depth understanding of what was involved or for them to fullyunderstand the risks they were taking.BAE and the airport Project Management team made another major mistake during the negotiations.Although the airlines were key stakeholders in the system they were excluded from the discussions.Excluding stakeholders from discussions in which key project decisions are made is always a losingstrategy. When previously excluded stakeholders are finally engaged, they usually ask for significantchanges that can negate much of the previous work done on the project.Key Decision 4 – Acceptance of change requestsNot surprisingly, as the project progressed the airlines did indeed ask for a number of significantchanges. Although in the original negotiations, BAE had made it a condition that no changes would bemade, the pressure to meet stakeholder needs proved to be too strong and BAE and the airport’sProject Management team were forced into accepting them. Among the major changes were; theadding of ski equipment racks, the addition of maintenance tracks to allow carts to be serviced withoutbeing removed from the rails and changes to the handling of oversized baggage. Some of the changes© Copyright 2008 Calleam Consulting Ltd, all rights reserved Denver Airport Baggage Handling System Case Study – Calleam Consultingmade required significant redesign of portions of work already completed.Accepting these changes into a project that was already in deep trouble raises some further troublingquestions. Did the team fail to understand the impact the changes might have? Did they fail torecognise how much trouble the project was already in? Although answers to those questions are notavailable from the public record, the acceptance of the change requests again hints at thecommunications disconnects that were occurring inside the project. Clearly some of the peopleinvolved will have understood the implications, but those voices appear not to have connected withthose who were making the overall decisions.Key Decision 5 – Design of the physical building structureRather than being separate entities, the baggage system and the physical building represented a singleintegrated system. Sharing the physical space and services such as the electrical supply the designers ofthe physical building and the designers of the baggage system needed to work as one integrated team.Largely because the design of the building was started before the baggage system design was known,the designers of the physical building only made general allowances for where they thought the baggagesystem would go. When the baggage system design was eventually started, the baggage system designteam was forced to work within the constraints left to them by the designers of the physical building(estimates to change the physical structure to suit the needs of the baggage system are reported tohave been up to $100M).The resulting design meant that the baggage system had to accommodate sharp turns that were farfrom optimal and increased the physical loads placed on the system [1]. Those stresses were keycontributors to the system’s reliability problems. In particular, navigating sharp turns is reported tohave been one of the major problems that lead to bags being ejected from their carts. These problemsultimately proved so severe that the speed of the system was halved from 60 cars per minute to 30 carsin order to reduce the physical forces when negotiating tight turns. That quick fix however had the sideaffect that it began to undermine the performance goals the system was trying to meet.Although the designers of the physical building likely did their best to make allowance for the baggagesystem, this portion of the story once again illustrates a breakdown in the overall planning of theproject. The allowance of spaces in which the baggage system would operate represented a keyinterface between the design of the physical building and the baggage system. To make effectivedecisions about how to design the physical building, the designers of the physical building needed to beworking alongside people who had expertise in designing baggage systems. Clearly this did not happen.What is not clear is if the designers of the physical building requested such expertise be provided or ifthey just went ahead in isolation. In either case, the Project Management team should have recognisedthe significance of the interface between the baggage system and the physical building and arranged forthe appropriate people to work together.Key Decision…

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