BAE, a well-reputed organization in building automated baggage handling systems was awarded a contract to design and build an integrated baggage handling system for the DIA. Unfortunately, many issues arose throughout the process of building the baggage handling system and the schedule of opening DIA was delayed several times.
In August 1994, the City of Denver notified BAE of a $12,000/ day penalty for not finishing the baggage handling system by the original completion date, ...view middle of the document...
The delays were due to many reasons. When BAE started the project, they were faced with fully defined project scopes, which proved to be a major planning error. There were many project management issues. The communication channel was not managed well between the stakeholders. As well, the City of Denver regulations had its fair share in delaying the project.
The political and economic situations played a role in the problem. The political involvement in the DIA project started since day one. There was too much pressure to fast track this project due to mayoral races. In the mid-1980s, there was a free fall in the economy. Officials in the region looked at the DIA project as a mean to increase the economic activity in the region.
BAE has few options on dealing with this problem. The first option is to maintain the status quo. The second option is to cancel the project, and the third option is to continue with same project upon completing some restructurings.
After analyzing the case and the options that are available, it is recommended that BAE proceed with option three, which is to proceed with same contract but after agreeing on some modifications and restructurings. Proceeding with this option would save BAE reputation and avoid possible litigation and bad PR, yet accomplish the project.