Perform an analysis for strengths, weaknesses, opportunities, and threats (SWOT) on the decision to build DIA

Internal Factors

Strengths(+)

• The new DIA would satisfy the needs of the Denver area for the next 50 to 60 years. (Kerzner, 2017, p. 467)
• DIA would be a model airport and the benchmark for other airports to follow. (Kerzner, 2017, p. 467)
  Ability to operate as a hub with 50 percent of passengers changing planes at DIA. (Kerzner, 2017, p. 469)
• Reduction in traffic bottlenecks and fewer delays. (Kerzner, 2017, p. 469)
• Solve the lack of runway increasing the airports capacity. (Kerzner, 2017, p. 469)
• Improved air traffic and ground traffic control; greatly improving flight operations efficiency. (Kerzner, 2017, p. 469 – 470)
  • E.g. – Flight operations would be able to shift takeoff and landing direction base on wind patterns in 4 mins vs. the current 45 mins.
• Ability to handle more large aircraft at concourse gates. (Kerzner, 2017, p. 470)
• Increased opportunity to handle international traffic. (Kerzner, 2017, p. 470)
• The new DIA could be a potential hub for Northwest and USAir creating a significant opportunity to increase revenue. (Kerzner, 2017, p. 473)
• The land site would be larger than the Chicago O’Hare and Dallas–Ft. Worth airports combined providing room for expansion and the required noise buffer zone. (Kerzner, 2017, p. 474)

Weakness(-)

• United and Continental who comprised 80% of the flights in and out of Denver object to the idea of building a new airport, fearing the added cost burden. (Kerzner, 2017, p. 467 – 469)
• The land agreement limited DIA to such businesses as airline maintenance, cargo, small-package delivery, and other such airport-related activities. The land agreement places restrictions on air cargo and air freight revenue streams. (Kerzner, 2017, p. 475)
• Zoning regulations, calling for no residential development with an LDN noise level of 60 and land use could limit expansion abilities. (Kerzner, 2017, p. 474)
• Competition from Front Range Airport, potential expansion of the airport and/or lost revenue through for air cargo and freight. (Kerzner, 2017, p. 474)
  • E.g. – Cargo and freight carrier continue to use Front Range Airport because of the restrictions imposed by DIA.
• Cost, economic pressure and design decisions.
  • E.g. – The terminal roof design would increase the cost of the project by $48 million and increase the duration of the project. (Kerzner, 2017, p. 477)
• Availability of qualified contractors and suppliers. (Kerzner, 2017, p. 479)

External Factors

Opportunities(+)

• Expansion and increased revenue opportunities.
• Operational efficiency could lower operating costs over time.
• Region, city, state economic prosperity.
  • E.g. – Jobs, tourism, corporate operating taxes, etc…

Threats(-)

• Build plans scaled back due to the recession. (Kerzner, 2017, p. 475)
• Funding volatility. Dependence on municipal bonds to fund the construction of DIA. Rating agencies and like S&P and Moody’s can impact the value of these bonds. (Kerzner, 2017, p. 479)
• Airport operational timeline.
  • E.g. – Can BEA deliver eight years of work in two years, so the baggage handling system is operational? (Kerzner, 2017, p. 482)
• Slow or no economic recovery.
• Increases costs and fees at DIA impact threatens fight volume for the major (Continental) and low-cost carriers (Southwest). (Kerzner, 2017, p. 485)
• Cost overruns and poor operational planning. (Kerzner, 2017, p. 486)
• Staffing and personnel logistics. (Kerzner, 2017, p. 485)
• Results of SEC investigation. (Kerzner, 2017, p. 488)
• Faulty workmanship, failing construction and falsified records. (Kerzner, 2017, p. 492)
• Ability to offset the increased cost per enplaned passenger. (Kerzner, 2017, p. 496)
• Distance from downtown Denver. (Kerzner, 2017, p. 497)
• Runway high wind shears. (Kerzner, 2017, p. 477)
• Bad weather. (Kerzner, 2017, p. 479)
• Mayoral race and political climate. (Kerzner, 2017, p. 479)
• Denver lacked an agreement with Continental and United Airline securing the use of DIA. (Kerzner, 2017, p. 479)
• Continental filed for Chapter 11 bankruptcy protection in December 1990 (Kerzner, 2017, p. 479)

 

Who are the stakeholders and what are their interests or objectives?

City of Denver: The city of Denver financed DIA with bonds. The city of Denver does not want to run out of cash as a result of DIA failing and default. If the city of Dever were to default it would be unable to pay its bondholders. Defaulting on these bonds significantly impacts the city’s ability to operate DIA and also impacts creditworthiness and future financing opportunities could impact the entire community.

Adams County and the residents of Adams County: Adams County is where the airport would be built. Ordinances were put in place to protect the residents of Adams County, but the reality is that there is now a massive airport in your backyard.

Federico Pena, Secretary of Transportation (previously Denver’s Mayor): While now the Secretary of Transportation I would imagine the legacy of being the Mayor who kicked off a major transportation project, and now the transportation secretary he would still have a stake in the success of the project. In politics every decision follows you, meaning that Pena is invested in the success of DIA or some way to disassociate himself from the failure. (Kerzner, 2017, p. 465)

Denver Mayor, Wellington Webb: The politician on the hook when DIA is opened. Probably not fun when he found out DIA may be built over an old Native American burial ground. (Kerzner, 2017, p. 465)

Greiner and Morrison-Knudsen the engineering firms hired to design and build DIA. (Kerzner, 2017, p. 476 – 477)

Union Pacific who was planning to put the rail lines in place which would connect downtown Denver to DIA. (Kerzner, 2017, p. 485)

Cargo carriers (UPS, FedEx, Airborne Express and others)impacted by delays associated with DIA and had committed to conduct operations from DIA. (Kerzner, 2017, p. 484)

United Airlines who was concerned that low operating costs at Front Range airport could see low-cost operators like Southwest Airlines move in and increase competition. (Kerzner, 2017, p. 484)

Other commercial airlines impacted by the success or failure of DIA. The Ability to survive in the market, market expansion and routes could/would all be impacted.

Financial markets and bondholders. Because bonds are similar to other financial instruments, they are held by individuals and also held in ETF, mutual funds and other financial instruments. Someone was betting on the success of DIA otherwise there would be no funding. (Kerzner, 2017, p. 501)

Airport and airline employees. Longer commutes, a significantly larger airport with underprovisioned equipment (Kerzner, 2017, p. 487) and wind shear (Kerzner, 2017, p. 487).

BAE who was responsible for a baggage management system that normally takes six years to install and two years to debug needed to execute in two years successfully. (Kerzner, 2017, p. 487)

U.S. West Communication Services: Awarded a $24.4 million dollar contract for DIA’s telephone system. (Kerzner, 2017, p. 483)

 

What appears to be the single greatest risk in the decision to build DIA?

Sure commitment from the airlines were critical, without airlines DIA cannot be a thriving airport, but I believe that the greatest risk to the sustainability of DIA was the ability for DIA to managed income to debt ratios and control bond ratings. Could DIA do what was required to generate enough income to outrun their debt given outside influences like higher enplanement costs, carrier volume reductions, an economic recession, the reliance on bond ratings to continue finance day-to-day operations, the political climate and a pending SEC investigation? DIA needed to understand their runway (how much time they had, not the tarmac), how the financial markets would react to decisions so they could establish DIA.

Bond rating agencies like Moody’s, S&P and Fitch Ratings will rate bonds based on the ability of the issuer to repay. A bond rating merely represents the issuer’s creditworthiness. Metrics like income to debt ratio indicate if a bond issuer can repay the principal and interest owed to bondholders. While DIA has many significant risks the biggest risks, I believe that access to the capital (potentially more capital) required to run day-to-day operations, market DIA, solicit carriers and remedy issues presents the most significant risk. Cash can help overcome issues because cash provides both the means and the time to remedy the situation.

 

What is the function of the project management team (PMT) and why were two companies involved?

The project management team (PMT) is a group who works together to achieve a task or goal. Bringing the right people together is extremely important, the skills required to accomplish the objective should govern team selection. These skills include technical subject matter expertise in a specific discipline, problem-solving skills, communication skills, and organizational skills.

The city of Denver engaged Greiner Engineering an engineering, and airport planning firm and Morrison-Knudsen Engineering a design-construct firm.
I believe the reason that both Grainer Engineering and Morrison-Knudsen Engineering were both engaged was to provide oversight and attempt to balance the city’s goal of creating a “thing of beauty” and airport personnel desire for the airport to be easy-to-clean. I think the goal was to provide focus while separating standards creation and conflict resolution from execution. (Kerzner, 2017, p. 476 – 477)

IMO the challenge here was not so much that there were two firms involved but more so that there was a lack of alignment on the design and construction objectives. Balancing the design aesthetic and operational efficiency requirements were extremely challenging.

When did the effectiveness of the project management team begin to be questioned?

The PMT effectiveness was questioned because it could not effectively manage the conflict between an aesthetic and operation efficiency. The PMT had the task of architecting a “thing of beauty” (Kerzner, 2017, p. 477), that was highly efficient, and it seems there was little it the way of compromise between the city and airport personnel. There were also numerous outside influences such as the recession and an uncertain economic climate, the carriers refusal to participate in design efforts, etc.

The PMT did not do a good job identifying project risks and contingencies. As a result, there were many unknown unknowns, rather than known unknows. (Projecttimes, n.d.)

References

14 Free SWOT Analysis Templates. (2018, November 07). Retrieved December 5, 2018, from https://www.smartsheet.com/14-free-swot-analysis-templates

Harvard Business Review Staff. (2016, November 03). Five Critical Roles in Project Management. Retrieved December 5, 2018, from https://hbr.org/2016/11/five-critical-roles-in-project-management

How do Cities Default and Recover, and What Does It Mean for Bonds? (n.d.). Retrieved December 5, 2018, from https://neighborly.com/learn/municipal-bond-defaults-and-recoveries-chapter-8

Kerzner, H. (2017). Project Management Case Studies (5th ed.). Hoboken, NJ: John Wiley & Sons, Incorporated.

Kim, S. D. (2012). Characterizing unknown unknowns. Paper presented at PMI® Global Congress 2012—North America, Vancouver, British Columbia, Canada. Newtown Square, PA: Project Management Institute.

Projecttimes. (n.d.). Things Known and Unknown. Retrieved December 5, 2018, from https://www.projecttimes.com/articles/things-known-and-unknown.html

Andrew, nicely done, as always.

The case study states that “The final part of the agreement limited DIA to such businesses as airline maintenance, cargo, small-package delivery, and other such airport-related activities.” (Kerzner, 2017, p. 474)
In reading this I felt that DIA might not be as attractive as Front Range for the cargo carriers. I realized after reading your post, and going back and looking at the text, that I probably misinterpreted the division on cargo and small-package delivery, thinking that DIA was restricting cargo to just small-package delivery, no I realize that was probably the wrong interpretation.

Do you not think the politicians were stakeholders? Would be hard to believe that any politician associated with a project of this magnitude would not have a stake in either taking credit for its success or distancing themselves from failure.

Border control was an interesting one that I didn’t think about but definitely could see that they would have a stake given that Denver would become a key entry point into the U.S.

References

Kerzner, H. (2017). Project Management Case Studies (5th ed.). Hoboken, NJ: John Wiley & Sons, Incorporated.

Scott, yep, this was a long read and a pretty nuanced analysis.

How much open land is there for expansion? It seems like there is lot’s of land but it also seems that there are ordinances that could potentially be impactful. If a jet fires up its engines in the center of the 53-square mile radius, and the noise level is LDN is 30 what happens to the LDN if the jet moves ten miles to the north, south, east or west? My question is while there are 53-square miles, what is the usability of the land. (Kerzner, 2017, p. 474)

Is DIA in a prime location? 26 miles from downtown Denver vs. Stapleton which is 8 miles from downtown Denver. (Kerzner, 2017, p. 474)
“Prime location” as a strength and “far from city” as a weakness seems to be at odds. Is the prime location a prime location for carriers from a route perspective? Took me a minute to realize this was where you were going, but I get it.

Interesting that no one seemed to call out the politicians as stakeholders. What do you think? Are Federico Pena and Wellington Webb stakeholders?

References

Kerzner, H. (2017). Project Management Case Studies (5th ed.). Hoboken, NJ: John Wiley & Sons, Incorporated.

Lyndon, nicely done, I like the use of HTML tables. 🙂

Do you think that bond ratings are a weakness or a threat? Given DIA’s reliance on bonds and bond ratings which impacted their ability to issue more bonds, interest rates, etc. I thought this was more of a threat than a weakness.

Does it seem reasonable that the city chose to engage Greiner Engineering and Morrison-Knudsen Engineers to try to balance the competing agendas and conflict between the city and airport personnel? Was there an issue with two companies being involved or was it more about a general lack of alignment on project objectives. Do you think the two engineering firms were engaged as an approach to try to attack what you mention in your response to “When did the effectiveness of the project management team begin to be questioned?”, focusing on standards and execution and thinking they could get this done without compromise?

References

Kerzner, H. (2017). Project Management Case Studies (5th ed.). Hoboken, NJ: John Wiley & Sons, Incorporated.

 

Greggory, while the runways at DIA were 6x the length of the runways at Stapleton I wouldn’t want to be there when it snowed and they only had 25% more equipment than Stapleton. (Kerzner, 2017, p. 474) I would have rather had taken a connection through Stapleton. This a case of what could be a strength becoming a weakness. There is no way they are clearing those runways and getting flights out during a Colorado winter storm. Looks great on paper, but the operational execution would be poor because of bad operation decisions.

Should the underprovisioning of equipment relative to the size of the airport be listed as a potential threat?

References

Kerzner, H. (2017). Project Management Case Studies (5th ed.). Hoboken, NJ: John Wiley & Sons, Incorporated.