The History of Failure Ep1

The Denver International Airport Baggage Handling System

I am in the midst of writing a book on various major business project failures and why they happened. To quote Roy Batty "I've seen things you people would not believe." None of us want a project that we are working on to fail, especially those projects that can cost millions of dollars, some reputations and overall trust. Yet they happen all the time. At least once a year you will read about a project that had been touted as the next big thing going up in a blaze of money and lawyers.

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One thing I like to do as an armchair historian is go back to those projects that we have conveniently forgotten about. I like looking at matters after all the lawsuits have been settled, because the act of discovery has been done for me. And oh the things you find out. So, join with me in a condensed exploration of some colossal corporate failures. Today I am looking at The Denver International Airport (DIA) Baggage Handling System.

The story DIA’s original baggage handling system is a classic tale of how pure ambition, poor planning, refusal to listen and misaligned execution can derail even the most promising projects. For professionals in the business community, particularly those familiar with the principles of the Project Management Professional (PMP) framework, this case offers a wealth of lessons on scope management, risk management, stakeholder engagement, and the perils of overengineering.

?We need to go back to the early 1990s. The city of Denver was needing a replacement to its airport, known as Stapleton. Stapleton had opened as a small municipal airport in 1929–30 and went on to become Denver's primary airport for sixty-five years. Die Hard 2 was filmed there. It was great for its time, close to downtown, easy to get in and out of, it was one of the original great “in the city” airports. OK, I know SFO, Midway, LaGuardia, Hobby, Love Field and Sky Harbor still exists. But getting in and out of Stapleton by the 1980s was taking a bad trip back in time.

Unfortunately, Stapleton was landlocked and could not grow any larger. And so the new Denver airport was founded on 54 square miles somewhere between Denver and Kansas City. Denver’s city leaders envisioned DIA as a modern marvel that would cement the city’s position as a global aviation hub, provided United Airlines stayed solvent. Central to this vision was an automated baggage handling system that promised unprecedented efficiency, given the sprawling size of the airport terminal, which is smaller than Atlanta, but just as painful and dull to move around in. Designed by BAE Automated Systems, the system was intended to seamlessly transport luggage across the sprawling airport’s concourses using a series of conveyor belts, carts, and tracks.

The promise was alluring: faster baggage processing times, reduced manual labor, and a cutting-edge reputation for the airport. However, as any project manager will tell you, a bold vision must be grounded in careful planning and execution. This was anything but. Unfortunately, this is where the cracks began to show.

From the outset, the baggage handling system was an ambitious endeavor, but the scope quickly ballooned. Originally, the system was meant to service a single airline: United Airlines, well known for mangling luggage without mechanical help. However, city officials decided mid-project to expand the system to cover the entire airport, because an untested product should be available to everyone. This decision significantly increased the complexity of the design and implementation. If they didn't drink, every project manager involved probably started after that.

In PMP terms, this is a classic case of scope creep. the project scope expanded without corresponding adjustments to time, cost, or resources. By not adhering to a clear scope management plan, the project became increasingly unwieldy. Changes were made without fully understanding their impact, leading to cascading delays and cost overruns.

DIA’s original opening date was set for October 1993. However, the aggressive timeline left little room for testing or adjustments. When issues with the baggage system emerged during initial trials, there was no buffer to accommodate fixes without delaying the airport’s opening. Go figure.

One of the most glaring issues was the lack of effective risk management. The baggage handling system was a technological first, with no comparable systems to draw lessons from. Despite this, project leaders failed to conduct a thorough risk assessment to identify potential challenges or develop contingency plans. Because that takes time and money and we have an airport that is opening.

For instance, the system relied on a network of automated carts to transport luggage at high speeds. During testing, these carts often malfunctioned, causing bags to be misrouted, damaged, or even ejected from the system. The videos are cringe inducing to watch, from an engineering standpoint. All one needs to do is play the theme song to “Curb Your Enthusiasm” in the background. These issues were foreseeable given the system’s complexity, but the absence of proactive risk mitigation strategies left the project vulnerable to cascading failures.

Another critical failure was the lack of effective stakeholder engagement. While city officials and airline executives were primary stakeholders, the project team did not adequately involve front-line users, such as baggage handlers and airport staff, in the design and testing phases. Because those people were not supposed to exist in baggage Utopia.

This lack of engagement led to a system that was not user-friendly and failed to account for practical, on the ground realities. For example, maintenance requirements were underestimated, and the system’s complexity made it difficult for operators to troubleshoot issues, which brings us to the next point. On paper, the baggage system’s design was a marvel of engineering, including thousands of sensors, hundreds of automated carts, and miles of conveyor belts. However, this complexity proved to be its Achilles' heel. The more intricate a system, the more points of failure it has, and the harder it becomes to diagnose and resolve issues. Still don't know which genius didn't get the "machines are going to break" memo, but then again testing may have uncovered some of it. Oh yeah, there was no time to test a system which there was only one of in the world.

When DIA finally opened in February 1995, 16 months behind schedule, the baggage handling system was still not operational. Ultimately, the airport was forced to revert to a manual system, hiring hundreds of workers to handle baggage the old-fashioned way.

The financial fallout was staggering. Factoring in redesigns, delays, and additional labor costs the project’s budget ballooned from $193 million to nearly $600 million (approximately $1.25 billion today). The failure tarnished DIA’s reputation and became a cautionary tale for ambitious infrastructure projects. Although the remnants of the system soldiered on for 10 years, the system never worked well (that's an understatement) and in August 2005, United Airlines announced that they would abandon the system completely.

The failure of Denver’s original baggage handling system is a goldmine of lessons for business leaders and project managers. In the end, there was plenty of blame to go around. DIA’s original baggage handling system was a well-intentioned but poorly executed project that serves as a cautionary tale for the business community.

For business leaders, the DIA saga underscores the importance of disciplined project management. No matter how ambitious the vision, success ultimately hinges on careful planning, realistic expectations, and a relentless focus on execution. As the saying goes, “Failing to plan is planning to fail,” and nowhere is this more evident than in the story of Denver’s ill-fated baggage handling system.