Computerised Accounting Information System Analysis

Computerised Accounting Information System Analysis The purpose of this report is to discuss how effective the computerized accounting information system will benefit a business that is expanding in expenditure, revenue and other key areas of business. Introduction to Accounting Information System AIS is a system that collects and stores accounting data, after that process the data into useful information used by the decision makers (internal and external users). The information produced by AIS can help decision maker to manage their business more efficiently strategically. However, accounting information system can be manual using the traditional way of recording business transactions manually using paper-and-pen. Today the term AIS referred to as compound computer base system that merges the ability of information technology together with traditional accounting principles and practices. A big benefit from computerize accounting information system is that they automate and make financial reporting more efficient. Accurate and summarized, timely information is a major tool for organizations decision making and financial reporting. The accounting information system pull imports data from the system database, process and transform it and eventually produces information and reports which can be easily consumed and analyzed by the users, managers and decision makers. These systems are required to ensure that the reports are timely and relevant so that decision makers are able to quickly and efficiently base on the information provided in the reports. Consolidation is one of the greatest characteristic of reporting as user does not have to go through a massive number of transactions. For example, at the end of the accounting period an accountant consolidates all payments by running a report on the system. The system application layer reclaims the data stored in the system database and produces a report with the total payments made to the vendors for that particular period. With large corporations which have huge volume of transactional data, generating a report without AIS can take day or even weeks. Case study background River Adventures is a fifteen years old company located in Cheddar, Somerset, owned and managed by Robin Forsythe. Until recently river adventures business has been highly seasonal offering two different kayaking instructions for beginners and Intermediate level as well as kayak and rafting trips down the river Axe in Somerset. They also usually rent equipment to participant if they required. However, the company is facing an exciting challenge which will alter the size, the type of service offered and the seasonality of the business. Robin has lately obtained two new sites and he is planning to launch a new team blinding course (corporate activity) and he is expecting a large number of new participants to this specific course. Financial management and business processes field Robin operating his business very informally using manual procedures in all areas. He always predicts the expenses for each course based on his working experience. He also manages the purchasing activities of the company and issue invoices for participants on the course. At the end of the year he determines his profit by his total revenue minus the total expenses during the year. Robin set the prices by consider his profit from the previous year, assess his competitors price and make adjustment for inflation. Robin employs an office administrator along with a number of kayak instructors and raft guides. The administrator manages Account Payable and Cash Receipts and records them in the Income Journal. He also maintains simple general ledger and payroll register for tax purposes only, and no use of this accounting data is made for financial planning or for operations control. River adventures advertise through leading outdoor magazine, he also advertises about the coming seasons program on popular kayak retail notice board. Problems Robin is not pleased with the arrangement of his business and he concern about how he will keep track on expenditure and revenues as the business get bigger. Robin feels that there is unnecessary wastage of the company resources as there is not real control over the cost of meals provided to the beginners course. In addition he notice that recently there is diminishing in the stock of camping as well as small items is also being lost. Robin has suspicion about the operation of marginally attended classes, but no analysis has been done to confirm his suspicion. Robin believes there is lack in his marketing activities and he can easily attract more customers by improving his marking activities. Business opportunity Robin know about 40% of kayaking course participants continue kayaking. As such his customer base reflects a target market for direct sales of kayaking and other equipment. He would like to expand his sales into a full scale direct mail/internet business. Doing so would enable him to provide year-round work for some kayaking personnel. Users of Financial Information Accounting information system objective is to identify record and communicate the economic events of an organization to the intended users. The type of information the user requires is dictated by the type of decisions they make. The information provided by the financial statements includes an organization resources and claims against those resources, as well as shareholders equity and changes in assets and liabilities. Financial information differs between the internal and external users. Accountants must understand the characteristics of information required by the different users of financial statements. In developing financial reporting standards, standard setters presume that those who use the resulting information will have a reasonable knowledge of business and economic activities and be able to read a financial report (Financial Accounting Standards Board, 2006, p. 2). The aim of communicating financial information to user is to let accountants to address the needs and interest of users. There are many different users of financial information and these include: equity investors, suppliers, creditors, customers, employees, governments and their agencies and members of the public. Those users are identified as internal and external users of financial information. Internal Users Robin and his management use financial information to plan, organize and operate the business. And this includes the office administrator, the cook, maintenance person and the kayak instructors. External Users There are quite a few types of external users of financial information and this includes lenders investors, tax authorities, general mass and media. Invertors use financial information to determine whether to buy, hold or sell their shares. Whilst suppliers and lenders view financial statement to assess the health of an organization and to ensure timely repayment of credit. Other external users include equity investors, customers, creditors, general public and governments and their agencies and regulatory bodies. The Functions, Features and Reports of UBS Accounting Information System UBS Accounting Software Since Robin is willing to expand his business activities, UBS Accounting software will enable him to handle and speed up all accounting functions in his business. UBS has the function to handle multiple company transactions. By implementing UBS Robin will be able to assess the performance of the three sites that he owns efficiently and effectively. UBS has the function to view all accounts and reports of each site separately. The software will also provide him with a consolidated account where he can assess the performance of the entire business. In addition UBS accounting has the function to compute good and service required by government agencies, so the office administrator is no longer required to spend time with the general ledger computing tax liabilities and he can focus on other aspect of business instead. UBS accounting software is very flexible; it is capable to handle up to 18 months transactions therefore, the company will not have any difficulties to implement the softwa re at any time they want to. UBS Accounting produces pre define reports. However most of the reports can be modified to suit any business requirement. The Software standard reports are: General ledger Listing Trial balance Trading, Profit Loss Account Balance Sheet   Fixed Assets Depreciation Report   Manufacturing Account    Trading, Profit Loss Account for individual project   Cash Flow Budget Variance Reports Gain/Loss on disposal of Fixed Assets Bank Reconciliation Debtors Creditors Statements Debtors Creditors Listing and Labels Debtors Creditors Aging Report Receipts printing Payment Vouchers printing and management reports UBS Stock Control Software UBS Stock Control is a real time system that updates the stock immediately after entries. It also performs as an invoicing system whereby Robin will be able to print invoices and delivery orders. A simple yet powerful Bill of Material module has been included to enhance the system. Four method of stock valuation are provided in the system, namely Fixed Cost, First in First out (FIFO), Monthly Moving Average and Moving Average. If required, a picture of stock item can also be inserted. By implementing UBS Stock Control, Robin will have superior control over his stock since the software can control and track all the movement of inventory in the company Besides the software has ability to handle multiple company transactions therefore he can control the inventory of each arm of business separately. UBS Stock Control produces the following reports: Print Delivery Order / Invoice / Cash Sale Print Sales Order / Purchase Order / Debit Note / Credit Note Re-order / Stock replenishment recommendation Stock Cards Month to Date stock status reports Stock aging reports   Multi-sorted sales analysis report by :- Customer/Salesman/area/product/invoice Gross profit analysis reports by :- Customer/product/bill/agent/area Yearly sales purchase report Top 25 product sales by quantity and sales value Item graded reports Serial number reports UBS Payroll Software UBS Payroll for Windows fulfills all government requirements such as KWSP Borang A, SOCSO Borang 8A / 2 / 3 and Income Tax EA Form, CP8D, CP22, CP22A, CP39 and CP159. It has become an effective payroll system for all type of businesses and industries due to its capability of  computing monthly,weekly, daily, hourly piece rating. It has 3 mode of payment- monthly, daily and hourly. In addition it compute allowances table, user defined overtime as well as tip point and piece rate computation. Reports generated by UBS Payroll: A.   Statutory Reports: CPF   IR8A / IR8S SDL / FWL B.   Management and operational reports: Payslip Payroll Summary Basic Pay / Allowances / Deduction / Overtime / CPF / SDL / FWL Personal and Payroll reports Leave taken / given reports Work force / Turn over analysis Cash denomination Net pay by cash / bank Yearly employee pay summary   C.   Reports to be submitted via computer diskettes: Employees contributions / net pay can be output to diskette and sent to bank, EPF, Socso and IRD for accounts to be updated. The System Requirement Pentium II 266 MHz or higher 128 MB memory or more   800 MB or more disk space 1 floppy disk drive   1 CD Rom Drive Windows 98, Win2000, WinXP and above   Mouse   Printer Users and Stakeholders Requirements AIS aim to provide information for both internal and external users-primarily for external information users. Given that external users have a range of information needs, financial accounts need to conform to certain standards in order to satisfy them. To that end, the identified users of financial accounting information should have their information needs addressed. In that way, one can determine the context in which accountants produce financial reports. Investors In the case of River Adventure, Robin is the only shareholder of the company. Robin will be able to base his investment decision on the financial position and profitability of the business which is provided by the new accounting system. The information provided by the AIS may also be useful for potential investors in the case if Robin want to expand his business in the future and sale shares of the company to other investors. Robin would be concern about the viability of the company or his return on investment, while potential investors want to know that they are investing in a strong company. Management The highly summarized nature of financial accounts provided by the new system, allows Robin and his management to assess whether the companys strategic and tactical objectives are being met. Knowing the position of the company allows them to fine-tune the day-to-day running of the company with knowledge of the impact of their decisions on the companys strength and viability. Lenders Creditors like banks and financial institutions have a preference to deal with a financially well company with a strong cash flow because they are worried with debt repayment and recovery. Employees Employees such as the raft guides, camp cook, instructors and the office administrator are concerned with whether the company will continue a going concern and if they might face and whether can ask for wage increases. Trade unions usually observe the financial position of an organizations to make wage increase demands as well. Suppliers Suppliers such as Rustic Retreats, local butcher, grocers and camping and sport equipment suppliers are concerned with whether they supply the company on credit terms and may desire to contract with the company as a going concern. Customers/Clients (and financial advisers/analysts) Customers like corporation wishing to send their employees on team building course and individual students, would also be concerned with the business being a going concern. Tax authorities Tax authorities like Inland Revenue, Yearend returns and Tax liabilities need to assess chargeable income of an entity to determine whether the right amount of tax is being levied in a particular year. Government Government includes all government or state agencies like the Central Bank. These agencies would use financial statements to ensure compliance, especially with the representation of the financial position of the business and accounting standards. The government also uses information from financial accounts for national statistics such as Gross Domestic Product. Public public simply refers to the rest of society. Business actions have an effect on society and the environment where River Adventure operates its business, so the public, which includes lobby group, would assess the entity as a corporate citizen. Business process models The revenue cycle Sales The sales segment of the revenue cycle begins when a consumer places an order. When the purchase order is received, an employee of the company enters the required data into the accounting system keying the order into an input screen.With the available online data files, the input data can be revised, the customers credit statues can be studied, and inventory level can be checked. Also a customers credit limits will be reviewed so that it does not exceed and keep tab of the available inventory items. The customers accounts records and sales records can be updated using the order processing. Relevant documents needed to fill and ship the order are printed. These documents include a pick list, a packing slip, an invoice, and bill of lading. The pick list serves as a list for warehouse employees to select items from the warehouse shelves. The packing slip is utilized by the shipping personnel to ensure correct items are packed. An agreement between the common carrier and the company comes in the form of the bill of lading. The invoice is then sent to the customer. Towards the end of the month, customers are given the bill according to the statement. Regular monthly reports would include sales reports, inventory status reports, and account receivable reports. The expenditure cycle Payroll To keep the payroll in check, an electronic time clock collects time and attendance when employees insert their time sheet into the clock. The time clock then reads the bar codes on the employees time sheet. The system thencollects data through-out the period and automatically calculates batch totals. The data batches are then used to prepare paychecks and the payroll register. Purchases The purchasing department order items from a vendor and an employee must enter a purchase order into the accounting software by keying data into the fields of a purchase order form on the screen. The receiving department receives the goods and compares the packing slip with the purchase order to confirm part numbers and quantities. A receiving report is prepared by an employee filling in the appropriate fields in a receiving screen in the software and inventory records are updated, the person completing this screen must choose the purchase order that matches this receiving report. When the vendor name or ID number is entered, the system will list open purchase order with that vendor. After the vendor has provided an invoice, the invoice must also be entered into an entry screen in the accounting software. Again the proper purchase order must be chosen from a list to open purchase orders. If the purchase order, receiving report and invoice match as to part numbers, quantities and pric es, the liability is approved for payment. At the due date of the invoice, a designated person must select certain invoices to pay and have the system generate a batch of checks. How the outputs of the new accounting information system will help River Adventure to solve their problems. The new accounting software has the ability to generate profit/loss and balance sheet at any time required thus Robin can keep track on his business expenditure and revenues as the business expand. The new accounting software also has the ability to produce break-even point reports so Robin and his management can confirm their suspicious about the operational marginality of each course. The sales reports, and account receivable reports produced by the new accounting system will solve the problem of cash sales being disappeared from the company accounts. After implementing UBS the company will have a proper control over the cost of meals provider to the beginners course as the software have the facilities of budgeting process in an organization as well as management controls of business activity. Unnecessary wastage of food material will not be occurred as the unused bulks of food will recorded as Work In Progress Inventories by the new software. UBS Stock Control real-time update of stock with each receipt and issue of items, the company will not have the problem of inventory item being lost as the software can track the stock via unique serial code. The company can make a better control over the stock whereby the software will provide comprehensive inventory report at any time required. After implementing UBS payroll the office administrator will not have the difficulties of computing the salaries and bonuses to be paid for his instructors since UBS Payroll ease the task of stuff payroll calculation and payments. Since the new accounting software will save a lot of time and effort to the employees of River Adventure, the management will have more time to focus on other aspect of business and to improve their marketing activities.

Bae Hbr

Harvard Business School 9-396-311 Rev. November 6, 1996 BAE Automated Systems (A): Denver International Airport Baggage-Handling System No airport anywhere in the world is as technologically advanced as the Denver International Airport. 1 It’s dramatic. If your bag [got] on the track, your bag [was] in pieces. 2 In November 1989 ground was broken to build the Denver International Airport (DIA). Located 25 miles from downtown Denver, Colorado, it was the first major airport to be built in the United States since the opening of the Dallas-Fort Worth Airport in 1974.In 1992, two years into construction, the project’s top managers recommended inclusion of an airport-wide integrated baggage-handling system that could dramatically improve the efficiency of luggage delivery. Originally contracted by United Airlines to cover its operations, the system was to be expanded to serve the entire airport. It was expected that the integrated system would improve ground time efficiency, reduce close-out time for hub operations, and decrease time-consuming manual baggage sorting and handling.There were, however, a number of risks inherent in the endeavor: the scale of the large project size; the enormous complexity of the expanded system; the newness of the technology; the large number of resident entities to be served by the same system; the high degree of technical and project definition uncertainty; and the short time span for completion. Due to its significant experience implementing baggage-handling technology on a smaller scale, BAE Automated Systems Inc. , an engineering consulting and manufacturing company based in Carollton, Texas, was awarded the contract.Construction problems kept the new airport from opening on the originally scheduled opening date in October 1993. Subsequently, problems with the implementation of the baggage system forced delays in the opening of the airport another three times in seven months. In May 1994, under growing pressure from shareholders, the business community, Denver residents, Federal 1Fred Isaac, Federal Aviation Administration regional administrator, quoted in â€Å"Denver Still Working Out Kinks as Its First Birthday Arrives,† USA Today (February 28, 1996), p. 4b. Fred Renville, United Airlines employee quoted in â€Å"Denver Still Working Out Kinks as Its First Birthday Arrives,† USA Today (February 28, 1996), p. 4b. Assistant Professor Ramiro Montealegre and Research Associate H. James Nelson of the University of Colorado at Boulder, Research Associate Carin Isabel Knoop, and Professor Lynda M. Applegate prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Some names have been disguised. Copyright  © 1996 by the President and Fellows of Harvard College.To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Bosto n, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. 1 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling SystemAviation Administration (FAA) commissioners, and the tenant airlines and concessionaires, Denver mayor Wellington Webb announced that he was hiring the German firm Logplan to help assess the state of the automated baggage system. In July, Logplan issued an 11-page report to the City of Denver that characterized BAE’s system as â€Å"highly advanced† and â€Å"theoretically† capable of living up to its promised â€Å"capacities, services and performances,† but acknowledged mechanical and electrical problems that  "make it most improbable to achieve a stable and reliable operation. Logplan suggested that it would take approximately five months to get the complete BAE system working reliably. It also suggested that a backup system of tugs, carts, and conveyor belts could be constructed in less than five months. In August 1994, Mayor Webb approved the construction of a backup baggage system. At the same time, he notified BAE of a $12,000-a-day penalty for not finishing the baggage system by DIA’s original October 29, 1993 completion date. Webb also demanded that BAE pay for the $50 million conventional tug-and-cart baggage system.Gene Di Fonso, President of BAE, knew that his company could demonstrate that flaws in the overall design of the airport and an unsystematic approach to project changes had affected implementation of the integrated baggage system. He wondered whether he should just cancel the contract and cut his losses, or attempt to negotiate with the city for the support requ ired to finish the system as specified, despite the severe deterioration in communication and rising hostility. Could the problems with the automated system be overcome with the dedication of additional resources?Given that the system represented a significant departure from conventional technology, would reducing its size and complexity facilitate resolution of the problems that plagued it? And, if the city could be persuaded to accept a simplified system, would the tenant airlines, particularly those with hubbing operations that had been promised more advanced functionality and better performance, be likely to sue? Building the Most Efficient Airport in the World Until about 1970, Denver’s Stapleton Airport had managed to accommodate an ever-growing number of airplanes and passengers.Its operational capacity was severely limited by runway layout; Stapleton had two parallel north-south runways and two additional parallel east-west runways that accommodated only commuter air carriers. Denver’s economy grew and expanded greatly in the early 1980s, consequent to booms in the oil, real estate, and tourism industries. An aging and saturated Stapleton Airport was increasingly seen as a liability that limited the attractiveness of the region to the many businesses that were flocking to it. Delays had become chronic.Neither the north-south nor east-west parallel runways had sufficient lateral separation to accommodate simultaneous parallel arrival streams during poor weather conditions when instrument flight rules were in effect. This lack of runway separation and the layout of Stapleton’s taxiways tended to cause delays during high-traffic periods, even when weather conditions were good. Denver’s geographic location and the growing size of its population and commerce made it an attractive location for airline hubbing operations. At one point, Stapleton had housed four airline hubs, more than any other airport in the United States.In poor weather and during periods of hightraffic volume, however, its limitations disrupted connection schedules that were important to maintaining these operations. A local storm could easily congest air traffic across the entire United States. 3 3According to James Barnes [1993], â€Å"By 1994, Stapleton was one of the top five most constrained airports in the US. There were over 50,000 hours of delay in 1988 and by 1997 the FAA had projected that Stapleton would experience over 100,000 hours of delay per year. † 2 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 The City and County of Denver had determined in the mid-1970s that Stapleton International Airport was in need of expansion or replacement. In July 1979, a study to assess the airport's needs was commissioned by the City of Denver to the Denver Regional Council of Governments. Upon completion of the study in 198 3, a report was issued saying that, due to its size and geographic location, and strong commitments by United and Continental Airlines, Denver would remain a significant hub for at least one major U. S. arrier. The study recommended expansion of Stapleton’s capacity. Political Situation4 The City of Denver’s 1983 mayoral race precipitated initiatives to improve the airfield infrastructure. Three candidates were vying for mayor: Monte Pascoe, Dale Tooley, and Frederico Pena. Pascoe, a prominent Denver attorney and former State Democratic Party co-chair, seized upon the airport issue, forcing other candidates to adopt stronger positions on airport expansion than they might have otherwise. 5 Pena and Tooley, however, drew the highest numbers of votes in the general election, and were forced into a runoff.At the persistent urging of the Colorado Forum (a collection of 50 of the state’s top business executives), Pena and Tooley signed a joint statement committing the mselves to airport expansion. Pena won the runoff. Committed by a public promise that could have been enforced, if necessary, by the most highly motivated members of the region’s business leadership, Pena immediately restated his intent to expand Stapleton. The City of Denver and neighboring Adams County began to develop plans for long-term airport development in 1984. In 1985, a new site northeast of Denver was chosen.Consummation of the airport siting issue, however, was left to Adams County voters, which had to vote to permit the City of Denver to annex property therein. The city hired a consulting firm to help organize its resources and its efforts to work through the legal process. The data that was gathered through the master planning and environmental assessment later proved useful for public education. An â€Å"Annexation Agreement† between Adams County and the City of Denver was reached on April 21, 1988. Adams Country voters approved a plan to let Denver anne x 43. 3 square miles for the construction of an airport.In a special election on May 16, 1989, voters of Denver endorsed a â€Å"New Airport† by a margin of 62. 7% to 37. 3%. According to Edmond, â€Å"Those two referendums passed largely on the merits of the economic benefits: jobs and sales tax revenues. † Economic Considerations A number of trends and events in the mid-1980s alarmed bank economists and other of the region's business leaders in the mid-1980s. The collapse of oil shale ventures between 1982 and 1986 saw mining employment fall from 42,000 to 26,000 jobs, while service support jobs fell from 25,300 jobs to 13,700. Construction jobs fell from 50,700 to 36,600 jobs, and the value of private construction plummeted from $24 billion to $9. 5 billion. 7 A lackluster economy led many government officials in counties and municipalities as well as in Denver to embark upon an unprecedented policy of massive public construction to save the region from what was reg arded in 1987 as an economic free-fall. A $180 million-plus municipal bond was issued for public improvements, including a new downtown library, neighborhood and major roadway improvements, and a host of overdue infrastructure investments.During the same period, 4Extracted from: Moore, S. T. : â€Å"Between Growth Machine and Garbage Can: Determining Whether to Expand the Denver Airport, 1982-1988,† Annual Meeting of the Southern Political Science Association, Atlanta, Georgia, November 4, 1994. 5Ibid. 6 7 Colorado Business Outlook Forum, University of Colorado School of Business, 1990. Small Area Employment Estimates; Construction Review, U. S. Department of Commerce, 1990 3 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System he Pena administration moved decisively to confront an increasingly aggressive Chamber of Commerce leadership that was promoting airport reloca tion. The determination of the â€Å"pro-New-Airport† clan was growing. The project was being marketed as a technologically advanced, state-of-the-art structure to draw businesses, import federal capital, and fund the creation of new jobs with bonded debts to overcome the short-term decline in the economy. The airport was to become a grandiose project to revive the Colorado economy and a master showcase for the Public Works Department. The entire business community,† recalled a member of the Mayor's administrative team: The Chamber of Commerce, members of the city council, the mayor, and state legislators, participated in informational discussions with other cities that had recently built airports. [This enabled] everybody to understand the magnitude of the project. So we studied the other two airports that had been built in the United States in the last 50 years and said, â€Å"Tell us everything that you went through and all the places you think there will be problem s. † We were not going into it blindly.Forecasts of aviation activity at Stapleton by the Airport Consultant team, the FAA, and others, however, did not anticipate events such as a new phase of post-deregulation consolidation, the acquisition in 1986 of Frontier Airlines by Texas Air (the owner of Continental), significant increases in air fares for flights in and out of Stapleton, and the bankruptcy of Continental. Consequently, the level of aviation activity in Denver was overestimated. Instead of rising, Stapleton’s share of total U. S. domestic passenger enplanements fell 4% per year from 1986 through 1989. 8 The Master PlanThe City of Denver's approach to preparing a master plan for the airport was typical. â€Å"One hires the best consultants on airfield layout, noise impacts, terminal layout, on-site roadways, off-site roadways, cost estimating, financial analysis, and forecasting,† observed DIA administrator Gail Edmond. â€Å"They brainstorm and generat e as many alternate layouts as possible. † Alternatives were discussed and eliminated at periodic joint working sessions, and a technical subcommittee was organized to gather input from the eventual airport users, airlines, pilots, and the FAA. â€Å"Everybody knows how to begin an airport master plan,† Edmond added.Following a bid, the consulting contract was awarded to the joint venture of Greiner, Inc. and Morrison-Knudsen Engineers for their combined expertise in the fields of transportation and construction. The consulting team, working under the direction of the DIA Director of Aviation, focused first on four elements: site selection; the master plan; the environmental assessment; and developing support by educating the public on economic benefit. The final master plan presented to the city by the team in the fall of 1987 called for the construction of the world’s most efficient airport.It was to be created from the ground up with no predetermined limitatio ns. The plan was to allow the airport to grow and expand without compromising efficiency. Twice the size of Manhattan at 53 square miles, the nation's largest airport was to be designed for steady traffic flow in all weather conditions. It was to comprise a terminal with east and west buildings joined by an atrium structure, three concourses, an automated underground people mover, and five parallel 12,000-foot-long runways on which as many as 1,750 planes could take off and land daily.Its flow-through traffic patterns would allow planes to land, taxi to concourse gates, and take 8 Furthermore, when selling the project to voters, planners at one point forecast up to 36 weekly flights to Europe by 1993. The number recorded in 1993, however, was four. The number of passengers departing form Denver was to rise from 16 million in 1985 to some 26 million by 1995. The 1994 figure, however, was about the same as the number of passengers in 1985, or half of Stapleton’s capacity. 4 Pur chased by Ashley Matcheck ([email  protected] om) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 off again all in one direction. The ultimate buildout, projected for the year 2020, was to include up to 12 full service runways, more than 200 gates, and a capacity of 110 million passengers annually. Estimated cost (excluding land acquisition and pre-1990 planning costs) was $2 billion. By the end of 1991, the estimated cost had increased to $2. 66 billion. Plans called for the project's completion by the fall of 1993.In September 1989, Federal officials signed a $60 million grant agreement for the new airport, which was to be financed in multiple ways—by issuing revenue bonds and securing federal grants— supplemented by a sizable investment by the city [county of Denver 1991]. Estimated federal grants for the new airport originally totaled $501 million. Portions of these were forthcoming from the FAA, for feder al fiscal year 1990 in the amount of $90 million and for federal fiscal year 1991 in the amount of $25 million. The remainder of the $501 million letter of intent was to be received on an annual basis through fiscal year 1997.The revenue bonds assumed the â€Å"Date of Beneficial Occupancy† (DBO) to be January 1, 1994, with bond repayments to begin on that date. At that time, the city determined that DIA would meet the DBO no later than October 31, 1993. A member of the Mayor’s administrative team described the approach. What we did was plan the DBO date and then we planned an extra six months just in case there was a lag in the opening, which, in essence, allowed us to create stability in the market. The other thing we did was that we conservatively financed and filled every reserve account to the maximum.So we borrowed as much money as we could at the lower interest rate and were able to average the debt cost down, not up, as we thought it would be. A Build-Design Pr oject By the time construction began at DIA in November 1989, a transfer of authority was taking place in the City of Denver. Wellington Webb was elected the new mayor. According to one of his assistants, the Pena administration had announced that the airport would be operational in October 1993. â€Å"This was a build-design project, which means that we were building the airport [while] we were designing it,† he explained. Because of the delays early on in the project, we had to accelerate construction immediately. There was a lot of pressure and too many players. This was an airport built by committee. We had regular meetings to straighten things out, but it didn’t always work. † Although the Webb administration inherited the airport project without a commitment on the part of the major carriers, the support and input of concerned airlines were absolutely key, not only financially but also in terms of input on overall airport layout, scope, and capacity, and su pporting systems such as fueling and baggage handling.Denver launched the DIA program without specific commitments from either of Stapleton airport's two major tenant airlines, United and Continental, which together accounted for more than 70% of existing passenger traffic. Continental committed to the new airport in February 1990, United in December 1991. Fundamental changes were made to the airport layout plan and facilities (some already under construction) to accommodate the operational needs of these carriers. The Webb administration followed the predecessor administration’s emphasis on assuring that the project’s greatest beneficiaries would be local businesses.The desire was to involve as many individual firms as practicable and to use Denver area talent. It was reasoned that local talent was easily accessible to the program management team (PMT), knew Denver building codes and practices, and had available the necessary professional labor pool to accomplish the design in accordance with the demanding schedule. In addition, existing law stated that 30% minority-owned firms and 6% women-owned firms had to participate in a public works program. The result was a contracting philosophy that maximized opportunities for regional businesses and the local workforce to compete for the work.At least five of 60 contracts awarded for the design of DIA went to Denverarea firms. These 60 design contracts generated 110 construction contracts. Eighty-eight professional service contracts also had to be coordinated. Many local firms had to be hired and the program was 5 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System chopped up into many small projects. Involvement totaled 200 to 300 firms and reached 400 during the construction phase. Five different firms designed the runways, four the terminal.The city's emphasis on encouraging everyone to comp ete and yet be part of the project increased the potential for interface and coordination problems. Denver’s flat economy led the administration to keep construction money within the city. Although this benefited the city, it introduced an additional burden on administration. As many as 40-50 concurrent contracts involved many interrelated milestones and contiguous or overlapping operational areas. The estimated daily on-site work force population exceeded 2,500 workers for a 15 to 18-month period beginning in mid-1991 and peaked at between 9,000 and 10,000 in mid-1992.Adding to the human resource coordination problems was a forecasted 4,000 deliveries daily. Construction volume for six months in mid-1992 exceeded $100 million per month. The prolonged period of assessment and negotiation prior to final approval of the project, and the financial plan selected (which required that bond repayments begin on January 1, 1994), pressured the PMT to push the project ahead at all cost . Because the project had to assume the characteristics of a â€Å"fast-track† project early in the construction startup, the compressed design period precipitated a more dynamic construction effort han might be anticipated for a â€Å"competitively bid, fixed price† program. Reliance on a design/build method for the project was, according to one DIA official, â€Å"unusual because projects this complex normally happen during separate stages. For example, you need to finish up the site selection before you begin the master planning. † Moreover, communication channels between the city, project management team, and consultants were neither well defined or controlled. â€Å"If a contractor fell behind,† a resident engineer who reported to one of the area managers said, the resident engineer would alert the contractor and document this.The resident engineer would document what would have to be done and what additional resources were necessary to get back on s chedule and finish the contract on time. As a public agency it was enormous, the amount of documentation that we did. I don’t know how many trees we cut down just for this project. The resident engineer had about five to eight 12-drawer filing cabinets of documentation and this was nothing compared to what the area manager had. It was just incredible. There were at least four to six copies of everything. The scheduling manager described the evolution of the tracking system that was used.One of the biggest problems we had was keeping track of all the changes. So we developed a database system that was installed at each one of the resident engineer’s trailers and each contract administrator was then charged with keeping that system up to date and feeding us disks, which we would then merge together periodically to produce an integrated report. But every party had developed their own tracking system before the start of the project. That worked well for each group, but the re was no way to take each one of these divergent systems and combine it into one, comprehensive report.So when we introduced the change tracking system everybody said, â€Å"fine, that’s wonderful, and I’ll update it when I get to it and when I get time. † It took three years to implement the tracking system. Project Management In a fast-moving, ever-changing environment such as the development of a new airport, the management structure must be able to rapidly produce engineering alternatives and the supporting 6 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 ost and schedule data. 9 But because DIA was financed by many sources and was a public works program, project administrators had to balance administrative, political, and social imperatives. 10 The City of Denver staff and consultant team shared leadership of the project and coordinated the in itial facets of DIA design. â€Å"The initial thought,† reflected one staff member, â€Å"was that the city staff would do their thing and the consulting staff do theirs and later we would coordinate. It became evident within a very short time that we were doing duplicate duties, which was inefficient.Finally the city decided to coordinate resources. † The city selected a team of city employees and consultants and drafted a work scope document that clearly separated the city’s from the consultants’ responsibilities. The elements the city did not delegate to consultants included ultimate policy and facility decisions, approval of payments, negotiation and execution of contracts, facilitation of FAA approvals, affirmative action, settlement of contractor claims and disputes, selection of consultants, and utility agreements.The city delegated some elements such as value engineering, construction market analysis, claim management, on-site staff and organizati on, and state-of-the-art project control (computerized management of budget and schedule). Exhibit 1 depicts the DIA management structure. The program management team became the organization dedicated to overseeing planning and development for the new airport. Headed by the associate director of aviation, the team was partially staffed by city career service employees.To add experience and capability, the city augmented the PMT with personnel from the joint venture of Greiner Engineering and MorrisonKnudsen Engineers, the consulting team. Observed one program management team member, â€Å"This working partnership of the City of Denver and consulting joint venture team developed into a fully integrated single organization, capitalizing on the best to be offered by all participants, and optimizing the use of personnel resources. † DIA’s operational project structure comprised five different areas subdivided into smaller units.The working areas were: site development (ear thmoving, grading, and drainage); roadways and on-grade parking (service roads, on-airport roads, and off-airport roads connecting to highways); airfield paving; building design (people-mover/baggage-handler, tunnel, concourses, passenger bridge, terminal, and parking); and utility/special systems and other facilities (electrical transmission, oil, and gas line removal and relocation). An area manager controlled construction within each area.Area managers were responsible for the administration of all assigned contracts and, in coordination with other area managers, for management of the portion of the overall site in which their work took place. United Airlines’ Baggage System From the public’s perspective, the â€Å"friendliness† of any airport is measured by time. No matter how architecturally stimulating a new airport structure, the perception of business or leisure travelers is often registered in terms of efficiency in checking luggage at the departure are a or waiting to claim a bag in the arrival area.The larger the airport, the more critical the efficient handling of baggage. Remote concourses connected by underground tunnels present special problems for airport planners and operators because of the great distances passengers and baggage must travel. The purpose of an airport being to move passengers as efficiently as possible, moving bags as quickly is 9 The DIA project used the so-called â€Å"fast-tracking† method, which made it possible to compress some activities along the critical path and manage the construction project as a series of overlapping tasks. 0 These included considerations such as affirmative action, local participation, neighborhood concerns, civic pride, input from the disabled community, art, secondary employment benefits of contract packaging, concern for the environment, and political interest. 7 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 BAE Automated Systems (A ): Denver International Airport Baggage-Handling System part and parcel of that responsibility. Rapid transport of frequent flyers accomplishes very little if bags are left behind.DIA's Concourse A, which was to house Continental Airlines, was situated some 400 meters, and United Airlines’ Concourse B nearly 1,000 meters, north of the main terminal. Concourse C, home to other carriers including American, Delta, Northwest, America West, and TWA, sat parallel to the other two concourses more than 1,600 meters north of the main terminal. The initial project design did not incorporate an airport-wide baggage system; the airport expected the individual airlines to build their own systems as in most other American airports. 1 United Airlines, which in June 1991 signed on to use DIA as its second-largest hub airport, proceeded to do just that. Needing an automated baggage handling system if it was to turn aircraft around in less than 30 minutes, United, in December 1991, commissione d BAE Automatic Systems, Inc. , a world leader in the design and implementation of material handling systems, to develop an automated baggage handling system for its B Concourse at DIA. The contract, which included engineering and early parts procurement only, was valued at $20 million; and the task was estimated to be completed in two and one-half years. We began working at DIA under a contract directly with United Airlines,† recalled Di Fonso. â€Å"Obviously, United Airlines has experience with airports. They concluded that the schedule had gotten totally out of control from the standpoint of baggage and they acted to serve their own needs, basically to protect themselves. We contracted with United and were already designing their portion of the system before the city went out for competitive bidding. † BAE was founded as a division of Docutel Corporation in 1968.Docutel, which had developed the Telecar (a track-mounted automated baggage system), constructed an autom ated baggage system for United Airlines at San Francisco airport in 1978. When Docutel ran into financial difficulties during this installation, United asked Boeing, a major supplier of its aircraft, to take over the company. Boeing agreed and the new company, a wholly-owned subsidiary dubbed Boeing Airport Equipment, completed the San Francisco installation. In 1982, Boeing sold the company to its senior management, which renamed it BAE Automated Systems.In August 1985, BAE became an operating unit of Clarkson Industries, a wholly-owned subsidiary of London-based BTR plc. BTR plc (formerly British Tire and Rubber), was a $10 billion conglomerate with global interests in building, paper and printing products, and agricultural and aircraft equipment. In 1994, BAE's 365 employees worked on projects across the United States and in Europe and Australia. In-house engineering, manufacturing, and field support capabilities enabled BAE to develop, design, manufacture, install, and support e very project it undertook from start to finish.BAE also provided consulting, engineering, and management services for airport projects and a variety of material handling applications. With sales of $100 million in 1994, up from approximately $40 million in 1991, BAE accounted for 90% of U. S. baggage sorting equipment sales. Between 1972 and 1994, the company had successfully designed, manufactured, and installed nearly 70 automated baggage handling systems (worth almost $500 million dollars) at major airports in the United States, in New York, Dallas-Fort Worth, Chicago, San Francisco, Atlanta, Miami, Newark, and Pittsburgh.It had also installed systems in Vancouver and London and was selected, in 1992, as a consultant to the $550 million main terminal for the New Seoul Metropolitan Airport in South Korea. BAE was a very self-contained, integrated company structured along two business lines: manufacturing and engineering. Its approximately 200,000 square foot manufacturing facility was capable of producing nearly all of the components required by BAE systems save motors, gearboxes, and bearings. The engineering department was structured according to major projects. Each project was assigned a project manager who reported directly to the company president. 1 Rifkin, G. : â€Å"What Really Happened at Denver’s Airport,† Forbes, SAP Supplement, August 29, 1994. 8 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 Implementing an Integrated Baggage-Handling System BAE had already commenced work on United's baggage system when the PMT recognized the potential benefits of an airport-wide integrated baggage system. Moreover, as one DIA senior manager explained, â€Å"airlines other than United simply were not coming forward with plans to develop their own baggage systems. Airport planners and consultants began to draw up specifications and th e city sent out a request for bids. Of 16 companies contacted, both in the United States and abroad, only three responded. A consulting firm recommended against the submitted designs, on the grounds that the configurations would not meet the airport’s needs. BAE was among the companies that had decided not to bid for the job. BAE had installed the Telecar system at a number of other airports and the basic technologies of the Telecar, laser barcode readers, and conveyor belt systems were not new. What was new was the size and complexity of the system. A grand airport like DIA needs a complex baggage system,† explained Di Fonso, Therefore the type of technology to be used for such a system is the kind of decision that must be made very early in a project. If there is a surprise like no bidders there is still time to react. At DIA, this never happened. Working with United Airlines, we had concluded that destination-coded vehicles moving at high speed was the technology nee ded. But quite honestly, although we had that technology developed, its implementation in a complex project like this would have required significantly greater time than the city had left available.A United project manager concurred: â€Å"BAE told them from the beginning that they were going to need at least one more year to get the system up and running, but no one wanted to hear that. † The City of Denver was getting the same story from the technical advisers to the Franz Josef Strauss Airport in Munich. The Munich Airport had an automated baggage system, but one far less complex than DIA’s. Nevertheless, Munich’s technical advisors had spent two years testing the system and the system had been running 24 hours a day for six months before the airport opened. Formulating IntentionsAs BAE was already working on United’s automated baggage handling system and enjoyed a world-wide reputation as a superior baggage system builder, Denver approached the compan y. BAE was asked to study how the United concept could be expanded into an integrated airport system that could serve the other carriers in the various concourses. BAE presented the City of Denver with a proposal to develop the â€Å"most complex automated baggage system ever built,† according to Di Fonso. It was to be effective in delivering bags to and from passengers, and efficient in terms of operating reliability, maintainability, and future flexibility.The system was to be capable of directing bags (including suitcases of all sizes, skis, and golf clubs) from the main terminal through a tunnel into a remote concourse and directly to a gate. Such efficient delivery would save precious ground time, reduce close-out time for hub operations, and cut time-consuming manual baggage sorting and handling. Although an automated system was more expensive initially than simple tugs and baggage carts, it was expected that it would reduce the manpower which was required to distribute bags to the correct locations.Bags unloaded from an aircraft arriving at a particular concourse would barely be touched by human hands. Moved through the airport at speeds up to 20 mph, they would be waiting when passengers arrived at the terminal. To prove the capability of its mechanical aspects, and demonstrate the proposed system to the airlines and politicians, BAE built a prototype automated baggage handling system in a 50,000 square foot warehouse near its manufacturing plant in Carrollton, Texas. The prototype system convinced Chief Airport Engineer Walter Slinger that the automated system would work. [The City of Denver] approached us based on one core concept,† recalled Di Fonso. â€Å"They wanted to have a fully integrated, airport-wide baggage system. The city 9 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System had two major concerns. First, they had no acceptable proposal. Second, United was probably going to go ahead and build what it needed and the rest of the airport would have been equipped with something else. Di Fonso continued, When we arrived on the scene, we were faced with fully defined project specs, which obviously in the long run proved to be a major planning error. The city had fallen into a trap, which historically architects and engineers tend to fall into as they severely underplay the importance and significance of some of the requirements of a baggage system, that is, arranging things for the space into which it must fit, accommodating the weight it may impose on the building structure, the power it requires to run, and the ventilation and air conditioning that may be necessary to dissipate the heat it generates.In April 1992, BAE was awarded the $175. 6 million contract to build the entire airport system. According to Di Fonso, company executives and city officials hammered out a deal in three intense working sessions. â€Å"We placed a number of conditions on accepting the job,† he observed. The design was not to be changed beyond a given date and there would be a number of freeze dates for mechanical design, software design, permanent power requirements and the like. The contract made it obvious that both signatory parties were very concerned about the ability to complete.The provisions dealt mostly with all-around access, timely completion of certain areas, provision of permanent power, provision of computer rooms. All these elements were delineated as milestones. Denver officials accepted these requirements and, in addition, committed to unrestricted access for BAE equipment. Because of the tight deadlines, BAE would have priority in any area where it needed to install the system. Di Fonso elaborated, When we entered into the contract, Continental Airlines was still under bankruptcy law protection.The city was very concerned that they would be unable to pay for their concourse . They only contracted for about 40% of the equipment that is now in concourse A, which was the concourse that Continental had leased. Beyond that, concourse C had no signatory airlines as leaseholders at the time. The city, therefore, wanted the simplest, most elementary baggage system possible for concourse C. The outputs and inputs were very, very crude, intentionally crude to keep the costs down because the city had no assurance of revenue stream at that point in time.The city did not get the airlines together or ask them what they wanted or needed to operate. The approach was more along the lines of â€Å"we will build the apartment building and then you come in and rent a set of rooms. † Project Organization and Management No major organizational changes to accommodate the new baggage system were deemed necessary, although some managerial adjustments were made on the DIA project. Design of the United baggage system was frozen on May 15, 1992, when the PMT assumed manage rial responsibility for the integrated baggage system.The direct relationship with BAE was delegated to Working Area 4, which also had responsibility for building design efforts such as the people-mover, airside concourse building, passenger bridge main landside building complex and parking garage, and various other smaller structures. The area manager, although he had no experience in airport construction, baggage system technologies, or the introduction of new technologies, possessed vast experience in construction project control management. BAE had to change its working structure to conform to DIA's project management structure. Di Fonso explained, 10Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 There was a senior manager for each of the concourses and a manager for the main terminal. The bag system, however, traversed all of them. If I had to argue a case for righ t of way I would have to go to all the managers because I was traversing all four empires. In addition, because changes were happening fast at each of these sites, there was no time to have an information system to see what is concourse A deciding and what is concourse B deciding.We had to be personally involved to understand what was going on. There was no one to tie it all together and overlap all these effects because the basic organization was to manage it as discrete areas. It was pandemonium. We would keep saying that over and over again. Who is in charge? For the first two years of the project, Di Fonso was the project manager. The project was divided into three general areas of expertise: mechanical engineering, industrial control, and software design.Mechanical engineering was responsible for all mechanical components and their installation, industrial control for industrial control design, logic controller programming, and motor control panels, and software design for writ ing real-time process control software to manage the system. At the time the contract with BAE was signed, construction had already begun on the terminal and concourses. Substantial changes had to be made to the overall design of the terminal and some construction already completed had to be taken out and reinstalled to accommodate the expanded system.Installation of the expanded system was initially estimated to require more than $100 million in construction work. Walls had to be removed and a new floor installed in the terminal building to support the new system. Moreover, major changes in project governance were taking place during the baggage system negotiations. In May 1992, shortly after the baggage system negotiations commenced, the head of the DIA project resigned. The death in October 1992 of Chief Airport Engineer Slinger, who had been a strong proponent of the baggage system and closely involved in negotiations with BAE, also exerted a significant impact on the project.Hi s cooperation had been essential because of the amount of heavy machinery and track that had to be moved and installed and the amount of construction work required to accommodate the system. His replacement, Gail Edmond, was selected because she had worked closely with him and knew all the players. Her managerial style, however, was quite different from Slinger’s. A Public Works manager recalled his first reaction to the change: â€Å"[The airport] is not going to be open on time. † A United Airlines project manager summarized Edmond’s challenge thus: Slinger was a real problem solver.He was controversial because of his attitude, but he was never afraid to address problems. He had a lot of autonomy and could get things done. Gail was in a completely different position. Basically, she had a good understanding of how the project was organized and who the key players were, but didn’t know much about the actual construction. Also, the city council didnâ€℠¢t give her anywhere near the autonomy and the authority that Slinger had and she had to get approval from the council on just about all decisions. They really tied her hands and everyone knew it.Di Fonso echoed the project manager's assessment: Walter [Slinger] understood that one of the things we had to have was unrestricted access. I think he clearly understood the problem the city was facing and he understood the short timeframe under which we were operating. He was the one that accepted all of the contractual conditions, all the milestones of the original contract. He really had no opportunity to influence the outcome of this project, however, because he died within months after the contract was signed. I think Gail 11 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 96-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System did an excellent job [but] she was overwhelmed. 12 She just had too much. The layers below focused inw ard, worrying about their own little corners of the world. â€Å"Not only did we not get the unrestricted access that was agreed upon,† Di Fonso emphasized, â€Å"we didn’t even have reasonable access. † Ten days after Slinger’s death, a BAE millwright found a truck from Hensel Phelps, the contractor building Concourse C, blocking her work site. She asked someone to move the truck or leave the keys so it could be moved.According to a BAE superintendent, â€Å"she was told that ‘This is not a BAE job and we can park anywhere we please: is that clear? ’† Elsewhere, BAE electricians had to leave work areas where concrete grinders were creating clouds of dust. Fumes from chemical sealants forced other BAE workers to flee. Di Fonso pleaded with the city for help. â€Å"We ask that the city take prompt action to assure BAE the ability to continue its work in an uninterrupted manner,† he wrote. â€Å"Without the city’s help, th e delays to BAE’s work will quickly become unrecoverable. 13 To further complicate matters, the airlines began requesting changes to the system’s design even though the mechanical and software designs were supposed to be frozen. â€Å"Six months prior to opening the airport,† Di Fonso recalled, â€Å"we were still moving equipment around, changing controls, changing software design. † In August 1992, for example, United altered plans for a transfer system for bags changing planes, requesting that BAE eliminate an entire loop of track from Concourse B. Rather than two complete loops of track, United would have only one.This change saved approximately $20 million, but required a system redesign. Additional ski-claim devices and odd-size baggage elevators added in four of the six sections of the terminal added $1. 61 million to the cost of the system. One month later, Continental requested that automated baggage sorting systems be added to its west basement at an additional cost of $4. 67 million. The ski claim area length was first changed from 94 feet to 127 feet, then in January 1993, shortened to 112 feet. The first change added $295,800, the second subtracted $125,000, from the cost.The same month, maintenance tracks were added to permit the Telecars to be serviced without having to lift them off the main tracks at an additional cost of $912,000. One year later, United requested alterations to its odd-size baggage inputs—cost of the change: $432,000. Another problem was the city’s inability to supply â€Å"clean† electricity to the baggage system. The motors and circuitry used in the system were extremely sensitive to power surges and fluctuations. When electrical feedback tripped circuit breakers on hundreds of motors, an engineer was called in to design filters to correct the problem.Although ordered at that time, the filters still had not arrived several months later. A city worker had canceled a contract w ithout realizing that the filters were part of it. The filters finally arrived in March 1994. A third, albeit disputed, complication related to Denver’s requirement, and city law, that a certain percentage of jobs be contracted to minority-owned companies. The City of Denver had denied BAE’s original contract because it did not comply with hiring requirements, where upon BAE engaged some outside contractors in lieu of BAE employees. Di Fonso estimated that this increased costs by approximately $6 million, a claim ejected by the Mayor's Office of Contract Compliance. Then, in September 1993, BAE’s contract negotiations with the City of Denver over maintenance of the system resulted in a two-day strike of 300 millwrights that was joined by some 200 electricians. BAE negotiated with Denver for maintenance workers to earn $12 per hour on certain jobs that the union contended should be worth $20 per hour. As a result, BAE lost the maintenance contract. 12 In addition to her role as Chief Airport Engineer, Edmond kept her previous responsibilities as Chief of Construction and Acting Director of Aviation. 3 Rocky Mountain News, January 29, 1995 12 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 BAE Automated Systems (A): Denver International Airport Baggage-Handling System 396-311 Project Relations Much of the effort for implementing the baggage system was directed within one of the four working areas. â€Å"The relationship with the management team was very poor,† recalled Di Fonso. The management team had no prior baggage handling competence or experience. This was treated as a major public works project.The management team treated the baggage system as similar to pouring concrete or putting in air-conditioning ducts. When we would make our complaints about delays and access and so forth, other contractors would argue their position. The standard answer was, â€Å"Go work it out among yourselves. † . . . With contractors basically on their own, this led almost to anarchy. Everyone was doing his or her own thing. Another perspective was offered by a project manager from Stone & Webster, a consultant to the PMT, reflecting on the work done by BAE: â€Å"This contractor simply did not respond to the obvious incredible workload they were faced with.Their inexperienced project management vastly underestimated their task. Their work ethic was deplorable. †14 PMT management insisted that access and mechanical issues weren’t the problem. â€Å"They were running cars in Concourse B all summer (1993),† Edmund observed. â€Å"The problem was that the programming was not done and BAE had full control of the programming. †15 Lawsuits and a Backup Baggage System In February 1993, Mayor Webb delayed the scheduled October 1993 airport opening to December 19, 1993. Later, this December date was changed to March 9, 1994. Everybody got into the panic mode of trying to get t o this magical date that nobody was ready for,† a senior vicepresident for BAE recalled. In September 1993, the opening was again postponed—this time until May 15, 1994. In late April 1994, the City of Denver invited reporters to observe the first test of the baggage system, without notifying BAE. Seven thousand bags were to be moved to Continental’s Concourse A and United’s Concourse B. So many problems were discovered that testing had to be halted. Reporters saw piles of disgorged clothes and other personal items lying beneath the Telecar’s tracks.Most of the problems related to errors in the system’s computer software, but mechanical problems also played a part. The software that controlled the delivery of empty cars to the terminal building, for example, often sent the cars back to the waiting pool. Another problem was â€Å"jam logic† software, which was designed to shut down a section of track behind a jammed car, but instead shu t down an entire loop of track. Optical sensors designed to detect and monitor cars were dirty causing the system to believe that a section of track was empty when, in fact, it had held a stopped car.Collisions between cars dumped baggage on tracks and on the floor; jammed cars jumped the track and bent the rails; faulty switches caused the Telecars to dump luggage onto the tracks or against the walls of the tunnels. After the test, Mayor Webb delayed the airport’s opening yet again, this time indefinitely. â€Å"Clearly, the automated baggage system now underway at DIA is not yet at a level that meets the requirements of the city, the airlines, or the traveling public,† the mayor stated. The city set the costs of the delay at $330,000 per month.Recognizing that his reputation was staked on his ability to have a baggage system performing to a point at which the new airport could be opened, Mayor Webb engaged, in May 1994, the German firm Logplan to assess the state of the automated baggage system. In July, Logplan isolated a loop of track that contained every feature of the automated baggage 14 15 Forbes, ASAP Supplement, August 29, 1994. Forbes, ASAP Supplement, August 29, 1994. 13 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 BAE Automated Systems (A): Denver International Airport Baggage-Handling System ystem and intended to run it for an extended period to test the reliability of the Telecars. Jams on the conveyor belts and collisions between cars caused the test to be halted. The system did not run long enough to determine if there was a basic design flaw or to analyze where the problems were. Logplan recommended construction of a backup baggage system, and suggested using Rapistan Demag, a firm it had worked with in the past. Construction of a backup system was announced in August 1994. The system itself cost $10. million, but electrical upgrades and major building modifications raised the projected cost to $50 million. In the meantime, the City of Denver, as well as many major airlines, hired legal firms to assist with negotiations and future litigation. â€Å"We will have enough legal action for the rest of this century,† a city administrator mused. The City of Denver had to communicate with such parties as the United States Federal grand jury, Securities Exchange Commission, and the General Accounting Office. The federal grand jury was conducting a general investigation concerning DIA.The SEC was investigating the sale of $3. 2 billion in bonds to finance DIA’s construction, and GAO the use of Congressional funds. Di Fonso, reviewing Mayor Webb’s letter and requests that BAE pay a $12,000-a-day penalty for missing DIA’s original October 29, 1993 completion date, as well as assuming the costs of building the $50 million conventional tug-and-cart baggage system, summed up the situation thus: â€Å"We have gotten to the point with the city that literally we are not talking to each other. Consultants recommended a backup baggage system, and the minute that the decision was made, the city had to defend it.We are left out in limbo. † 14 Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012 396-311 -15- Exhibit 1 Organization Chart Acting Associate Director of Aviation Denver International Airport City Attorneys Contract Compliance DIA Coordinator Tenant Facilities Administrative Assistant Marketing/Public Information Manager Planner Program Manager Computer Systems Administration Deputy Program Manager Airline Specialty Systems Environmental Engineer Contracts Risk Management Financial Manager of Design Contract Administration Administrative AssistantManager of Project Controls Architectural Supervisor Engineering Supervisor Document Control Contracts Staff Clerical Staff MIS Schedule Cost Estimating Project Managers & Support Staff Manager of Construction Project Controls Support Staff Safety Manager Senior Project Engineer QA/QC Manager Employee Relations Area 1&2 Manager Area 3 Manager Area 4A Manager Area 4B Manager Area 5 Manager Construction Support Staff Source: City and County of Denver, Colorado, Airport System Review Bonds, Series 1991D, October 1991. Purchased by Ashley Matcheck ([email  protected] com) on April 11, 2012

Culture as an Important Facet of Society

A society without culture is as good as dead. Discuss. A society according to Thomas, L (1995:25) is defined as â€Å"a group of mutually interdependent people who have organized in such a way as to share a common culture and feeling of unity†. In other ways society consists of people, and culture consists of products that people create. Culture according to Giddens (2005:45) refers to â€Å"the pattern of human activity and the symbols, which give significance to this activity†. Culture is represented through the art, literature, costumes, customs and traditions of a community.Different cultures exist in different parts of the world. The natural environment greatly affects the lifestyle of the people of that region, thus shaping their culture. The diversity in the cultures around the world is also a result of the mindsets of people inhabiting different regions of the world. There are several components of human culture namely; symbols, language, values and beliefs, nor ms, and technology. Symbols are anything that carries a particular meaning recognized by people who share a culture. The simplest most everyday things are symbols for examples a wave of the hand can be a friendly gesture of hello.However, if not done properly with all the fingers in the upright position it can be a rude gesture and a great sign of disrespect. The honking of a car horn is a symbol to grab someone's attention to their surroundings. Even something as common as a kiss is a symbol of love and caring. Language is a system of symbols that allows people to communicate with each other. Language can be words or sounds that are spoken or words that are written. For instance some people believe that dogs communicate with each other through barking, this may be their own language.Values are culturally defined standards by which people assess desirability, goodness, and beauty, and that serve as broad guidelines for social living. Beliefs are specific statements that people hold to be true. There are several examples of both that can be found by looking at the Christian religion. The Ten Commandments are a great source. â€Å"You shall have no other gods before me†, for Christians this statement is both a belief and a value. â€Å"Honor you father and mother† is a statement that Christians hold true and also one that they set their standards of living by.The other example of values and beliefs is â€Å"You shall not murder† a statement they stand by and live their lives by. Norms are rules and expectations by which a society guides the behavior of its members. One example of a norm is not cheating on a test, we all know this is wrong and should not be done at all cost. Technology is knowledge that people use to make a way of life in their surroundings, which is reflected by material culture an example of this is Plasma TV's you can simply hang these picture perfect TV's anywhere on the wall.It is true to say that no society exists witho ut culture because of the following facets that culture brings to society which are as follows: The cultural values of a community give it an identity of its own; a community gains a character and a personality of its own, because of the culture of its people. Culture is shared by the members of a community. It is learned and passed from the older generations to the newer ones. For an effective transfer of culture from one generation to another, it has to be translated into symbols. Language, art and religion serve as the symbolic means of transfer of cultural values between generations.Culture is a bond that ties the people of a region or community together; It is that one common bond, which brings the people of a community together. The customs and traditions that the people of a community follow, the festivals they celebrate, the kind of clothing they wear, the food they eat, and most importantly, the cultural values they adhere to, bind them together. Culture is seen as a system of social control, wherein people shape their standards and behavior; the cultural values form the founding principles of one's life. They influence one's principles and philosophies of life.They influence one's way of living and thus impact social life. Culture is the Treasury of Knowledge; culture provides knowledge, which is essential for the physical and intellectual existence of man. Birds and animals behave instinctively with environment. But man has greater intelligence and learning capacity. With the help of these, he has been able to adapt himself with environment or modify it to suit his convenience. Culture has made such an adaptation and modification possible and easier by providing man the necessary skills and knowledge.Culture preserves knowledge and helps its transmission from generation to generation through its means that is language helps not only the transmission of knowledge but also its preservation, accumulation and diffusion. On the contrary, animals do not h ave this advantage because culture does not exist at such human level. Culture Defines Situations; culture defines social situations for us. It not only defines but also conditions and determines what we eat and drink, we wear, when to laugh, weep, sleep, love to like friends with, what work we do, what god we worship, what knowledge we rely upon, what poetry we recite and so on.Culture Defines Attitudes, Values and Goods; attitudes refer to the tendency to feel and work out in certain ways. Values are the measure of goodness or desirability. Goods refer to the attainments, which our values define as worthy. It is the culture, which conditions our attitude towards various issues such as religion, morality, marriage, science, family planning, positions and so on. Our values concernsing private etc. are influenced by our culture. Our goals of winning the race, understanding others, attaining salvation, being obedient to elders and teachers, being loyal to husband, being patriotic etc. re all set forth by our culture. We are being socialized on these models. Culture Decides Our Career; whether we should become a politician or a social worker, a doctor, an engineer, a soldier, a farmer, a professor, an industrialist; a religious leader and so on is decided by our culture. What career we are likely to pursue is largely decided by our culture. Culture sets limitations on our choice to select different careers. Individuals may develop, modify or oppose the trends of their culture but they always live within its framework. Only a few can find outlet on the culture.Culture Provides Behavior Pattern; Culture directs and confines the behavior of an individual. Culture assigns goals and provides means for achieving them. It rewards noble works and punishes the ignoble ones. It assigns him status. We see dream, aspire, work, strive to marry, enjoy according to the cultural expectation. Culture not only contains but also liberates human energy and activities. Man indeed is a prisoner of his culture. Culture Provides Personality; Culture exercises a great influence on the development of personality. No child can get human qualities in the absence of a cultural environment.Culture prepares man for group life and provides him the design of living. It is the culture that provides opportunities for the development of personality and sets limits on its growth. As Ruth Benedict has pointed out every culture will provide its special type or types of personality. Culture Makes Man a Human Being; It is culture that makes the human, a man, regulates his conduct and prepares him for group life. It provides to him a complete design for living. It teaches him what type of food he should take and in what mariner, how he should over himself and behave with his fellows, how he should speak with the people and how he should co-operate or compete with others. An individual abstained from culture is less than human; he is what we call feral, man. The individual to be tru ly human must participate in cultural stream without it he would have been forced to find his own way, which would mean a loss of energy in satisfying his elementary needs. Culture Provides Solution for Complicated Situation; culture provides man with a set of behavior even for complicated situation.It has so thoroughly influenced that often he does not require any external force to keep himself in conformity with the social requirements. His action becomes automatic. Forming queues when there is rush at the booking window or driving left in the busy streets. In the absence of culture, he should have been baffled even at the simplest situations. He need not go through painful trial and error learning to know what food can be taken without poisoning himself and fellow. His culture directs and confines his behavior, limits his goals and measures his reward.His culture gets into his mind and shutters vision so that he sees what is supposed to see in dream what he is expected to dream a nd hunger for what he is trained to hunger. Culture Provides Traditional Interpretations to Certain Situation; through culture men gets traditional interpretation for many situations according to which he determines his behavior. If a cat crosses his way, he postpones his journey. It may however be noted that these traditional interpretation differ from culture to culture. Among some culture owl is regarded as a symbol of wisdom and not a symbol of idiocy.Culture Keeps Social Relationship Intact; culture has importance not only for man but also for the group. Had there been no culture there would have been no group life. Culture is the design and the prescription for guiding values and ideals. By regulating the behavior of the people and satisfying, the primary drives pertaining to hunger and sex it has been able to maintain group life. Culture has provided a number of checks upon irrational conduct and suggestibility culture aids such as in schooling or scientific training. Lessen the chances that a man will behave irrationally or irresponsibility.The members of group characterized though they be by consciousness of kind, at once competing. They are held in line by constraints prescribed by culture. Culture Broadens the Out Looks of the Individual; culture has given a new vision to individual by providing him a set of rules for co-operation of the individuals. He thinks not only his own self but also of the others. Culture teaches him to think himself a part of the larger whole, it provides him with the concept of family, state, nation and class and make responsible the cooperation and division of labor.Culture Creates New Needs; Culture also creates new needs and new drives, for example, thirst for knowledge and arranges for the satisfaction. In conclusion culture and society are co-existent one does not or cannot exist without the other, culture and society may have some common elements but the two are not the same they are not identical the essential diffe rence is that society is composed of people while culture consists of knowledge, ideas, customs, traditions, folkways, mores, skills, institutions, organizations and artifacts.

Classification of Price Elasticity of Demand - 2147 Words

Classification of Price Elasticity of Demand 1. Price Elastic Demand (% ΔQd % ΔP) Ï µ 1 If the value of price elasticity coefficient is greater than one in absolute value. This means that a small change in price results to a greater change in quantity demanded. Goods which are elastic tend to have some or all of the following characteristics: They are luxury goods They are expensive and a big % of income e.g. sports cars and holidays Goods with many substitutes and a very competitive market. E.g. if Simsbury’s put up the price of its bread there are many alternatives, so people would be price sensitive Bought frequently Graph: We say a good is price elastic when an increase in prices causes a bigger % fall in demand. e.g. if price†¦show more content†¦For example, if Sky increase the cost of premiership pay per view, many football fans will pay the extra price. Though because it isn’t a necessity, demand may be less inelastic than say petrol. Tap water. For householders, tap water is a necessity, with no alternatives. If the water company increase the cost of water bills, people would keep buying the service. It would have to rise to a very high price before people disconnected their water supply. This is why tap water is regulated. Diamonds. Bought very infrequently, diamonds are the ultimate luxury with few exact alternatives. You could buy other precious gems, but others may not have the same allure as diamonds. A cut in price wouldn’t increase demand very much. Peak rail tickets. For commuters who rely on the train to get to work in London, demand will be very inelastic. If price of fares from Surbiton to London increase, demand will only fall by a small amount. The alternatives for commuting into London, such as driving are limited. Apple iPhones, iPads. The Apple brand is so strong that many consumers will pay a premium for apple products. If the price rises for apple iPhone, many will continue to buy. If it was a less well known brand like Dell computers, you would expect demand to be price elastic. References: http://www.economicshelp.org/blog/7019/economics/examples-of-elasticity/ 3. Unitary Elastic Demand (% ΔQd = % ΔP) Ï µ 1 If the value of elasticityShow MoreRelatedPrice Elasticity of Demand and Supply1102 Words   |  5 Pagesin making price and output decisions. Price Elasticity of Demand The price elasticity of demand measures the sensitivity of the quantity demanded to price. The price elasticity of demand is the percentage change in quantity demanded brought by a 1 percent change in price. The value of price elasticity of demand for a normal good must always be negative, reflecting the fact that demand curves slope downward because of the inverse relationship of price and quantity. 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