EXECUTIVE SUMMARY
The Denver International Airport is undergoing innovative change through various initiatives, and policies. Given that DIA is the country’s largest airport, it is vital for budgetary and project planning be addressed and redeveloped into an efficient and productive manner. As the lead consultant of management, I am responsible for assessing the cost and service challenges in relation to the construction and operation of the new airport in Denver, Colorado. Furthermore, the comprehensive report provided will recommend solutions and strategies that address these cost and service problems.
The information collected indicated that the DIA needs options for reducing the loss of travelers and revenue to the Colorado Springs Airport. Furthermore, an assessment of the major components and considerations results to a cost-benefit analysis for building the new airport. As indicated in this report, the DIA will follow five steps that make up the formal cost benefit analysis for enhanced quality construction and operation. In addition, the DIA assessment reveals that several components were overlooked resulting in the $3.2 billion in cost overruns.
The recommendations consist of strategizing cost and service problems, constructing a one-mile runway, and a 10-step project-planning guide. The three recommendations provide adequate solutions that will reduce the loss of travelers and revenue to the Colorado Springs Airport. This report is a comprehensive assessment with recommendations from extensive research of the Federal Aviation Administration (FAA), Project Management Life Cycle, and Cost-Benefits Analysis Guide.
Scope and Methodology
On October 31, 1994, Federal Aviation Administration (FAA) distributed...
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... policies, procedures and practices.
Works Cited
Federal Aviation Administration (1999). FAA Airport Benefit-Cost Analysis Guidance. Retrieved June 29th, 2010, from http://www.faa.gov/regulations_policies/policy_guidance/benefit_cost/media/faabca.pdf 33
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http://www.faa.gov/airports/central/aip/benefit_cost/
Method 123 Project Method Methodology (2009). Project Management Life Cycle. Retrieved June 30th, 2010, from http://www.mpmm.com/project-management-methodology.php
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Smith, M. and Pearce, B. (2005). IATA Economics Briefing No 2. Aviation Taxes and Charges. Retrieved January 10, 2008 from http://www.iata.org/NR/rdonlyres/8BC719FF-D354-4F61-8997-11173687DAED/0/aviation_taxes_charges.pdf
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In 1971 Southwest Airlines started their operations with a vision of being a low cost/low fare carrier for passengers traveling between San Antonio, Dallas and Houston. After early legal battles and struggles gaining market share, their fighting spirit, integrity and will to succeed paid off. Over the course of the next 40+ years, Southwest has become the world’s largest low-cost carrier, while carrying more domestic passengers that any other U.S. airline (“Southwest Corporate,” 2015). Their culture, values and operating practices are what have driven this company to its current success and will continue to do so for the foreseeable future.
Denver International Airport Construction and Operating Costs. (1997, July 5).University of Colorado Boulder. Retrieved April 28, 2011, from http://www.colorado.edu/libraries/govpubs/dia.htm
Airport planning, once carried out utilizing a single future forecast, failed to account for the complexity and uncertainty of the aviation industry. Today, it is widely assumed airport success can only be met through the utilization of a flexible, integrated planning approach that sees forecasts as incorrect.
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The Board of Directors unanimously voted for the immediate construction of a new state of the art facility to meet the increased demands. Unfortunately, the construction of the new facility will take three years to be completed. Jim Elliot recognizes this gap and believes that the three year gap will be too long and suggests developing short range solution while the facility is under construction.
Hartsfield –Jackson Atlanta International Airport (n.d.). Case Study. Airport Master Plan – Demand/Capacity Analysis and Facility Requirements Summary. Retrieved from
Southwest Airlines has come from an underdog to being one of the best airlines in the industry. This reputation translates from its strategic management of resources. The Co-founder and former CEO, Herb Kelleher, established a unique corporate culture that leads to high customer satisfaction, employees’ morale, and one of the most profitable airlines in the industry (Jackson et al., 2012). The corporate culture concentrates on empowerment the workforce. It shows through Southwest Airlines core values that “happy employees lead to happy customers, which create happy shareholders” (Jackson et al., 2012). Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are focusing on the change process post the merger with AirTran, and evaluating alternatives to address the impacts of the merger.
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To test the financial feasibility and plan acceptability, there must be information on the magnitude, and share of estimated project cost that are reimbursable. This information can be derived from cost allocation. Also where cost sharing is required in the multipurpose planning process cost allocation can be applied. Cost allocation also provides information necessary for allocating the real expenditures ensuring that the cost account are maintained in line with plan formulation and allocation principles during the subsequent c...
We can partially agree to what Kerzner has to say about quantifying cost and benefits. However, it is indeed; very much a practical approach studied by Kerzner who states cost a phenomenon difficult to quantify. But it would be gross understatement to suggest that it is rather more difficult than quantifying benefits. As in the above answer, two different examples are quoted to back Kerzner’s claim. The example of the cost of airport and train will justify my stance on the subject. It is difficult to quantify the cost of building up an airport even after conducting cost-benefit analysis as the operating and periodic costs vary but can we measure the number of citizens who will be benefitted from airport compared to train. I totally agree with your take on the subject but we can partially agree with Kerzner as he backs his opinions with practical justifications.
One of the stakeholders group is customers. As they are the most important part of the business, without them you cannot operate the business. If u doesn’t have customers for whom will you produce? They just want high quality product at fair prices and good services. By building up the second runway they will be able to fly more flights and more customers will be attracted as they can easily get the ticket. The price of tickets might rise as the demand will rise which customers will don’t want. It will be convenient for their customers as there will more choices of airline flying there, they can choose amongst them.