Group Characteristics Assumptions (Note these are ...



Denver Airport Case BackgroundIn 1988, Denver, Colorado embarked on a project to construct a state-of-the-art airport to replace the existing Stapleton Airport. Stapleton was viewed as incapable of expansion because of its location. The newly proposed airport would reduce costs of operation, allow for sufficient growth, and eliminate pollution and air traffic delays. The new airport, named Denver International Airport (DIA) was scheduled to open on October 31, 1993.In the September 1994 issue of Scientific American, W. Wayt Gibbs chronicled the DIA as an example of a modern software crisis:“Denver’s new international airport was to be the pride of the Rockies, a wonder of modern engineering. Twice the size of Manhattan, 10 times the breadth of Heathrow, the airport is big enough to land three jets simultaneously in bad weather. Even more impressive than its girth is the airport’s subterranean baggage-handling system. Tearing like intelligent coal-mine cars along 21 miles of steel track, 4,000 independent “telecars” route and deliver luggage between the counters, gates and claim areas of 20 different airlines. A central nervous system of some 100 computers networked to one another and to 5,000 electric eyes, 400 radio receivers and 56 bar-code scanners orchestrates the safe and timely arrival of every valise and ski bag.At least that is the plan. For nine months, this Gulliver has been held captive by Lilliputians-errors in the software that controls its automated baggage system. Scheduled for takeoff by last Halloween, the airport’s grand opening was postponed until December to allow BAE Automated Systems time to flush the gremlins out of its $193-million baggage handling system. December yielded to March. March slipped to May. In June the airport’s planners, their bond rating demoted to junk and their budget hemorrhaging red ink at the rate of $1.1 million a day in interest and operating costs, conceded that they could not predict when the baggage system would stabilize enough for the airport to open [c.f. Gibbs].”Eventually the Denver International Airport (DIA) did open, but the advanced baggage system was only partially functioning. The four delayed openings of the airport caused many residents to speculate that DIA really stood for “Do It Again” or “Doesn’t Include Airlines”. In order to finally open the terminal, the city invested $51 million to install a conventional baggage system as a work around to the high-tech system. Ironically, the conventional system was completed four weeks ahead of schedule and $3.4 million under budget [c.f. Cook]. The obvious question is: why was the high-tech system so difficult to implement?Cook, B. (1995), “Denver International Worth the Wait,” Airport Magazine, May/June.Gibbs, W. (1994), “Software’s Chronic Crisis,” Scientific American 271, 3, 72-81.Here are some key facts summarized about the case:?Project started in 1988 with a scheduled 1993 completion date. ?Project was several years late. ?Cost overruns totaled almost a half of billion dollars. ?Blame was placed on software – specifically, the schedule overrun of the $193 million automated baggage handling system (ABHS). ?To get the airport open in 1995, $51 million was spent to retrofit a conventional baggage system as a temporary workaround to ABHS.Within your team, discuss the information given about the case and then respond to the following1)Was software complexity and/or a poor software development process the only “culprits” in the DIA fiasco?2)How would you assess the risk management process in the DIA project?3)What mitigating plans and strategies might have been implemented if a good risk management plan had been in place?4)Can you estimate (ballpark) what some of these might have cost?5)Who dropped the ball? BAE? Others?BlueCross BlueShield of SC Case StudyThe Alliance business area of BlueCross BlueShield of SC, which processes business for other Blues Plans (e.g. NC and Florida), brings on new Alliance business on January 1st of each year. Each year, a project is established to enable all IT Systems to support this new Alliance business. The project usually starts around July of each year. Marketing is continually selling, so new groups may be identified after the project has started.All groups have an effective date of January 1st of the upcoming year. Some groups include service penalties if we cannot process business as of that date.Group Characteristics Assumptions (Note these are hypothetical and not meant to capture exact details for any particular year)There are 10 new groups this year ranging in size from 2,500 contracts to 50,000 contracts. A contract represents a subscriber and covered dependent(s). To accommodate the large volumes all enrollment data will be received electronically (no manual keying).The Customers are going through their Open Enrollment period in conjunction with the transition to BlueCross BlueShield of SC coverage (Open Enrollment usually starts in October or November and allows participants to select their coverage levels for the next year).Typically, the benefits for the upcoming year are not finalized until just prior to the Open Enrollment period.In the past, carryover amounts such as lifetime maximums were not provided to Blue Cross Blue Shield SC and claims accumulators started anew. More and more groups require us to collect historical claims accumulators (e.g., LifeTime Maximums) and use these in our claims adjudication process.Many Customers choose to carve-out their Drug and/or Psychiatric benefits to an external vendor. There are many different vendors that provide this service. Amounts paid by these external vendors often contribute to out of pocket maximums, deductibles, and lifetime maximums that are key to the claims adjudication process.In addition to new Alliance business, BlueCross BlueShield of SC adds new local groups effective January 1 of each year.BlueCross BlueShield of SC Assumptions This Year (again these are hypothetical)Many of the other applications (systems) are older in design and do not have the ability to easily handle the flexibility required for these new Customers.Both the I/S Division and Customer Operations have experienced significant growth in staff each of the past 3 years.The new business volume this year is anticipated to be triple that of any previous year. Last year Alliance business was 5% of the total volume. With this year’s addition, Alliance business will be 25% of the company’s total volume.Success of this year’s new business will impact future Marketing efforts (that is, future year’s business growth).Many other projects with mandatory dates in the same timeframe are underway.The I/S Division employs a release strategy which groups projects together that have a similar implementation date. ................
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