Project Failure: of Heathrow Terminal 5 - Case Study Example

STUDENT NAME: STUDENT NUMBER: UNIT NAME: UNIT NUMBER: TOPIC: HEATHROW TERMINAL 5 PROJECT FAILURE INSTRUCTOR: INSTITUTION: DATE: INTRODUCTION Terminal 5 was designed to be a home of British Airways international and domestic passengers at the Heathrow. It has an annual capacity of 30, 000, 000 passengers and it is compatible with the largest aircraft in the world, A380 airliner (Deakin, 2008, p.11). It is on a site of 260 hectares between northern and southern runaways at Heathrow. It is comprised of concourse A (A four storey terminal building), concourse B (satellite building) and a 62 aircraft stands. The second satellite building will be completed by 2010 (Deakin, 2008, p.11). Scope, Time, and Cost of the T5 project The T5 project was estimated to cost £4.3 billion. The project scope included new terminal, nine new tunnels, satellite building, and road connections to the M25 and river diversions. The time for the project was as follows; in October 2001, BAA declared its interest in the construction of terminal 5, in 2002, the separate working groups to develop the T5 project agreement was created. According to Andrew (2009, p.15), the construction work for the T5 started on October 2002 and the project was completed on March 2008 as it was anticipated in the plan. In the due course the project was hailed in 2006 because the construction company needed to adopt innovative project management practices to avoid the consequences of traditional project management approaches that were being used in the United Kingdom construction Industry (Andrew, 2009, p.15). In a project of this size, a traditional approach would have resulted in average time overruns. For two years after the project inception there was a 48% budget overruns and 68 fatalities whereas T5 could have been completed within the budget and on time at the human cost of 2 fatalities (Andrew, 2009, p.15). Under the T5 agreement, BAA adopted total risk in all contracts, and developed a model of integrated teams showing a partnering relationship. The pioneering approach emphasized on early risk mitigation to detect, manage and mitigate risks associated with this particular project (Health and Safety Executive., 2005, p.3). The change in BAA's culture can be described as a 'watershed', for it created an environment for early problem-solving, information sharing and collaboration. A good example of where the approach was applied was the offsite prefabrication of the roof (terminal’s) to reduce risks associated with its advanced design (Andrew, 2009, p.16). The use of offsite trials and testing was instrumental in saving time and cost during the construction. In 2006, the BAA Company was sold to a Spanish construction company known as Ferrovial. This company had borrowed $18bn to purchase BAA and it had to implement some cost-cutting activities which included: replacing many director level staff with a Ferrovial team in a bid to “perfect staff performance of Heathrow”. This company also threatened to reduce the number of staff members in the capital projects divisions by BAA. The company was reluctant to use T5 future projects agreements. These activities are believed to have cut the quality of T5 facilities and it led to project failure at its implementation stage (Andrew, 2009, p.17). The opening of the project T5 project was exclusively designed for BA’s use. After the completion, the British Airways described the terminal building with the following characteristics: seamless check-in with no queues, improved punctuality and improved safety of baggage because the facility used modern technology. HM Queen Elizabeth officially opened T5 on 14th march 2008 and its operation was anticipated to commence on 27th march 2008. The problem was that on the first day of flights, flights were cancelled, more than 15000 baggages got lost and passengers were stranded. WHAT WENT WRONG? From a time, scope, quality and cost perspective, the construction phase of the project was lauded as success. The project managed risks and reduced disputes and conflicts. The involved stake holders (the Construction Company and British Airways) were indulging in the ‘halo effect’ now that the project had gone so well. They thought that the implementation process would be as smooth as other phases of the project. On the contrary, the implementation process was faced by a culmination of challenges because of what I call “mis-assumptions”. Something went wrong in the implantation phase of the project. Involvement of Staff members For every project to be successful, all stakeholders should be involved. In T5 project, the involvement of staff members was ignored by the management. There were reports that the staff members lacked adequate training. The management did not see the significance of training and preparation for the implementation. In addition, the management failed to predict the possibility of any failure, so it lacked a contingency plan ( BBC News, 2008). To start with, the management never asked the staff members to arrive early so as to counter the potential delays when entering the building that they had not entered before. Secondly, according to BBC News (2008), managers didn’t pay for the additional staffs who were asked to come in on the off duties to help out. The handlers of the baggage were not familiar with the new process and technology. In addition, the staff did not have adequate skills that were required to operate the new resource management system. Finally, the new baggage handling system had no backup system to support the complex system. This shows us that the project managers in T5 project basically ignored the importance of the staff in the implementation stage of the project. They thought that the workers were conversant with the map of the new building and that they were qualified enough to operate the new resource management system. Conflicts in the expectations of stakeholders There were conflicts in the expectations of all stakeholders that led to the failure of the project. First, the United Kingdom government wanted to revive the reputation of its construction industry through the implementation of Egan report. Secondly, Ferrovial Company wanted to realize its investment in BAA. In addition, British Airways wanted to have an iconic home at Heathrow. The members of staff needed tools and processes to perform their jobs and the passengers needed to have a trouble-free travel (Bourne, 2009, p.20). These expectations were not harmonized leading failure of Terminal 5 project at its implementation stage. Communication in the Organization Communication in an organization is very significant in the success of all projects carried out by the organization. In any organization there is communication from managers to the staff and communication via internet and other ICT applications (Silverman, 2010). If communication is compromised in any project, there is a greater possibility of failure. In T5 project, in the testing of Baggage system, the software filters were installed by the technicians. This was to inhibit messages from the system during testing to be delivered to the ‘live’ systems of other terminals. After the completion of the project, these filters were accidentally left in place (Silverman, 2010). This blocked communication and as result, this terminal did not receive any information about transferring of bags from other airlines to British Airways Airline. These bags were sent automatically to manual sorting in the storage facility of the terminal. There was an incorrect configuration that stopped the flow of information from the baggage handling system to its reconciliation system. A week after the opening, 5th April 2008, the reconciliation system failed for a whole day (Rooksby, 2008). The faulty reconciliation system told the security staff that the bags had not been screened and this made the bags to miss their designated flights. In addition, there were some errors in transmission of British Airways data between IT and SITA and BAA and communications. This made the system not to recognize the number of bags which needed manual sorting process at T5. The terminal lacked server capacity and this exacerbated the problems. As these errors culminated, more bags were unrecognized by the system; they missed their flights and had to be rebooked on new flights. When the managers realized there was a problem with the baggage handling system, they switched off the system. The managers decided to ask the passengers to choose between travelling without their bags and rebooking their flights. It took more than three days to sort out the bags manually. It is evident that there was a communication breakdown that led to the failure of the project on the first day of its implementation. The communication systems were faulty and they gave wrong instructions and information to the staff members especially the security personnel. This means that the staff members were denied very essential information regarding the operations. Secondly, the managers’ way of communication to both the staff and the passengers was faulty (Rooksby, 2008). They could have alerted the passengers on the faultiness of their system so that at least they could have opted for another airline. On the contrary, the managers just kept quiet, hoping there will be a solution. This worsened the problem because it brought about inconveniences to the passengers. RECOMMENDATION ON HOW THE ISSUES COULD HAVE BEEN AVOIDED Proper System Testing The socio-Technical systems at Heathrow Terminal 5 needed to be tested properly before the opening day. System testing exceeds 50% of the overall effort of the project (Rooksby, 2008). Testing could have been done before, during and after system development. Testing at Terminal 5 was conducted at the end of the project. This makes it hard to discover both major and minor problems. In Terminal 5 testing should have been done to ensure quality. Testing only shows the presence of problems and not their absence (Silverman, 2010). During testing all the stake holders of the project needed to be involved. On the contrary, the mangers of T5 project did not see the importance of the staff members. Training and Orientation of staff Members The terminal 5 project had a very successful construction phase. However, the managers thought that the implementation phase would be as smooth as the construction phase. According to the managers, the greater goal of the project had been achieved and what was remaining was simple; the staff members to relocate to the new building (Hancock, 2010). The opening day problems were as a result of ignorance by the managers. They never valued the importance of the staff members (as stake holders) on the success of the project. The implementation of the project required the staff members to use complex resource management IT systems (BBC News, 2008). The staff members were not trained on how to use such programs. The problems could have been avoided if only the staff members were shown how to use the complicated programs. In addition, the staff members should have been oriented to the whole process. This could have been done through a seminar where staff could have been issued with maps and other paraphernalia that was important for the success of the project. Communication Plan The success of any project or organization depends on communication. Communication breakdown results to tension among the stakeholders. Tension leads to creation of grapevines which are detrimental to the success of the project. To ensure success during the opening day of Terminal 5 project, communication should have been taken care of. However, this was not the case. There was a communication breakdown between British Airways and other Airlines. There was a communication breakdown between the management and staff members. Finally there was a communication breakdown between the management and the passengers. The British Airways spokesperson escalated the problem by avoiding the media. This could have been avoided if a strong communication channel was adopted. This could have been done by testing the relation of the ICT communication between British Airways and other airlines, orientation and training of staff members, asking the day off staff members to help out and informing the passengers on the progress. A well planned communication plan could have helped to resolve the confusion among the staff members and the passengers. A Contingency Plan The construction company and British Airways were caught unaware. The rationale for that is that they thought that everything will be smooth. They never had a Plan B in case things did go as expected. A contingency plan gives an alternative to the management when there is a crisis. If there was well planned contingency plan the problems experienced on the opening day could have been avoided. LESSONS LEARNT Don't let it happen in the first place Terminal 5 is a complex and a novel building. The aim of building the terminal was to enhance the customer service and showcase that Heathrow is a world class airport. For this reason, a smooth opening of the terminal was essential but unluckily this did not happen and the ensuing chaos was at the top of the headline news. The news reports suggested that the problems were as a result of culmination of failures, but I think something went wrong in relation to risk management. It was not clear whether rehearsals were carried out. If rehearsals were carried out, why were the glitches during the opening day not identified? It was clear that the staff members were not trained and there were no contingency plans in case of such a failure. From this I have learnt that in project management, it is always better to have a “plan B” in every stage of the project. The management thought that because the project had been completed on time, the opening would be as smooth as the construction. It is better to prevent it from happening than dealing with the consequences of the failure. Take responsibility for your actions The other lesson that I have learnt from terminal 5 project is that it is better to take responsibility of your actions as a project manager. When the project managers were addressing the media from on BBC television, they were wheeled out. They read their reports from written scripts and avoided to answer questions from the media. This was a disaster that could have been avoided. I can term it as a disaster of “their own making”. So the spokesman and other project managers should have stood up and answer questions and at least be empathetic to the plight of the clients. On the contrary, they refused to take responsibility of their actions. This made the company look elusive and shabby. They could have chosen a heavy weight spokesman to respond to the media questions. This could have shown that the company handled the problem with seriousness. Take radical steps to show you are in control Instead of avoiding the situation and eventually getting it right, British Airways and BAA could have taken radical steps to show that they were in full control of the situation. The failure of Heathrow terminal 5 teaches us that when in a crisis, the managers should admit that there is a problem and take radical steps to control the situation rather than soldiering on and hoping that the situation will be okay. This is what the Heathrow managers did. They cancelled operations for some time and reopened it after training their staff and reviewing their safety and health systems. This caused disruptions to their customers but it proved that they took the matter seriously and they were determined to look for solutions Buy Goodwill It was reported that the affected passengers were given £100 each to pay for the hotels that cost £200. In addition the customers were given free food. This was a quick action of throwing money to the problem. Although it may look as an extravagant idea, the managers were buying goodwill from the clients. When media reporters went to look for unsatisfied customers it was difficult to get one. The money that was spent doing that was relatively minor compared to losses that the company would have lost in future due to its bad reputation. From the above points it has been learnt that in case of a high profile activity such as the opening of Heathrow terminal 5 managers are supposed to make sure nothing goes wrong in the first place, ensure risk management, have good contingency plans, have well trained staff and good organization CONCLUSION The Heathrow terminal 5 project could have been termed as one of the most successful projects if it had a successful opening. On the contrary, this was not the case because there were problems during the implementation stage of the project. The construction phase was very successful but the project failed at the implementation phase due various reasons as discussed in the essay. To start with, the communication between BAA and British Airways failed and there was no contingency plan in place. Secondly, the baggage handling system gridlocked as the staff was checking the luggage quicker than how it was loaded onto planes. On the other hand, the staff had not been trained on how to handle complex resource management systems. In addition, the staff was not given any orientation concerning the new building. The construction of T5 overran leading to construction even after its opening by the queen. There are some lessons that both present and future managers can learn from this project. They include taking responsibility of one’s actions, buying good will, ensuring effective communication channel in an organization and making sure that you are in control in case of a crisis in an organization. Furthermore, completing a technical phase of the project does not mean that the project goals have been achieved. This means that all phases of the project are equally important. Other projects Managers especially for airports learnt a lesson and have been working hard to avoid duplicating these problems in their respective projects. As a future manager, when planning for projects I will ensure that all phases of the project have been planned for. This can be achieved by ensuring that each all phases of the project are equally important. I can ensure that I will always be having a contingency plan and that the flow of communication among the stakeholders is effective. Finally, I would ensure that all stakeholders of the project are treated equally and their expectations are harmonized. REFERENCES BBC News Channel. 2009. Disruption at T5 'was avoidable' Retrieved 11th November, 2010 from http://news.bbc.co.uk/2/hi/uk_news/england/london/7498557.stm BBC News Channel. 2008. What went Wrong at Heathrow d Terminal 5 Retrieved 11th November 2010 from http://news.bbc.co.uk/2/hi/7318568.stm Davies, Andrew et al. 2009. From Iconic Design to Lost Luggage: Innovation at Heathrow London: Imperial College, p. 15-17. Deakin, Simon. 2008. Governance Processes, Employee Voice and Performance Outcomes In The Construction Of Heathrow Terminal 5 London: University of Cambridge, p.11. Great Britain Transport committee. 2008. The Opening of Heathrow Terminal 5:. Great Britain: The Stationery Office, p.25-28. Hancock, David. 2010. Heathrow Terminal 5 Project: Success or Failure? SlideShare Inc. Retrieved 11th November, 2010 from http://www.slideshare.net/Hank5559/heathrow-terminal-5- success-or-failure Health and Safety Executive. 2005. Heathrow Terminal 5 Project Case Study. HSE, p. 1-4. Lynda, Bourne. 2009. A Maturity Model for Organizational Implementation, Gower Publishers, p. 20. Rooksby, John. 2008. Testing Socio-technical Systems: Heathrow Terminal 5. University of St. Andrews Press. Retrieved 11th November, 2010 from http://www.slideshare.net/johnrooksby/testing-sociotechnical-systems-heathrow- terminal-5-1753827 Silverman, Ben. 2010. A Terminal Public Relations Nightmare Retrieved 11th November, 2010 from http://www.ereleases.com/prfuel/a-terminal-public-relations-nightmare Thomson, Rebecca. 2008. Lack of software testing to blame for Terminal 5 fiasco, BA executive tells MPs. Retrieved 11th November, 2010 from http://www.computerweekly.com/Articles/2008/05/09/230629/Update-lack-of- software-testing-to-blame-for-Terminal-5-fiasco-BA-executive-tells.htm Read More