Stakeholder Management Performance of Heathrow Airport - Term Paper Example

Name Class Unit Table of Contents Introduction 3 Literature review on stakeholder theory and its application to the engagement with and management of stakeholders in large projects and programmes 3 Summary of the main points 5 Review the stakeholder management performance of Heathrow Terminal 5 based on literature review 5 Communication of vision 5 Levels of success in managing internal and external stakeholders 7 Degree to which stakeholder issues increased Heathrow Terminal 5 project complexity 8 Conclusions from the analysis regarding Heathrow Terminal 5 performance in managing stakeholders 9 References 10 Introduction Heathrow Airport is the UK largest airport and busiest airport globally. With an aim of enhancing their services, the construction of Terminal 5 was initiated in 1986 and completed in 2008. The main aim was to implement the project and enhance the passenger handling capacity. Terminal 5 would enable the airport to handle an extra 30 million passengers annually. The project was estimated to cost £4.2B and would have a payback of 8 years. To start the project, the British Airport Authority took survey among 70,000 annually to determine the new terminal needs. British Airports Authority (BAA) engaged stakeholders for a long time involving a public inquiry which lasted for 4 years. There were also continuous engagements with different stakeholders. Despite this, failure to fully engage working during all phases of project led to challenges during the opening day (Brady & Davies, 2010). This report analysis stakeholder theory and its application with engaging stakeholder management in large projects based on Heathrow Terminal 5. The report starts with literature on stakeholder theory and its use in stakeholder management and engagement. This is followed by stakeholder management performance of the Heathrow Terminal 5 and the stakeholders mapping. The report then analysis levels of success in managing internal and external stakeholders during the project. Degree to which stakeholder issues increased project complexity is also looked at in relation to Heathrow Terminal 5. Lastly, the report concludes with project performance in managing its stakeholders based on the literature. Literature review on stakeholder theory and its application to the engagement with and management of stakeholders in large projects and programmes Bourne & Walker (2008) asserts that without the stakeholders support, a project cannot be successful. Stakeholders are a vital group who ensures the success for the organisation and the project (Greenwood, 2007). This is a group that has a classifiable relationship with the organisation (Bourne & Walker, 2008). A lot of authors have acknowledged the importance of stakeholders in projects. In fact, most of the authors claim that project failure is not generally a result of poor management but lack of appropriate communication among the project stakeholders (Wysocki, 2011). It has been noted that stakeholder analysis forms a vital part in stakeholder management. This involves having a close relationship with the stakeholders as early as possible during the project (El-Gohary, Osman & El-Diraby, 2006). The level of engagement for each and every stakeholder must be established and come up with the best way to involve the stakeholders. There are several tools which can be used and includes the Stakeholders Engagement Assessment Matrix (Achterkamp & Vos 2008) According to the stakeholders’ theory, managers have a role to investors as well as the stakeholders within and outside the organisation (Beringer, Jonas & Kock, 2013). Stakeholders are defined by their interest in the organisation or project. Primary stakeholders are the actors who have a direct and contractual relationship with the project (Charvat, 2003). Secondary stakeholders are those who are affected by the project but have not contractual connection to it (Crawford, 2001). Primary stakeholders in this case include those who have direct influence such as the employees and secondary stakeholders who includes the community and political groups (El-Gohary, Osman & El-Diraby, 2006). The stakeholder theory is based on common good. This is through looking at the members of the society and naturally bonded when their needs and goals are fulfilled. Common good is based on allowing all members to fulfil their needs and goals (Cleland & Ireland, 2004). Project managers are expected to take actions which are based on attained the best for the society. The stakeholder theory acts as the basis for the stakeholder engagement in a project. The theory helps a lot in understanding the behaviour of the stakeholders in the context of the project (Turner, 2014). In fact the central purpose of the stakeholder theory is to help the managers in understanding the stakeholders and manage them strategically (Bourne & Walker, 2008). This is due to fact that stakeholder engagement is critical for the survival of the project. According to analysis, the stakeholder theory is based on three alternative aspects. These are descriptive, instrumental and the normative aspect (Greenwood, 2007). Based on the descriptive theory, it is possible to explain specific corporate characteristics. It is a theory that shows how the management behaves during the project (Koskela & Howell, 2002). Instrumental theory looks at the way in which the stakeholder management and project performance are connected (Turner, 2014). Vision is critical for the success of a project hence the need to communicate it to the stakeholders. Through describing the vision, it becomes possible to clarify the way in which the project should proceed (Achterkamp & Vos 2008). The vision has power to enable the stakeholders make sense of the plan. The project managers are expected to align the project goals and their commitment to them. To create an effective project vision among the stakeholders, there is need for clear and effective communication (Atkinson, 1999). The vision acts as the artefact that defines the project soul. The artefact must be accepted and internalised by the stakeholders for the project to be successful (Bourne & Walker, 2008). In fact, the success factor for the project is having a shared idea among all participants (Belout & Gauvreau, 2004). The project manager has a role in change management. This is through instigating the process of change among the stakeholders. A project vision helps the stakeholders to participate and eliminate negative behaviours as they embrace change. This is due to the link between change and vision (Munns & Bjeirmi, 1996). Vision statement convinces the audience on the need for the change and explains the benefits to be attained. Project vision is more complex than an organisation vision since it uses temporary organisations each with their unique culture and subcultures (Cicmil, Williams, Thomas, & Hodgson, 2006). The vision being communicated has to be easily understood, motivational, credible and challenging. Stakeholders’ management is a critical task and a complex one. Research shows that the stakeholders’ should be managed as the key project objective (Besner & Hobbs, 2006). For the large projects, they should be managed for the benefit of all stakeholders (Brady, Davies, Gann & Rush, 2006). The groups affected must be allowed to participate in decision making and their welfare catered for. It is the role of the project managers to ensure that they use interpersonal skills to meet and manage the stakeholders’ expectations (Meredith & Mantel Jr, 2011). This includes helping the stakeholder build trust, and also overcome the resistance to change. Thus, the stakeholders have to be identified and their degree of influence in the project identified (Koskela & Howell, 2002). This helps in balancing their demands, needs and expectations on the project. The project managers are expected to access the stakeholders’ capabilities in acting and expressing their interests in different situations (Achterkamp & Vos 2008). Summary of the main points During the project construction, all stakeholders are involved. Despite this, their level of involvement differs. For example, the regional stakeholders may have concerns on the manner in which the construction activities influence their daily routines. This is unlike the global stakeholders who are more interested in evaluation of the project impacts in relation to their areas and ensuring that the limits are within what was agreed on during the planning phase (El-Gohary, Osman & El-Diraby, 2006). It is the role of the project manager to communicate with all stakeholders on the state of the project, steps being implemented, budget, and the scope of the entire project (Glicken, 2000). The feedback provided by the stakeholders is supposed to be analysed and acted on. It is possible to use the feedback from the stakeholders to modify and enhance the project performance. The interest of the shareholders has to be balanced to ensure execution and completion of the project. When coming up with the risk management and procurement plan, it is always important to ensure that the influence of all stakeholders is considered (El-Gohary, Osman & El-Diraby, 2006). The project manager must be able to anticipate the people reaction in a project. Research shows that use of active management of the stakeholders can help a lot in minimising the risk of the entire project failing in meeting the objectives (Aaltonen & Kujala, 2010). The key to develop a successful project vision is to make the project objectives well understood, motivating, credible and challenging (Achterkamp & Vos 2008). All the project needs must be well articulated in the vision to ensure success. Review the stakeholder management performance of Heathrow Terminal 5 based on literature review Communication of vision The construction of Heathrow Terminal 5 is one of the most multifaceted projects. It was a project which included several disciplines together such as civil, mechanical and electrical systems. Despite the complexity of the project, there was poor communication of the vision to some internal stakeholders. The communication plan used by the project manager failed to effectively communicate the vision to workers. There was no strategic management and planning in engagement with the workers (Aaltonen & Kujala, 2010). To ensure the success of a project, there is need to give the stakeholders an opportunity to give their input on the project goals. This helps in articulating common set of values and objectives (Kerzner, 2013). The stakeholders failed to adequately give the workers who are vital stakeholders an opportunity to give their input on the vision and mission. There was no clear vision for the Terminal 5 workers to accomplish the stated goals. The stakeholders were not well engaged in the process and hence there was no co-design process (Brady et al., 2006). There were no strategic directions during the early phases of the Heathrow Terminal 5 design. Vision is critical for the success of the project outcomes and this cannot be attained without fully engaging the stakeholders (Christenson & Walker, 2004). The most significant contribution by the project manager is creating and communicating vision (Noland & Phillips, 2010). This may have reduced passion for the stakeholders on the project which was manifested during the final launch leading to chaos. The launch of Heathrow Terminal 5 was marked with chaos, confusion and loss. This is due to fact that the internal stakeholders were not well informed on the project and their commitment to the goals was low (Brady & Davies, 2010). The Terminal 5 project had diverse stakeholders who had varying interests. They needed to have a shared and prominent vision for the project. The project manage had this role through empowerment. The organisational environment also failed to ensure that the project vision was shared by everyone. This is especially the internal stakeholders who were ignored in most of the project phases (Noland & Phillips, 2010). Thus, everybody interest was not addressed to sustain a shared vision. The project leadership structure had no mechanism to ensure that there was continuous participation. The leadership failed to understand that the stakeholders look at the end benefits. Moreover, the vision was not continuously maintained in the minds of all stakeholders (Kerzner, 2013). This led to the end benefits being forgotten by some of the stakeholders. Vision is motivational since the stakeholders are able to use to attain their interests. The project leader did not use the project benefits well to motivate everyone (Brady & Davies, 2010). Mapping stakeholders in the project Table 1. Stakeholders in the project (Bourne & Walker, 2005) Internal stakeholders Main concern Influence Employees Airport workers and their Unions Job opportunities, using new systems, change, labour standards. Influence the design, training needs, compensation, and impacts timeline. Employees’ unions Owners British Airport Authorities (BAA) Costs, schedule, cost benefit analysis, timing, functionality. Time, schedule, technology. Financial sponsors Client External stakeholders Suppliers Suppliers Contractors Terms of services, payments, rules and regulations. Affects schedule, determines materials quality. Community and general public Local community, public Inconvenience during construction, pollution, waste disposal, environmental degradation, quality. Calls for environmental impacts assessment, determines waste disposal, demands quality, determines aesthetics, have an impact on timeline. Customers End users Passengers Service providers Flexibility, speed, reliability, ease of use and benefits. Determines features through feedback, determines quality. Government UK government Compliance, safety, quality, environmental sustainability. Ensures compliance with standards and regulations, impacts project timeline. Activists Environmental groups NGOs Trade Associations Media Environmental impact, compliance with standard’s, labour standards, supply chain ethics and community involvement. Ensures environmental protection, ensures labour standards and human rights are upheld, have an influence on timeline. Competitors Main competitors Fair competition. Sets the benchmark, ensures fair competition. Levels of success in managing internal and external stakeholders Managing an airport terminal project is a hard task due to the high number of stakeholders involved. Terminal 5 project started early in 1986 with the architectural competition and the business case. According to the UK government, all major projects are approved through a long consultation process by all stakeholders. The stakeholders for the project included the government bodies and communities each with varying and often conflicting interest (Cleland & Ireland, 2004). This led to a long public inquiry which lasted for 4 years before the government approval. The contracting needs for the varying stakeholders led to a lot of challenges in the construction of the Terminal 5. This is especially in the project inception and implementation stages. The government was committed to a project that would create value for all stakeholders. Based on the Freeman stakeholder theory, the project managers have a role in both internal and external environment to ensure success (Kerzner, 2013). Thus, the project management had a role to ensure that there was a healthy balance in meeting all stakeholders’ needs. The stakeholders’ theory claims that while maximising the shareholder wealth, there is need to consider other stakeholders interests (Crawford, 2001). From the analysis, the stakeholders involved in the construction of Heathrow Terminal 5 had different stakeholder groups with different goals and objectives. All stakeholders were relevant to Heathrow airport. The internal stakeholders groups included the employees, employee unions, airport shareholders and the financial sponsors. The external shareholders were the suppliers, end users, community, public, customers advocate groups, government, competitors, political parties and activists (Brady et al., 2006). The airport stakeholders came from varying backgrounds and had varying goals and objectives. To meet stakeholders’ needs, there is need to consult all stakeholders involved at different stages of the project (Kerzner, 2013). Passengers were the most vital stakeholders for the airport terminal. Despite this, there was no adequate feedback gained from the passengers while designing the terminal. The relationship with the passengers was not properly forged despite the attempts at the later stages of the project. The main elements that were considered for the passengers’ satisfaction were safety, reliability, communication and experience (Brady et al., 2006). It was also considered that persons with disabilities were catered for. The area where the airport terminal project failed is employees’ engagement. The staff were not fully involved during the project early stages devout the project being lauded as a success. This is especially during the implementation phase where the employees were almost left out. The staffs were inadequately engaged through lack of preparations. There was lack of proper training on the use of terminal 5. This can be associated with poor communication to the employees who were to implement the project (Brady & Davies, 2010). For example, the employees were not asked to arrive early to address any delays and there were no additional staff. The baggage handlers were not engaged in the early stages during installations. This made them unfamiliar with the new technology. It was also reported that the staff faced a lot of challenges using the new resource management system due to lack of training. Moreover, there was no backup for the baggage handling system. It is clear that the project manager was poor in communicating employees who were critical stakeholders. Poor preparation of the stakeholders responsible for the operation can be a major cause of failure (Crawford, 2001). The rest of the internal stakeholders who included the airport shareholders and the financial sponsors were involved since the project inception. In fact, the shareholders and the financial sponsors held regular meetings and were briefed well on the project progress (Bourne & Walker, 2005). For the external stakeholders, there were through consultations. This included long public inquiry which lasted for four years and ongoing consultations. The suppliers were well engaged by the project management at all levels. In fact, the degree of engagement with the suppliers should be high to ensure success of the project within the budget (Caldwell, Roehrich, & Davies, 2009). The customers who included the community, public and the end users were also engaged at all level. The community was engaged through public forums where they gave their reviews and provided with the feedback (Davies, Gann, & Douglas, 2009). Despite low engagement with the passengers, the management tried to address their concerns. The government and the customer advocate groups were involved all through. This is aimed at ensuring that the project is being implemented within the ethical guidelines. The environmental groups were highly involved to ensure that the project did not have adverse impacts on the environment (Aaltonen & Kujala, 2010). This included carrying out periodic environmental assessments. The management were aware that the environmental issues were very vital in the success of the Terminal 5. This required having all stakeholders involved with an aim of coming up with successful environmental strategy. This led to the suppliers being pressured to be environmental conscious in their work. It involved coping with the environmental and legal standards in Europe and favouring the interest of the local communities during the construction of the Terminal 5 (Davies, Gann, & Douglas, 2009). Degree to which stakeholder issues increased Heathrow Terminal 5 project complexity London Heathrow Terminal 5 became more complex and its performance was impacted by the stakeholders’ issues. It is important to note that stakeholders’ influence have a huge impact on the project timeline and costs (Bourne & Walker, 2005). The issues raised by the stakeholders define the project complexity and performance (Pich, Loch & Meyer, 2002). First, the project took very long time due to the public inquiry and engagement with the stakeholders. This is due to fact that stakeholders’ issues have to be dealt with appropriately before the start of the project (Söderlund, 2004). This included ensuring that the project was sustainable through addressing environmental, social and economic issues (Kerzner, 2013). There was need to meet the Control of Pollution Act Section 61 agreement before proceeding with the project. The required waste management by the stakeholders also led to an increase in the time frame for the project (Brady & Davies, 2010). The shareholders, advocacy groups and the management wanted the project to meet the set requirements and standards. When the activists protests, the project timeline is impacted. This led to more time as the construction materials had to undergo major test to ensure quality (Davies, Gann, & Douglas, 2009). The intense public inquiry and political influence led to an increase in the estimated schedule for the project being increased. The local residents had to be compensated as well as reducing the impact the terminal had on the residents. Lack of proper engagement with the staff using the new facility led chaos during the implementation. The estimated cost of Heathrow Terminal-5 project was £4.2bn (Brady et al., 2006). This cost was not increased despite the challenges that were experienced during the opening of the terminal. At the moment, the current level of sustainability, efficiency and quality services at Heathrow Terminal 5 is based on the influence of different stakeholders who includes the customers to the environmental and human rights groups. Conclusions from the analysis regarding Heathrow Terminal 5 performance in managing stakeholders Despite the few challenges in stakeholders’ engagement, Heathrow Terminal 5 is one of the most successful projects. The project adopted innovative project management practices with an aim of addressing the challenges of the traditional approach in project management. This made it possible for the project to keep its budget within the set limit and also adhere to the set timelines. The project was completed in time and within the set budget with minimal human fatalities of two. There was an excellent engagement with the external stakeholders but within the internal stakeholders, there was poor engagement with the workers. The first day of operation led to loss of baggage, cancelling of flights and stranded passengers. Based on the stakeholders’ theory, there is need for effective communication of vision to all stakeholders. The project manager failed to appropriately communicate the project vision to workers who were critical stakeholders. The baggage handlers were not well trained and there were low morale on the staff. This led to overload on the baggage handling and chaos. In fact, the project success was judged from the completion and implementation. This made the terminal to be associated with failure due to poor stakeholder management on the side of the staff. The selective addressing of the stakeholders needs and expectations led to the catastrophic opening of the project. The outcome from the Heathrow Terminal 5 is in line with the literature findings. Literature states that a project is only successful if there is communication with all stakeholders involved. According to research, failure to include all stakeholders during the project stages affects the outcome. Failure to fully engage all stakeholders affected the implementation of the project during the opening. References Aaltonen, K., & Kujala, J. (2010). A project lifecycle perspective on stakeholder influence strategies in global projects. Scandinavian Journal of Management, 26(4), 381-397. Achterkamp, M. C., & Vos, J. F. (2008). Investigating the use of the stakeholder notion in project management literature, a meta-analysis. 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