Heathrow Terminal-5

Heathrow Terminal-5 Case Study

Executive Summary:

Heathrow airport has been in operation since 1946 and is the UK’s largest airport and the world’s busiest international airport, carrying over 60 million passengers and 1.3 million tons of cargo each year. Terminal 5 when constructed will be able to handle 30 million passengers per year, taking Heathrow’s total number of passengers to around 90 million.

Heathrow Terminal 5 is the most multifaceted construction projects in Europe with good procurement and Supply Chain Management strategies in place. It is a multidisciplinary project consisting of civil, mechanical, electrical systems, communications and technology contractors over the entire phase of the project.

The project is aimed at making Heathrow maintain its competitive position within Europe, retain its passenger capacity and also increase it by 30% over the next 10 years; this project when carried out will make Heathrow one the world’s busiest airport and a major source of income for the UK economy. It is estimated that the project will cost £4.2B and have a payback period of 8 years.

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Since construction projects are prone to risks related to Environmental, legal and Supply Chain issues, the main aim is to maintain a synergistic relationship amongst all the stakeholders of the project with an effective communication strategy in place and to hire external consultants having expertise related to environmental (material risk, waste management, air quality, dust, noise and others) and legal aspects of the project. This helps in a smooth flow of the project coping with Environmental and legal standards set by the UK (Europe). This also favours in preserving the interests of local communities during the construction of this Terminal (Execution Phase).

Some of the main multifarious challenges which are involved in the project phases would be:

* Exhaustive Planning activities

* Earthworks (Archaeology)

* State of the Art design of the infrastructure (Buildings)

* Twin river diversion

* Rail and Road infrastructure projects.

The main elements under T5 project includes construction of the Main Terminal building, two Satellite Terminals, Aircraft stands, an Air Traffic Control Tower, connections to Public Transport, Road works, Rails and Tunnels.

The success of this project also depends on the lessons learnt from the following two stages:

* Lessons learnt prior to this project from other major construction projects

* Lessons learnt during the execution (construction) stage of the project.

Therefore the project should be focussed on the first point than the second one and strive towards having minimal lessons learnt during the execution stage of the project. The main aim is to complete this project on time, within budget and with exceeding expectations of the quality from the customer.

1. Introduction:

BAA is the world’s leading International airport group, responsible for managing the multifaceted Airport environment including safety and security, operation of air bridges, runways, environmental issues, shops and commercial facilities, airport systems which includes IT, information/ help desks and others. It owns, develop and manage 9 International Airports in total including Budapest (Hungary) and Naples (Italy).

BAA serves more than 150 million passengers at its seven UK airports, including the world’s busiest international airport, Heathrow. It is involved with management contracts/ stakes in ten airports outside the UK and also has got retail management contracts at two Airports in the USA. BAA established airport privatisation and retailing, and is recognised for its efficient airport operations.

BAA’s achievements have been emphasized by its sustained effort towards managing environment and other impacts of aviation. It is also successful in maintaining a synergistic relationship amongst customers, employees and business partners in an efficient way. It constantly benchmarks itself against the demanding prolific standards of corporate roles and responsibilities.

1.1 Project Rationale:

As Project Rationale describes about the basic reason for the accomplishment of the project, the major issues which Heathrow airport is facing are the escalation in the number of passengers and this is causing an increase in the congestion at the current terminals of Heathrow, due to increase in congestion it is difficult to provide the world class customer support/services effectively to the passengers and the airlines.

An increasing global competition from other International Airports in the European region like inParis,AmsterdamandGermany proposed a threat to Heathrow’s revenues and position in aviation industry. There is a need to accommodate bigger planes like Airbus A380 and the effective air traffic monitoring system with the help of new Air traffic control tower.

The above factor generates a need to expand the Heathrow airport for British Airport Authority (BAA) in the form of a new terminal named “TERMINAL-5”.

2. Definition

British Airport Authority is one among the leading airport operator in the aviation industry, to provide the best customer service was one among the objective. To know the required improvement at Heathrow Feedbacks were collected by conducting a survey among the 70,000 passenger a year. The need of spectacular Heathrow Terminal-5 is to accommodate the increment of passengers without any congestion, better customer service and infrastructure (Modes of transportation to be developed for both Rail and Road, Sixty new aircraft stands which can adapt advanced and future aircraft like A380, Air traffic control tower to monitor it).

2.1 Scope

The Scope of the project is to provide the best customer service and quality to the passengers at Heathrow by creation of state of art new terminal building which help toaccommodate30million passengers equipped with the modern modes of transportation without any congestion. Also to provide very good infrastructure facilities to the airlines operating from Heathrow by building sixty new aircraft stands and a state to art control tower (87m high air control tower) with all modern technologies.

Scope Inclusion:

*Main Terminal building

*Two satellite building

*87m high Air Control Tower

*Sixty Aircraft Stands

*Multi Storey car park

*Twin river diversion

*Road infrastructures

*Rail infrastructures

Scope exclusion:

·Construction of a Runway at the Terminal

·Maintenance of the Terminal after handing over to BAA

2.2 Objectives

• To Increase the capacity of passengers flying per year by 30 million.

• To construct a Terminal-5 building, inherits all modern facilities while meeting the Environmental standards.

• To construct sixty new aircraft stands inclusive of stands designed for the most advanced aircrafts like Airbus A380.

• To develop the Rail infrastructure by extension of Heathrow express, London underground Piccadilly Line and creating six platform Rail station.

• To construct a state of the art Control Tower, designed to meet the demands of Air traffic control at Heathrow in the future.

• To improve the road infrastructure, new spur road to the M25 linking the terminal to the national road network.

• To divert the two rivers around the airport by incorporating many ecological enhancements.

2.3 Deliverables

• Environmental friendly terminal-5 building with better quality and services.

• Sixty aircraft stands which can adopt most advanced aircrafts and runway connections

• Passenger capacity enhancement.

• Modern Air Traffic Control tower, new rail station and links to the central London with Heathrow express and Piccadilly line extension.

• The new spur road links to M25 motorway and its widening to reduce the traffic congestion.

3 Summary

The concept of sustainability is one among the major considerations which is been identified and addressed for the proposed Heathrow Terminal-5. If any issue with respect to sustainability, the designed and approved sustainable frame work as to be applied at regular intervals. This is the proactive approach applied for sustainable issue. To overcome the communication T5 agreement

Considerations

* Sustainability of the Project in terms of environmental, social and economic factors.

* Meeting the airline company Requirements and Standards, British Airways being the only airline operating from the Terminal at initial stages

* Risk factors involved in the project (Economical, Political, Social, Environmental).

* The effect of the T5 Project on the operations of the other terminals.

3.1 Assumptions

* Terminal 5 has the potential to become a major Surface Access interchange or substitution by providing an important role in the South East transportation system of U.K.

* Resource availability throughout the Life cycle of the Project.

* It’s assumed the derived T5 agreement will effectively work between BAA and suppliers, team work can be effectively achieved.

3.2 Constraints

* The estimated Cost of the project may increase because of the macro economical factors like exchange rate, cost of the materials and workforce.

* Estimated Schedule of the project can increase due to intense public enquiries and the political influence.

* To meet the environmental standards and compensating the local residents plus the effect on the other four terminals.

* The competition from the other contemporary rivals like Charles De Gaulle airport in Paris and

* Frankfurt airport and Schiphol airport of Amsterdam.

4 Business Case

A business case is required form of document, supporting an argument for a proposal of the desired Project like (Project Rationale, Scope, Objective, Deliverables, Assumptions, Considerations and Constraints, Financial Analysis, Critical Success factor, Option Appraisal). The business case is used as decision making tool for the Proposed project, whether the Project is feasible or not “Go/No-Go decisions”. Also acts as an approval document for the proposed Project. Please find the proposed business case for Heathrow Terminal-5 in the Appendix:

5 Project Structure

The need of a Project Structure is to define standards to the team, which will be used during the Project life cycle. The standards include Communication, Documentation, Change control Procedure. Project structure includes both Organization structure and management structure. Traditional tree structure approach is implemented for Heathrow Terminal-5, find the organization breakdown structure in the Appendix 123245

5.1 Roles and Responsibilities

Title

Role

Board of Director:

Responsibilities

• Ensure the companies prosperity and Keeps the organization’s mission, values, and vision.

• Deals with challenges and issues with regard to Corporate Governance, Corporate social responsibilities and corporate ethics.

• Reviews and approves the annual budget, Program plans and organizational policies.

• Attend monthly board and committee meetings, Annual General Meeting.

• Ensure the adequate resources (Financial, Expertise, Technology) are available to the organization.

Title

Role

Chief Operating Officer:

Responsibilities

• Managing day to day activities of the Organization and Operations Management ( HR, Admn, Finance and Purchase).

• Strategic Decisions maker, Ensures the ideas of the Team are understood, Implemented, Monitored, coordinated and Managed throughout the life cycle

Title

Role

Project Head:

Responsibilities

• Since its a mega project, the coordination

Title

Role

Programme Manager:

Responsibilities

• Overall management and co-ordination of the projects.

• Contributing to strategy, policy and procedure.

• Management of supplier/contractual relationships.

• Budgetary control of the projects.

• Monitoring of issues and responding at the programme level.

Title

Role

Project Manager:

Responsibilities

• Recruiting skill full Employees, Identifying the stakeholders, expertise as per the Project requirement.

• Managing the Stakeholders, Project deliverables, Develop and maintaining detailed Project Planning, leading the project team.

• Handling (Resolving, Escalating) the Project issues if encountered any during the Project life cycle, Updating to the action log as part of Lessons Learnt.

• Ensure the Scope of the project is achieved, if any variation order occurs proper planning to be done to overcome it.

• Monitoring the project progress and performance, Status report to the Stakeholders in the form of Newsletter/Email/PPT

• Make sure milestones and deliverables to be achieved as per schedule.

• Inputs from all the stakeholders to be considered and implement it when required & record it.

• Defines the Project structure for the organization.

• Should encapsulate the roles of Contractors, Cost controllers, Schedulers, Risk manager, Operations and Control as an when required during the Project life cycle

Title

Role

Project Leader:

Responsibilities

• Act as Team leader

Title

Role

Project Team Members:

Responsibilities

• Level of participation as designed by Project Leader

• Executing Tasks and Deliverables

Responsibility matrix for Heathrow Terminal in the Appendix

5.2 Methodology

To communicate effectively with better understanding of the project among the Stakeholders, Project managers, Project team members there shall be standard procedures to be followed in a Project management context. The proposed standard form for Heathrow Terminal-5 “Association of Project Management”, which is been agreed and approved by the stakeholders for successfully achieving the Project. For example “The tools and techniques required for the respective phases”

To have Heathrow Terminal-5 to be delivered successfully, British Airport Authority had come up with the introduction of T5 Agreement which is based on the commitment and involvement of both BAA and Stakeholders in achieving the deliverables while overcoming the occurrence of risk. By this agreement the BAA concentrates on the below:

§ Focus on the managing the cause of problem not the effects from them.

§ Work in integrated team irrespective of their different organizations.

§ Focus on proactively managing the risk instead of avoiding the litigation.

Effective agreement for HT-5 was achieved by using the Contract type “ NEC3”

5.3 Control

To overcome the uncertainty in a Project, flow of information should be addressed among the team members and respective authorities for controlling and monitoring. Find the proposed structure for Heathrow Terminal-5, Organization Breakdown structure, Work Breakdown Structure, Project Hierarchy structure, Gantt Chart in the appendix 1234456. Minutes of meeting played an vital role to monitor if any issues occurred.

5.4 Communication

According to Lock (2007) the compliment of good management communications is the provision of adequate feedback paths through and across the organization. These will facilitate cooperation and coordination.

Communication can also be defined as transfer of valid information from an entity to another,

Purpose of a communication plan is to transfer of required information to the audience, associated with respect to those issue/updates/scenarios. Find the below communication flow among the Project team members for Heathrow Terminal-5, also find communication plan for find in the appendix

Communication Plan:

An effective communication strategy as to be plotted by project manager to have a better understanding and coordination among the team members and good Communication strategy plays a vital role among the Team members/Stakeholders/Customers/Clients.

The purpose of communication plan is to overcome the communication breakdown among the project team members and also helps in monitoring the Progress and Difficulties of the Project. Hence the need of communication plan for Heathrow terminal-5 was determined on the basis of the activity’s occurring and a definite completion of the task during the respective phases. The derived communication plan for Heathrow Termina-5 was structured on the basis of the below activities:

Phase

Who

Type

Purpose

How

When

Whom

Deliverables

Phase: Indicates in which phase the meeting is going to occur.

Who: who is going to conduct the meeting?

Type: Indicates the subject of the meeting.

Purpose: Indicates the topics to be discussed.

How: Mode of medium used for the meeting.

When: How frequently would the team members meet?

Whom: who are the participants involved during the meet?

Deliverables: The outcome during the discussion for that meeting.

Please find the communication Plan in the appendix 12345

6 Risk Management

Risk management is the act or practice of dealing with risk. It includesplanningfor risk,identifyingrisks,analyzingrisks, developingrisk responsestrategies, andmonitoring and controlling risks to determine how they have changed ( Kerzner 2009)

The objective of risk management is to identify the potential problems which may occur during the project life cycle, so that risk can be Controlled and Monitored throughout the Project life cycle. Risk management is a constant process which as to be carried out throughout the project life cycle and its conducted in the planning phase. The combination of below process constitutes risk management:

* Risk Identification

* Risk assessment

* Risk Mitigation

Risk Identification:

This process involves in identifying potential risk which affects the project, it’s further classified into Internal and External risk which affect the project in achieving the scope. Internal risks are the uncertainty which occurs by the organization or within the organization like communication and resources; these can be controlled and monitored by the project manager. External risks are the uncertainty which affects the organization/project by the external factors like environmental and downfall in the economy; these risks are uncontrollable by the organization which impacts the Scope. Keeping the above factors for Heathrow terminal-5 the below are identified and classified as

Risk Assessment:

They are requested to evaluate the magnitude of risk factors and influencing factors that appear in the risk mode, also assist in classifying the risk. Considering these the risk assessment is done for Heathrow Terminal-5:

§ Adverse Publicity:

Awareness of the Project to both the customers and stakeholders.

§ Economic:

Funding Issue throughout the Project Life Cycle, Uncertainty of the market (eg: Market Fluctuation, Inflation), Insufficient revenues to repay the debts after the Project Completion.

§ Environmental:

Diversion of two rivers round the west of the airport incorporating many ecological enhancements( eg: Water Quality), Failure to compliance the standards for environmental act (Misunderstanding of process and pathways of the environment), Failure to meet the standard of air quality which defined before the execution of the project, Failure to meet the standards defines in “Control of Pollution Act Section 61 agreement”, Improper waste management will increase the estimated budget( eg: use of recycled product)

§ Local Community:

Making sure the social activity of the people surrounding the construction site will not affect (eg: transportation, Traffic)

§ Political:

Failure to compliance the policies of the government (will affect the progress of Project), Change in Government could lead to change in foreign policies and affect the project

§ Procurement:

Delay of the services/materials from the Suppliers.

Breaching the contract terms and conditions, due to illegal activity from Suppliers (Eg: Information leakage)

§ Technology:

Failure of techniques/technologies used in the project ( Eg: IT System, Design, Data Management)

§ Airport Security:

HT-5 being developed on such a large scale, proactive measures to be taken if any form of threat like Terrorist attack.

§ Corporate Governance:

Failure of align in meeting the interests of individuals and corporations.

Failure to meet the relationship between the participants (chief executive officer, management, shareholders, employees) of the project in determining the direction and performance of project.

§ Communication Plan:

Delivering the required information to authorized people, also make sure there is no breakdown of communication between the two interface

§ Contractual:

Updation of the latest clauses if any during the review meetings, poorly written/executed contracts there is a risk to the organization’s assets, property and reputation. Unauthorized employees signing the contracts, due to non-compliance of contract by suppliers and other contractors. Approving the contracts that are unfavourable to the organization, creating and/or signing contracts without advice/review by legal counsel. Misplacing the approved contracts, having inefficient and inconsistent contract policies and process across the organization. Confidentiality to be maintained by the respective authorities who manage the contract

§ Resources:

Ensuring proper flow of cash from the stakeholders throughout the life cycle, Risk of migration of skilful, resourceful, expertise employee of company to competitive organization, improper usage of limited resources by unskilled employee.

§ Schedule:

Risk of overrun of the budget due to improper scheduling, Risk of Schedule Slip. This can cause a change in scope of project.

§ Cultural:

Risk of differences in opinion. This leads to difficulty in negotiation between supplier and client, Risk of differences in business ethics leads to difficulty in decision making.

§ Design:

Risk of overseeing the specification, assumptions and requirement of the product during starting phase of design, Risk of including the extra cost due to complex design.

§ Organizational Issues:

Any issues with organization impact the progress and decrease in efficiency towards the project. Risk of losing the formed trust and good will from the client point, due to the organisational issues within the company.

Risk Mitigation:

The purpose of risk mitigation is to specify the criticality and priority of risk, what are the effects of the risks, occurrence of the risks and impact of the risk to the organization/people/environment. Acts as tool to Control the risks, like action taken towards a particular risk by choosing the appropriate “Avoid, Accept and Mitigate”, also provides that who is responsible for resolving the occurrence of the risk.

A systematic reduction approach is being used for identifying the occurrence and/or exposure to a risk.On the above approach the Risk Mitigation has been plotted for Heathrow terminal-5, please find it in the Appendix 1234

Risk Matrix:

The purpose of risk matrix is to determine the level of risk (High, Medium and Low), resulting provides information to both Stakeholders/Organization to concentrate and mitigate the identified risk. The rating for the below is derived on the occurrence of “probability and impact”. A contingency plan is also derived to mitigate the risk, below is the proposed Probability-Impact matrix for Heathrow Terminal-5:

IMPACT

RATING

4,5

3

1,2

HIGH

MEDIUM

LOW

4,5

HIGH

Schedule, Communication Plan

PROBABILITY

3

MEDIUM

Economic Procurement Environmental

Resources Organizational Issues, Airport Security

1,2

LOW

Contractual

Legal Issues, Technology, Corporate Governance

Design Political, Cultural, Adverse Publicity

7 Work breakdown Structure

As per PMBOK 3rd Edition work breakdown structure is defined as “A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables.”

The Purpose of Work breakdown structure in Heathrow Terminal-5, firstly it helps the project manager accurately in defining and organise the scope of the Project. This can be obtained by following the traditional method “Hierarchical tree structure”. At each level of tree structure breaks the Project deliverables and objectives to more specific and measurable packages/work packages. Secondly it helps in assigning roles and responsibilities, resource allocation to the Project. Also helps in monitoring and controlling the project throughout the Life Cycle, it helps in estimating the cost, schedule and risk involved in the project for each work packages. Finally, make sure that the deliverables are specific has per the stakeholders and helps in identifying whether the deliverables are repetitive and overlapping. Please find the proposed work breakdown structure of Heathrow Terminal-5 which mainly focuses on Execution phase with a budget of £3120 million and £300 million

Kept apart for the contingency which may occur during the Execution Phase, please find the Work Breakdown structure in the Appendix 1.23

7.1 Gantt chart:

The founder of Gantt chart “Henry Lawrence Gantt” used this tool to show the actual schedule and progress of the project was invented on 1920s and used on large projects from 1931. Gantt chart key feature is that it focuses on Systematic approach rather than algorithm approach, Gantt chart is most effective form of graphical representation hence for Heathrow Trminal-5 such an tool helps you out in sorting your. Gantt charts provide quick and easily understood means for describing the project activities, while network activities can also be determined like Critical Path and PERT. The activities/task may be listed in order of entry of Start date, Finish date, duration and Slack and appropriate to their graphical bars we can find the Start, Finish, duration and slack as well. Gantt chart are also used as project status report, it helps in the project manager in gathering the information have the deliverables met as per the baseline plan. The baseline plan includes both schedule and resources, whether project is schedule overrun, resource allocation and budget status.

The purpose of Gantt chart for Heathrow Terminal-5 is to provide a visibility of estimated schedule and project status for the assigned deliverables/tasks throughout the project life cycle. Also find the derived Gantt chart for execution phase by the team in the appendix 1.24, which includes Critical path method and Milestones.

Critical Path Method:

Critical path can be defined as the chain of events whose flat is equal up to zero, those events which occur in this path are critical to the successful achievement of the project within its earliest possible time. The activities lying on the critical path must to be given Priority by the management and supply resources if required.

Heathrow Terminal-5-Landside civil- Site preparation-Pipelines for heat and power- Structure-Shops and commercial facilities- Safety and security-Testing of runways and building-Landscaping

Mile stones:

As per Dobie (2007), project must be divided into measurable a package, that is actions which will contribute to the achievement of objectives. The project phase as combined related project activities to achieve a logical outcome like major deliverables; these deliverables form the milestone throughout the lifecycle.

Milestones are essential tools frequently used by project manager to control the progress of the project and manage the scope of the project. Also compare the actual costs and progress experienced with the costs and progress planned. The identified four major Milestones for Heathrow terminal-5 during the scheduling of execution phase

Ø Milestone 1: Completion of landside civil process.

Ø Milestone 2: Completion of Terminal 5 building.

Ø Milestone 3: Completion of Airfield and runway.

Ø Milestone 4: Completion of Rail and Road Infrastructure and Testing and Land scrapping phase.

The deliverables identified in the Gantt chart are for Execution phase as below:

1) Landslide civil process

2) Terminal-5 building

3) Airfield and Runway

4) Air traffic Control tower

5) Rail Infrastructure

6) Road Infrastructure

7) Testing and landscaping

8) Site and logistics

The detailed descriptions of the deliverables are as follows:

Task

Deliverables

Targets

Controls

Dependency

Schedule (Days)

Resources

Authorities

1

Landside civil

Site preparation, Pipelines for heat and power stations, Twin river diversion (Construction of two channels, Maundering flow pattern, Maintaining eco balance)

Piles method, Water quality, Waste Management

–

377

Programme manager, Project Manager, Site Engineer, Consultants, Designers, Manager, Team leaders, Labourers

Programme Manager

2

Terminal-5 Building

a) Exteriors (Structure, Bus station, Taxi Stands, Drop Off, Multi story car park) b) Interiors (Shop and Commercial Facilities, Elevators and Escalators, Conveyor belt for Handling baggage, Safety and Security, Tracked transit system) c) Satellite building, Energy centre and hotels

Waste management and use of advance technology

1

853

Programme manager, Project manager, Architects, Software developers, Manager, Team leaders, Labourers

Programme Manager

3

Airfields and runway

60 aircraft stands, Runway and earthworks

Air Quality, Noise reduction

1