In 2001 it was approved by the State of Secretary constructed by BAA a company for the largest organization of airports later bought by a Spanish company. This project was one of the mega infrastructure projects that was nationally celebrated and anticipated. The project costed about £4.3bn was on budget and on schedule carefully executed by the BAA making it to be the state-of-the-art facility with the most minimum fatalities and maximum safety precautions involved. But building the airport was not the only measurement that needed to be considered by BAA and BA (British Airline; the occupants of the Heathrow Terminal 5). On the opening day many challenges were faced by the BA which was due to the lack of strategic management of the car parking, staff duty scheduling, unfamiliarity of the equipment’s by the staff, technical faults in the computer systems which caused hundreds of baggage being lost 54 flights delayed, turning the celebration of a mega infrastructure into a distasteful experience by the passengers.
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Heathrow’s Terminal 5
Constructed by the country’s largest airport construction company BAA and inaugurated by her Majesty herself, attended by many and anticipated nationally. This mega infrastructure, state-of-the-art facility was on schedule and on budget. Where many mega infrastructures fail, this was reconsidered at every aspect and after many repercussions one of the most successful projects of all time.
The Identification and Assessment of Key Challenges
Repercussions are always involved in mega infrastructure projects, this being one of the most anticipated by the nation is one such example that lead to many challenges that the BAA (the owner) and BA (the occupants) faced. Here is a discussion of the challenges faced and how they were resolved.
Key Challenges and How they were Resolved
Starting from its opening day; the staffs were not called as early as they were supposed to be. There weren’t enough parking spaces accessible to the staffs due to which there was an overall traffic and hard to find free parking slots. The smaller number of staffs were then available in check ins, those who managed to reach on time couldn’t access their ID log in in the computer systems which was then resolved by the BAA on the reset of fast password tracking. But when they were logged in they were not aware of their assignments. The infamous baggage issue and overall operation of the technology, the staffs were not educated about it. (Tim Brady, 2009)
How did the project leadership manage and overcame these challenges?
Since many baggage was lost due to the unfamiliarity of the system and the unawareness of their task. The whole management of the passengers were in great chaos and the service was delayed over all. The staffs that were coming late were not aware of the baggage issue hence more luggage was taken in the baggage system and not enough staff to cater to the needs. This problem was later resolved a month after it’s opening, and the luggage error dropped to 1.3 percent. 54 flights were cancelled but the passengers who were coming in were adding to the queue due to the baggage disaster. Another prominent problem faced by the T5 on it’s opening was the overall ground power, this resulted in unavailability of escalators which then caused overall crowdedness and confusion amongst the staffs and passengers. (London Heathrow Terminal 5, 2010)
One other challenge faced was the unavailability of airbridges, as the overall number was underestimated, and which was also new hence the staff was not familiar with it. But once the people became familiar with it the problem was resolved. Even the automated power system failed, the system was reset and restarted and yet another issue was resolved. (Tim Brady, 2009)
Identification of Opportunities for Improvement in the Challenges Faced
As quoted by Eryl Smith, managing director of T5, according to the managing director it is evident that the BAA had an opportunity to revert their shortcomings and employ a greater strategy, as only a neat strategy could enable this airport to serve its true purpose in the future, and for the longer run. This project was focused more on the bigger picture rather the details that jeopardized the functionality of the airport. According to the 2020 report, a purposeful agenda has been laid out that has thoroughly explained the challenges which would eventually shape the construction of terminal 5. It highlighted all the minor and macro issues and emphasized on the importance of “enhancing the everyday experience of airport”. These ideas were eventually taken up by the team, so they may pursue potential solutions.
The stakeholder analysis is of great importance as all the risks, success and failures are considered. The stakeholders share their perception as it focuses on attention to the details, principles and guidelines. The following passage will include the stakeholder’s analysis on the success and failure of the Heathrow Terminal 5 saga.
After the longest public inquiry, with 80 million GBP, heard 700 witnesses and generated of about 100,000 pages of transcript, T5 was initially approved by the Secretary of the State after reviewing the public inquiry report. Several protocols, limitations and conditions were implemented and the local communities’ complaints on noise pollution was also taken into an account. The London House of Commerce emphasized that the overseas visitors would have to spend 10 million fewer nights in Britain if T5 did not proceed, with a loss of GBP 1 billion and another GBP 500 million to the tourist industry. (OECD Publishing , 2016)
The Heathrow Terminal 5 is greatly criticized as the project was delivered on time and on budget with the minimum fatalities but the overall execution of the system after the infrastructure greatly stained the reputations of BA. The consequences involved in the execution of the projects were greatly measures and sought out by the 50 stakeholders involved and BAA, the traditional approach was not chosen, if it was, then an estimated 6-8 fatalities and overrun of 2 years of time and overrun of 40% budget of occurred if they did not choose an alternative approach. BAA carefully studied the risks involved and strategized the construction. (Borne, 2009)
Resolving the stakeholders’ needs and competing interest between private and public stakeholders
With the influence of the stakeholders at hand, T5 agreement was introduced by BAA, in which they agreed to take risks of all contracts for the project and developed the idea of integrating teams with stakeholders from the designers, constructors, builders etc. forming a partnership relationship. The stakeholder’s emphasized that they mainly focused to reduce the risks associated with the projects which is why the integrated team needed to be on the same page and be well acquainted of the overall factors and features involved. BAA promoted problem-solving, collaboration and accessibility of information. In every perspective the construction and the time, budget, scope and quality involved was appreciated. (Borne, 2009)
Opportunity for improvement
This new airport consisted of seamless check-in, designed to eliminate queening, improvements in punctuality and baggage handling. Some of the factors that made the opening day a chaos is mentioned. The lessons were learned, and BAA has managed to relocate 50 airlines at Heathrow associated with the reconstruction of terminal 1,2, 3 all without incident. This gave them the experience and the skills to tackle the challenges that they faced in T5. (Krigsman, 2008)
Funding Model and Financial Arrangements
The Heathrow Terminal 5 cost about £4.3bn. Due to the large and complex nature of the project, BAA chose to take what is a unique contracting approach to this project.
Financial Modelling of the Heathrow Terminal 5 and achieving financial sustainability
They structured the contracts with their vendors such that BAA held all the (financial and liable) risk, which was intended to ensure the contractors would focus their energy to being on-time and on-budget. To accomplish this, BAA had contractors’ risk payments pooled together, which was then used as incentive: If the contractors finished on time and on budget, they would be rewarded with a share from the pool; if there were cost overruns, contractors would lose out on their potential bonuses.
This strategy also encouraged the vendors to work together to solve problems instead of just finger-pointing, as it meant that they all benefit from collaborating and completing their respective projects. Another approach BAA took with the contractual arrangement was to require an ‘open-book’ approach with the vendors to ensure that all expenditures were being accounted for fairly (Airport-technology.com, n.d).
Trade-offs and Impact
According to BAA, 80-85% of the project deliverables were completed on time at T5, compared to only about 60% in the general construction industry, so they feel their innovative approach has worked very well (Blue Skies Thinking, 2005)
The environmental aspects of this mega project should be carefully considered, waste and water recycling method and technologies should be introduced. New technology should be introduced to reduce the noise pollution caused by the airport.
This mega infrastructure project was anticipated the most and it was bound to fail anytime soon. The financial strategy of BAA and the stakeholder’s engagement made the project a successful one. Even the small repercussions were sought out and resolved significantly later.
Borne, D. L. (2009, November 5). Why stakeholders matter. Retrieved from Chief Executive Officer: http://www.the-chiefexecutive.com/features/feature68469/
OECD Publishing . (2016). Country case: Stakeholder engagement during the construction of. Retrieved from www.oecd.org: https://www.oecd.org/governance/procurement/toolbox/search/stakeholder-engagement-during-construction-heathrow-airport-terminal-5.pdf
Tim Brady, A. D. (2009, November 19). From hero to hubris – Reconsidering the project management of. Retrieved from ScienceDirect: www.sciencedirect.com
Blue Skies Thinking (Aug 18, 2005). The Economist.
Airport-Technology.com (n.d.) Retrieved February 8, 2010 from http://www.airport-technology.com/projects/heathrow5/
Krigsman, M. (April 7, 2008). IT failure at Heathrow T5: What really happened. Retrieved February 8, 2010 from ZDNet site: http://blogs.zdnet.com/projectfailures/?p=681
House of Commons Transport Committee. (November 3, 2008). The opening of Heathrow Terminal 5. (Twelfth Report of Session 2007-2008). London: The Stationery Office Limited.
Vanderlande Industries (n.d.). London Heathrow Terminal 5. Retrieved March 19, 2010 from http://www.vanderlande.com/web/Baggage-Handling/References/Major-Hub-Airports/London-Heathrow-Terminal-5.htm
London Heathrow Terminal 5. (2010, March 18). In Wikipedia, The Free Encyclopedia. Retrieved March 19, 2010, from http://en.wikipedia.org/w/index.php?title=London_Heathrow_Terminal_5&oldid=350976938