B.A.

(Hons) Business Administration (Top up)

Management and Administration of Projects and

Operations (BSS056-3)
2019

Heathrow Terminal Five Business report

Name: A.A.D. Amali Chathurya

Student ID: 1822939
Contents
1. EXECUTIVE SUMMARY...................................................................................................................................................1
2. EVALUATION OF THE SUCESS AND FAILURES OF THE OUT SOURCING PROCESSES ADOPTED BY THE T5 PROJECT......2
2.1. What is out-sourcing?............................................................................................................................................2
2.2. Advantages of outsourcing:...................................................................................................................................2
2.3. Disadvantages of outsourcing...............................................................................................................................2
2.4. Failures of the T5 project which had been outsourced:........................................................................................3
2.5. Successes of the T5 project which had been outsourced:....................................................................................3
3. IDENTIFICATION AND DISCUSSION ABOUT THE IMPACTS ON THE CUSTOMER EXPERIENCE OF IT PROCESSES USING
OPERATIONS MANAGEMENT CONCEPTS AND MODELS.......................................................................................................5
3.1. Project management process model:....................................................................................................................6
3.2. Triple Constraints:.................................................................................................................................................7
3.3. Service process matrix:.........................................................................................................................................8
4. Application of a quality framework TQM and associated tools could be used to improve quality standards
throughout the planning and execution project phases.......................................................................................................9
4.1. What is quality management?...............................................................................................................................9
4.2. Dimensions...........................................................................................................................................................9
4.3. What is TQM?.......................................................................................................................................................9
4.4. Principles of TQM: What is quality management?..............................................................................................10
5. CONCLUSION...............................................................................................................................................................12
1. EXECUTIVE SUMMARY

Heathrow Airport is a crucial partner connecting countries together in the world. They stand with a vision, “To
give passengers the best airport service in the world-we will achieve this by making every journey
better.”[ CITATION www1 \l 1033 ]

Heathrow airport is the second busiest airport in the world by international passenger traffic[ CITATION wek \l
1033 ] . And owned Heathrow Airport Holdings and operated by Heathrow Airport Limited. Heathrow airport
has five terminals and only four are active currently. The case study is about Terminal 5, which is the hub for
British Airways and Iberia. T5 opened in 27th March 2008, inception was in 1989 and constructions started in
September 2002. Before the opening of T5, Heathrow operated a half million planes, over 65 million passengers
through 90 airlines across 4 strained terminals. A need for a new terminal rose at that time. T5 has the ability to
handle 3 million passengers annually. With the opening of T5, 70%of British Airways has shifted to T5 and rest
of the 30% moved within one week. Construction budget was 4.3 billion and 60 contractors, 16 major projects,
147 sub projects were run complete the T5. Testing sessions were taken placing October 2007 using 15,000
people for 65 trials public, HAH employees, BA employees and stakeholders were used for trials. Baggage
system trial that were on 400,000 bag gages was a big challenge. And introduced self-service kiosks for check
ins and baggage dropping. Only 60% of the general constructions were completed before the opening date so
HAH didn’t want to change the opening date, and they did it as it was planned with the operational outcome
shows 80% to 85% reached. Even they did some trial sessions for the stakeholders; they were not trained for the
IT system. The whole terminal was a mess on the opening day. The major drawback was the sacrificing of the
completion and testing of IS to keep the opening date unchanged. During the first five days BA misplaced more
than 23,000 bags cancelled 500 flights and made a loss of 16 million euros. This report concludes the
outsourcing processes of constructions, IT systems, and failures, successes of them. Then it describes the impact
of the customer experience of IT process and finally how they could improve project’s quality by applying of
quality frame wok to the project.

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2. EVALUATION OF THE SUCESS AND FAILURES OF THE OUT SOURCING PROCESSES
ADOPTED BY THE T5 PROJECT
2.1.What is out-sourcing?

Outsourcing is an agreement in which one company hires a another company to be responsible for a planned or
existing activity that is or could be done internally and sometimes involves transferring employees and assets
from one firm to another[CITATION wek \l 1033 ]This is a concept which was originated after 1981.

Out sourcing is the business practice of hiring a party outside, a company to perform services and create good s
that traditionally where performed in house by the company’s own employees and staff.[ CITATION Inv \l 1033 ]

2.2.Advantages of outsourcing:

The company can focus on core business.

Increasing the business efficiency

Cost can be controlled

Process will be standardized after the completion.

Less attention for recruitment of staff and labour.

Can improve customer service.

Increase of revenue due to veteran knowledge.

Limited resource and overhead needed.

Risk can be shared in between the core company and the outsourced company

2.3.Disadvantages of outsourcing

Risk of fraud (security and confidentiality issues)

Degree of control is less

Lack of flexibility in taking managerial decisions

Hidden cost cannot be calculated

Communication and quality risk

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 Less control over time scope

Heathrow airport holdings ltd had outsourced the construction of the terminal and the IT system of the terminal
5.Heethrow airport T5 had been planned for 19 years starting from 1989 to march 2008 construction of the
terminal was started in September 2002 construction budget was 4.3 billion over 60 contractor s, 16 Major
projects and 147 sub projects of the construction were out sourced. Halcrow group Ltd ,turn and Townsed
group, Mott Mac Donald Ltd ,Air BP, Laing o’” rourke civil engineering are some of the incumbent first tier T5
suppliers. Information technology systems were designed and installed by Vanderlande industries of Netherland
, who had worked with other large airports in the world.

2.4.Failures of the T5 project which had been outsourced:

Sacrificing completion and testing of IS to keep opening date unchanged

Misplaced more than 23,000 bags, on the first 5 days

Cancelled 500 flights

Loss of 16 million Euros

Staff not trained properly

6 weeks delay of the training

Parking issues for the airport staff on the opening day

Staff security search delays

Uncompleted constructions on the opening day

Out of 275 lifts, 28 were not working

Construction delay caused training delays for British Airways passenger services and Ramp employees

All other training session’s scope were reduced to overcome the limited time period

Server capacity was not enough for the IS

Equipment training was failed for baggages, air bridge jetties and ground handling

Untrained employees were not able to fix unexpected problems raised due to IS

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Booked new flights to resend the baggages which were sorted manually

The loading staff could not login into the baggages reconciliation system and could not use handheld
devices

Flight delays

The unrecognized bags which were not filtered from the IT system automatically send for manual sorting

Could not feed data from the baggages handling systems to the baggage reconciliation system since the
opening day 5th of April 2008, whole day system failed and the system showed a faulty result of security
screening had been done for baggages.

2.5.Successes of the T5 project which had been outsourced:

T5 could handle 35 million passengers alone annually

After transferring 40% of the route and traffic generated by British Airways to T5, all the other terminals
started increasing revenue

Other 90 airlines which were operate by other 4 terminals, also started increasing revenue

All the airlines started to pay more rent to HAH

Newly constructed transit system rail stations and the river systems also were opened with the T5 and
started helping the revenue to be increased gradually

Performed within the allocated budget. The complexity of the construction, HAH wanted contractors to be
on budget and on time to manage the risk that can be raised. So HAH pooled the incentive among the
contractors and the vendors who were on time and on budget got more incentive. This concept led the
vendors and contractors to work collaborate in order to increase the incentive

HAH had shared the risk among the vendors to maintain the quality, scope and to keep the opening date
unchanged

HAH used an open book approach to ensure that the expenditure was accounted fairly

Got a 80% to 85% of outcome from the completion of 60% from the general construction

96 self-service kiosks machines were installed for check in and baggages dropping to drag 80% of the
passengers for the kiosks to save operational cost, for passenger satisfaction, decrease queuing and to reduce
waiting time

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3. IDENTIFICATION AND DISCUSSION ABOUT THE IMPACTS ON THE CUSTOMER
EXPERIENCE OF IT PROCESSES USING OPERATIONS MANAGEMENT CONCEPTS
AND MODELS

T5 project is a huge investment for the buildings and for the IT systems at Heathrow airport. BA and HAH had
spent 4.3 billion Euros for the construction and 75 million was spend for technology. And BAA invested 175
million Euros on IT systems. Software engineers have used 400,000 man hours to develop this complex system.
The system was designed by a collective group of people from British airways authority and Vanderlande
industries of Nederland’s and can handle intra and inter terminal lug gages and actually process 70,000
baggages per day. Automatic identification, explosive screening, fast tracking for urgent bags, sorting and
automatic sorting and passenger reconciliation are the steps that bags have to undergo through the system.
Passengers immediately understood about that there is a failure the baggage system and it is going to be of
massive difficulty and affect them individually. As the airport technology system describe about the IT system,
baggage handling system at T5 is the largest baggage handling system in Europe for a single terminal. Main
baggage sorter and fast tracking systems are the two main systems of it. It system designed, software
development, manufacturing, installation, commissioning and integration of their baggage system were fully
done by Vanderlande industries. They had a strategic implementing team which helped BAA’s baggage
delivery system.

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 .1. Project management process model:

At the initiating stage the project management team should have identifies the project objective, should have
defined the constrains of the project and authorization of the entire project.

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At the planning stage the team should have identified analyzed and clarified the statement of work, the project
plan, the project glossary, assumptions and constrains with regards to the project, critical success factors
immerged, project plan updates.

At the controlling stage performance, status reports, plan change requests should have been dealt with and
change management results, issues of management results should have been taken into proper consideration.

At the executing stage project deliverables and deliverable acceptances’ should have been properly identified
and made the ultimate goal. Actual effort and completion data should have been properly measured. Change
requests and ultimate issues should have been analyzed properly.

At the closing stage which is the final stage of the process the project management team should have evaluated
the product and the vendors. The acceptance documentation should have been evaluated properly and a proper
closure of legal, contract, budget criteria should have been performed. Project archives re-deploy resources
should have been taken into proper consideration and outstanding issues and changes should have been dealt
with regularly.

At the on-going of the project the project management team could have applied past project content and lessons
learned on future projects with regards to the failure made in the past.

“A project management process is an administration process for the planning and the control of services or the
implementation of a project. The results of a process are delivers of the project product, achievement of the
project objectives, documentation of the learning processes”[CITATION WWW \l 1033 ]

A project to be succeeded it needs a set of skills, knowledge, flexibility and creative problem solving ability and
also an effective completion of a project needs a methodological and responsive core processing and abilities.
At the initiating part of the T5 project, the project group should identify the involving processes, activities and
skills that are needed to begin and end the project. Permissions, authorizations, work orders, setting clear time
periods to be completed , teams, budget are some of the stronger parts of the ignition of a project. Assumptions,
constrains, critical factors, project plan update and communication methods has to be planned on the second
stage of the project process model. Then a project needs to use their skills, and knowledge to mitigate
unforeseen circumstances in the controlling and executing stage. The people should guild the project forward
and guard the project to be secured within the given Triple Constraints.

3.2. Triple Constraints:

Scope

Budget Time

A success project cannot compromise any of their 3 constraints. Define the scope of the project, set strategies,
plans and time limits to be done at the beginning stage. A project needs a wide clarification of all project goals,
objectives and expectations to achieve those goals according to the time line and the budget. Utilizing higher set
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of skills for communication to address the team at the complex situations to do the work within the scope,
budget and on time. At the end the project needs a good closure with great reviews, completed necessary paper
work on time. Completion of a project needs a set of dynamic skills and progressive knowledge. The T5 project
to be a “National Humiliation” within the first five days of the opening, it is so critical to study about the project
process model of the T5 project.

3.3. Service process matrix:

Degree of Interaction and Customization

LOW

SERVICE FACTORY( A
STANDERDIZED Degree
SERVICE,HIGH
SERVICE SHOP of
CAPITAL
INVESTMENT)eg:- labour
AIRLINES intensity

LOW HIGH

PROFFESUIONAL Degree
MASS SERVICE
SERVIC of
Labour

HIGH
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Simply, service factory means capital intensive and standardize services. Airline is the most related example for
this category and also the service of an airport or an airline is a standardized service. [ CITATION www \l 1033 ]

Considering about the success part of the IT system at T5, they could handle 35 million passengers and their
baggage annually alone at T5. They have installed 96 self-service kiosks for passenger checking and baggage
dropping it has made 80% of the passengers to save cash of the air line, improve passenger satisfaction and
decrease weighting time at queues and they could sort 70000 bags per day. Introducing this system to
passengers was one of the biggest challenges they had come across. When identifying the weakness of theT5
project the entire baggage system was a failure. Airport staffs were not trained well; T5 made a huge loss due to
the system failure and not trained passengers. Passengers missed their bags on their particular flight and had to
wait to get the baggage from the next rescheduled flights and the whole IT system was a major down turn which
made a Hugh negative impact on passengers.

4. Application of a quality framework TQM and associated tools could be used to

improve quality standards throughout the planning and execution project phases

Quality management is an essential factor that gives frame work to manage the core business activities and to
follow the requirements which give rise to more benefits. Quality management concept supports organizations
to pursue improvements and excellences in a company and it shows the ability of the service to meet or to
exceed the customer expectations continuously.

.1. What is quality management?

“The degree of excellence of a thing” [ CITATION web \l 1033 ]

“The totality of feature and characteristics that satisfy needs”[ CITATION Ame \l 1033 ]

4.2. Dimensions of quality:

One of the major and most important dimensions of quality is “performance”. It simply means “Characteristics
of the products or service”. With regards to this case of the terminal 05, the core characteristic of quality is the
transferring of the passenger and his baggage to the desired destination. But amidst the major failure of the IT
system this core characteristic has not been successfully made in to act. Next dimension is esthetics; how the
passenger would feel about the experience of T5 .Being in queues for a long time and missing the baggage
made the feeling of comfort, luxuriousness and basically the positive appearance of passengers a major blunder.
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As mentioned above a customer would certainly expect above characteristics from an airline service, but the
service has totally failed in accomplishing their goal and has failed in complying with the dimension
“conformance”. The reliability of the service has been a major failure with inconsistency that prevails in the
good quality of the service that they provide.

4.3. What is TQM?

“Total Quality Management consists of organizations wide efforts to install and make permanent climate where
employees continuously improve their ability to provide on demand products and services that customer will
find of particular value”[CITATION wek \l 1033 ]

TQM describes a management approach to long term success through customer satisfaction [ CITATION htt \l
1033 ]

4.4. Principles of TQM: What is quality management?

1) Customer – focused
2) Total employee involvement
3) Provides controlled
4) Integrated system
5) Strategic & systematic approach
6) Continual improvement
7) Fact-based decision making
8) Communication

TQM involves with:

1) Customer satisfaction
2) Healthy customer-supplier relationship
3) Trust and respect between involving parties
4) Keep not changing the requirements of the customer
5) Supplier should help for zero defects
6) Regular monitoring of the work

The quality management objectives of the T 05 project should be;

1) Project should focus customer satisfaction

2) Training and development of the staff
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 3) Continuous improvement of the culture of the project
4) Cost reduction of the project should be a main objective of the project, but where as in this case the
company made Hugh losses from the begging itself.
5) Focus on continuous quality improvement where T05 had no programs on it
6) Every person involves in the project should work towards a common goal but in the T05 project the
airport employees had no idea how to use the hand held devices even.

The case study gives us information about how they communicate the budget constraint to their suppliers but it
doesn’t give us information hoe they communicate the quality policies to the stake holders, hoe should be the
work teams, allocation of the wok for teams and individual participation for each work sections. They didn’t
have knowledge up to what extent the project is standardized. They were in lack of Quality measurements and
quality control units too. T05 didn’t have a mechanism to identify the problems that can occur in the near future
and solving processes. The best part of the T05 failure was lack of knowledge and training for both parties. If
T05 had a better TQM process they could have identified the roots of the problems that can be occurred. A
successful project should have continuous audits with regards to identification of the incompliances with
standards expected a mere audit at the end of the project shall never ensure the delivery of a standard project.
They could use the PDCA cycle or benchmarking for the above purpose. The T05 project group should have
implemented a planning strategic planning session with TQM approach. Organizations should evaluate the
needs and wants of a customer to assure the deliverable’s best outcome both quality management and strategic
planning give a competitive advantage to the company to perform excellence in the society and it’s the bitter
truth that T05 has missed in their project. In order to minimize deviations from predetermined standards, during
the planning session the project group should set, defined and measure the quality targets to assure a quality
deliverable. Quality requirements and quality control measurements ensure the quality standards of the whole
project during the planning and execution faces

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5. CONCLUSION

Managing a successful project is not as easy it seems to be, successful projects undergo difficulties for being
successful and outsourcing is a crucial part of a project grant the control of the project to outside parties. There
can be successes and failures of outsourcing as discussed in this report. Construction delays and scarifying
training sessions on behalf of not changing the opening date. T5 had you be a “national humiliation” at the
very first day. Since the newly installed IS weren’t familiar for the stake holders and it made a huge loss for
HAH. As discussed about the operation process models which is related to IT process in the report helps to
identify and discuss about the impact on the passengers. If T5 had a quality framework, quality measurements
and quality audits throughout the planning and executing phases, T5 would not be a national humiliation

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1. BIBLIOGRAPHY
(n.d.). Retrieved from Investopedia.

(n.d.). Retrieved from www.inlookx.com.

(n.d.). Retrieved from www.slideshare.net.

(n.d.). Retrieved from webster's dictionary.

(n.d.). Retrieved from http://asq.org.

(n.d.). Retrieved from wekepedia.

(n.d.). Retrieved from www.heathrow.com.

American Society Of Quality Control. (n.d.).

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