Group 1 Lit + Prelim Case

STAKEHOLDER MANAGEMENT: A LITERATURE REVIEW
ACE225 Project Management in Construction

Chalmers Department of Architecture and Civil Engineering
Stakeholder Management:
A Literature Review
Case Study Analysis prepared by Group 1:
Abluch, Inam
Lönnqvist, Ulrika
Maher, Brad
Morosini, Assienah
Date: October 12, 2020
1
Contents
Abstract ................................................................................................................................. 3
Introduction ............................................................................................................................ 3
Method .................................................................................................................................. 5
Discussion............................................................................................................................... 5
Communication and Stakeholder Management ....................................................................... 5
Project Success and Stakeholder Impact .............................................................................. 8
Conclusion ............................................................................................................................ 12
References ............................................................................................................................ 14
2
Abstract
Stakeholder management is a vital part of project management. A structured and well thought
through process of analyzing and managing the stakeholders early on and throughout the whole
project could very well be the difference between the success or failure. This paper presents the
concept of stakeholder management out of a Project Management Body of Knowledge, PMBoK
perspective and discusses findings of the identification and impact of stakeholders.
Introduction
A project is according to the Project Management Body of Knowledge (PMBoK 6th edition), a
temporary endeavor undertaken to create a unique product, service or result. Every project passes
through 4 different phases of the Project Life Cycle which are:
1. Starting the Project
2. Organizing and Preparing
3. Carrying out the Work
4. Ending the Project
The phases may be repeated or occur in an overlap. There are 5 project management process groups
namely, initiating process group, planning process group, executing process group, monitoring and
controlling process group and lastly closing process groups. The process groups include 49 processes.
Project stakeholder management is described in PMBoK 6th edition, as one of the 11 knowledge
areas in project management. Stakeholders are the people, groups, or organizations that could impact
or be impacted by the project. Project stakeholder management entails analyzing stakeholder
expectations and their impact on the project and to develop appropriate management strategies for
effectively engaging stakeholders in a project’s decisions and execution. The knowledge area includes
4 of the 49 project management processes which are to identify stakeholders, plan stakeholder
engagement, manage stakeholder engagement and monitor stakeholder engagement; the processes
are recurrent and performed throughout the project. Every process has an input which is managed by
the use of different tools and techniques which may lead to a revised output.
To identify stakeholders includes analyzing and documenting relevant information regarding

stakeholder interests, involvement, interdependencies, influence, and potential impact on project
success. Each time the identification process is repeated, the project management plan components
and project documents should be consulted to identify relevant project stakeholders. As the work
progresses through the execution phase, the contractors and suppliers may change. These changes
should be reflected in the stakeholder register. The communications management plan should
therefore include a stakeholder list.
3
Planning stakeholder engagement entails developing approaches to involve project

stakeholders based on their needs, expectation, interests, and potential impact on the project. The
key benefit is that it provides an actionable plan to interact effectively with stakeholders. Decision-
making techniques that can be used for this process include but are not limited to
prioritization/ranking. Stakeholder requirements need to be prioritized and ranked, as do the
stakeholders themselves. Stakeholders with the most interest and the highest influence are often
prioritized at the top of the list. The stakeholder engagement plan is a component of the project
management plan that identifies the strategies and actions required to promote productive
involvement of stakeholders in decision making and execution. It can be formal or informal and highly
detailed or broadly framed, based on the needs of the project and the expectations of stakeholders.
The stakeholder engagement plan may include but is not limited to specific strategies or approaches
for engaging with individuals or groups of stakeholders.
Managing stakeholder engagement is described as the process of communicating and working

with stakeholders to meet their needs and expectations, to go through problems and contribute to an
appropriate stakeholder engagement. The goal is for the project manager to increase commitment
and reduce resistance. Activities that are included are to engage stakeholders in different stages of
the project, to manage expectations, risks or possible problems and to highlight and solve possible
problems by clarifying and resolving identified issues. The tools and techniques for this are e.g. expert
judgment which is judgement provided based upon expertise in a knowledge area, discipline or
industry. The expertise is provided by a group or person. Other tools are expert knowledge of how to
handle politics and power structures, environments and culture in and outside of the organization and
knowledge of assessment techniques, communication methods and strategies in dealing with
stakeholder engagement. Interpersonal and team skills can also be used (e.g conflict management,
cultural awareness, the ability to negotiate which is useful in achieving support or agreement
supporting the work of the project or its outcome and resolving conflicts within the team or among
stakeholders).
To monitor stakeholder engagement is the process of monitoring project stakeholder

relationships and tailoring strategies for engaging stakeholders through the modification of
engagement strategies and plans. Key benefits of the process are to maintain or increase the efficiency
and effectiveness of stakeholder engagement activities as the project evolves and its environment
changes. The tools and techniques used are as following but not limited to data representation (e.g.
stakeholder engagement assessment matrix, which monitors stakeholder engagement through
tracking changes in level of engagement for each stakeholder), communication skills through feedback
and presentation interpersonal and team skills (e.g. active listening, leadership, networking, political
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awareness). PMBoK argues that the success or failure of the project is strongly dependent on how
stakeholders are treated during project realization with stakeholders’ satisfaction seen as one of the
key objectives to succeed with project delivery.
Method
The databases used to identify articles on the chosen topic was the Chalmers library articles
search engine (http://www.lib.chalmers.se/) which uses the EBSCO research database and the Google
search engine. The articles were found using a combination of search strings containing the words
stakeholder and management in combination with words such as communication and construction.
The articles used in this literature review are:
Article Author
Effective Communication Management: A Key to Kirti Rajhans

Stakeholder Relationship Management in Project-
Based Organizations
Exploring critical success factors for stakeholder Jing Yang, Geoffrey Qiping Shen, Manfong Ho, Derek
management in construction projects S. Drew and Albert P. C. Chan
From client to project stakeholders: a stakeholder Robert Newcombe

mapping approach
Stakeholder impact analysis in construction project Stefan Olander

management
Stakeholder management through empowerment: Steve Rowlinson and Yan Ki Fiona Cheung
modelling project success
The review also includes one article from the course literature, ‘The changing paradigms of
project management’ by Julien Pollack. The selected articles deal with the shifting paradigms of
stakeholder management when it comes to the lack of a methodological framework in understanding
the importance of stakeholders, their management and impact on projects.
Discussion
Communication and Stakeholder Management

Managing stakeholders can at a first glance be perceived as an easy task. But in-fact, and as
described by numerous scholars it can be a time-consuming process and therefore it could easily be
overlooked. Poorly managed stakeholders could be hazardous and easily lead to project failure.
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Pollack (2006) states that known project management techniques are becoming viewed as
insufficient in the management of complex projects. The paper deals with the role of a traditional
project manager with origins in the defense, engineering, construction and aerospace industries, a
role which derived from the PMBoK guide. While the role of a project manager requires interpersonal
skills in reference to the management of people there is little to no reference to Human resource
management HRM practices which Pollack views as fundamental in a project manager’s role. The
PMBoK instead references external HRM practices. In the PMBoK the planning of how to manage the
stakeholders is an important step before actually starting to communicate. As being highlighted in all
articles a lot of different issues between all involved parties in the project life cycle can easily create
issues later on. A relationship management approach as described below could be one way.
As described by Cheung and Rowlinson (2008), traditionally it has been common to avoid
involvement from stakeholders in construction projects; it has been seen as interference from non-
specialists. A more contemporary approach is to try to get them involved and to apply a relationship
management model to empower the stakeholders instead.
Relationship management is thus strongly related to stakeholder management and could be perceived
as a method.
Relationship management is characterized by:
- trust building
- reduced need for monitoring each other
- reduced need for formal controls
- reduced tension
One of the biggest challenges of project management is to manage the various stakeholders to
avoid political issues arising. Communication is the key factor to avoid such happenings and will lead
to empowerment of the stakeholders. Olander references (Bourne and Walker, 2005) in stating that
a project cannot be viewed as successful if attention has not been paid to the needs and expectations
of a projects’ stakeholders even if the project meets all other requirements when it comes to time,
budget and scope.
Communication management is according to Rajhans (2018) a proactive measure in the
management of all projects' stakeholders. Rajhans (2018) further describes the need for an effective
communication management which are structured initiatives directed towards planning, monitoring
and controlling all communication channels within an organization, such as the development of
corporate communication strategies, the design of internal and external communications directives,
and the management of information flows, which also includes online communication. In the article
Rajhans (2018) references Bournes (2013) framework for understanding the concept of effective
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communication management which suggests that there are five important steps in the management
stakeholder relationships through effective .The steps which are:
1. Identify all stakeholders of the project,
2. Prioritize the stakeholder needs,
3. Visualize and decide the necessary stakeholder management strategy,
4. Engage stakeholders, and
5. Monitor the stakeholder communication during all the project stages. The steps are used in
Rajhans study when it comes to understanding the concept of efficiency in communication.
A content analysis method as suggested by Chinyio and Akintoye (2008) was used in order to
validate given responses. The second part of the study, a questionnaire survey, was prepared and
conducted using a five-point Likert scale. This in order to further examine and validate much of the
confirmed methods of communication in the management of stakeholder relationships, with a focus
on understanding the importance of communication in the management of different parts of
stakeholder relationships. The initial study examined the suitability of various angles of the
questionnaire leading to a revision of the final questionnaire. The participants were a mix of project
managers and assistant project managers from construction, IT, power and manufacturing sectors
across India. Results from the first part of the study show that a majority of the participants viewed
stakeholder management as an important factor in the success of a project. Major issues that were
uncovered when it comes to the management of stakeholder relationships are:
- Information distortion
- Delay in information
- Miscommunication between important stakeholders
- Conflicts between the client and the contractors or internal conflicts amongst
- the project team(s)
- Lack of single point of contact
- Lack of trust amongst the stakeholders
Rajhans (2018) concluded that all above stated issues are because of or in regard to problems
in communication when it comes to managing stakeholder relationships. When it came to the
question of communication as a tool for stakeholder management, communication was seen as an
important tool in e.g. managing stakeholder expectations/engagements, to facilitate project
monitoring and control, overcome resistance to change, for better performance of the project team,
for risk management and effective project leadership. The results of phase 2 showed the importance
of stakeholder relationship management for project success, the role of communication in stakeholder
relationship management, the importance of communication as a tool to manage stakeholder
engagement, and that effective internal communication facilitates better performance of project
team, these were seen as the most important factors in the management of stakeholder relationships.
With these findings Rajhans (2018) concludes that there is a need for methodologies when it comes
to effective communication management, this in order to involve and manage all stakeholders and
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streamline the performance of the project team. Rajhans (2018) sees the above finding as cementing
the importance of effective communications management as a tool for managing stakeholder
management and an indication on the importance of stakeholder relationships when it comes to a
projects' result and success. Successful stakeholder relationships can thus be achieved through
expedient communication that carefully manages stakeholder demands. A method for this is
according to Rajhans (2018) and effective stakeholder relationship through a “well planned strategy”
or if done methodologically according to the figure below. Rajhans (2018) concludes that while there
is a known consensus on the importance of stakeholder relationship management there have been
little to no real attempts in managing these relationships which are of great importance when it comes
to a projects’ success.
Figure 1: Communication Framework for Stakeholder Relationship Management
Project Success and Stakeholder Impact

As defined by the PMBoK, identifying the stakeholders is an action that has to be performed
early in the project life cycle. Stakeholders have often been overseen or confused by the older
definition of client, as it being a single entity. It’s a misconception that clients shouldn’t be involved at
all in a construction project. Newcombe (2002) gives two propositions on what a client is.
1. Client is one stakeholder out of many
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2. Stakeholders with different levels of power and different interests have expectations that
the project manager has to manage.
Mapping the different stakeholders in the project by posing the following questions:
1. Who are the project stakeholders?
2. What do these stakeholders expect?
3. How do the project managers manage these stakeholders?
Stakeholders can be divided into different classes. Through the literature many scholars have
contributed to this classification. Rowlinson and Cheung (2008) limit the different classes to those
identified by Li (2007) and Walker et al. (2007):
- upstream stakeholders - paying customers and end users
- downstream stakeholders - suppliers and subcontractors
- external stakeholders - general community and independent concerned parties
- invisible stakeholders - who engage with the project team in delivering the ultimate project
benefit but whose cooperation and support is vital for project success
- project stakeholder group - project sponsor/champion and project delivery team
Stakeholders interact with the project in two different arenas, Rowlinson and Cheung (2008),
on the cultural arena by ideology and shared values, in the political arena where powerful individuals
and interest groups exercise their powers. This could lead to conflicts if not carefully managed.
Stakeholder interaction with the project through centripetal or centrifugal forces, the centripetal force
is cooperation through the cultural area, and the centrifugal is the force of conflict and competition in
the political arena. ‘Stakeholder analysis through mapping’ is a tool used to determine how likely a
group of stakeholders will enforce their expectations on the project. Which groups have the means to
do so, i.e. the power and the impact their expectations might have on the outcome of the project.
In construction projects it becomes clear that stakeholder identification can be difficult due to
the complexity and uncertainty of most construction projects. Furthermore Young et al. 2009 points
out that project managers in construction could end up missing out on engaging stakeholders due to
unclear objectives of stakeholder management and difficulty identifying “invisible” stakeholders.
Olander (2006) states that managers must try to identify significant and legitimate stakeholders and
respond to their interests and concerns, this is seen as of importance for managing the impact of a
stakeholder’s power in regards to their impact on the success of a project’s chosen plan, which in turn
leads to the need for the identification and analysis of stakeholders. For this analysis Olander (2006)
refers to a stakeholder impact index which is useful in determining a stakeholder’s power to
manipulate a projects’ outcome. On the question of who is a stakeholder Olander (2006) uses
Freemans (1984) definition of stakeholder as “any group or individual who can affect, or is affected
by, the achievement of a corporation’s purpose” which he derived from a from Stanford Research
Institute memo from 1963 stating that “stakeholders are those groups without whose support the
9
organization would cease to exist”. Olander (2006) at the same time brings up the critique of Freemans
definition, being too broad giving everyone the title of stakeholder which diminishes the role of the
stakeholder. Freemans definition has however been adopted by PMI (2004) in its definition of a
stakeholder.
Olander (2006) further investigates the definition using Mitchell el al (1997) definition of a
stakeholder as a person or group of people who has a vested interest in the success of a project and
the environment within which the project operates. A vested interest is defined as having possession
of one or more of the stakeholder attributes of power, legitimacy or urgency. These stakeholders can
be within or outside of a company or project and can be normative or derivative simply put those who
the power is exerted on and those who exert power. When it comes to stakeholder attributes Olander
(2006) points to Mitchells et al. (1997) definition of stakeholder attributes which are dormant,
discretionary, dominant, dangerous, dependent and definitive. Olander (2006) brings up Johnson and
Scholes (1999) statement on the fact that the identification of stakeholder is only one piece of the
puzzle, they propose a technique for mapping stakeholders the power/interest matrix, in which
stakeholders categorization is done based on their power towards the project and their level of
interest. This is further developed by Bourne and Walker (2005) into “the vested interest–impact index
(ViII)”, consisting of the parameter vested interest levels (probability of impact), and influence impact
levels (level of impact).
Olander’s (2006) analysis of stakeholder deals with the impact of external stakeholders on the
implementation of three construction projects: a senior housing project, single track railway and a
housing projects of roughly 1,200 apartments, all located in the south of Sweden, from their
conception up to the beginning of their implementation phase. In the study a variation of stakeholders
was identified for the projects along with their power and influence on the projects. The conclusion
was that the project had not considered external stakeholders leading to them contributing to longer
planning and design processes as they joined together in opposition of the project, leading the project
manager to eventually incorporate their needs in the project. The third project was lucky in the fact
that the opposing external stakeholders did not have enough power as the supporters of the project,
left the opposing stakeholders’ needs unmet. Olander (2006) argues that the importance of
stakeholders is dependent on their possessed attributes with power being seemingly the main
attribute for a stakeholder impact on a project. Legitimate stakeholders are however according to
Olander (2006) the most important as they carry the project risks leading to a need for addressing
their needs. Olander concludes that a stakeholder analysis based on the stakeholder impact index is
useful for proactively planning the structuring of stakeholders and their potential but also for the
evaluation of the stakeholder management process during a project as well as after it is finished.
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A number of critical success factors, CSF have been suggested in the literature over the years.
The CSF is defined as “areas in which results, if they are satisfactory, will ensure successful competitive
performance for the organization”. In a paper Yang et al. (2009) identifies the top three CSF for
construction projects as:
1. stakeholders with social responsibilities (economic, legal, environmental, ethical)

2. stakeholders’ needs and constraints to the project
3. communicating and engaging with stakeholders properly and frequently
Giving the complexity that surrounds the stakeholder management the communication and
setting common goals, objectives and project priorities are crucial. It will be the means to get decisions
made and care taken by decision-makers in stakeholder communication.
Figure 2: Framework for successful stakeholder management in construction projects, Yang et al.
All successful stakeholder management is based on a good communication plan. As described

in the section about communication by Rajhans (2008). Rowlings and Cheung (2008) also stresses that
communication supported by structured facilitation and relationship management activities are
crucial for a good execution of the project. A result of a successful application of relationship
management to the stakeholder management is empowerment. The needs of the stakeholders will by
it be negotiated and tangible outcomes achieved (Fig 3).
In practice the project manager is traditionally a problem solver, taking on the role of expert
instead of a facilitator encouraging participation. Pollack (2006) however states that this form of
leadership is slowly being seen as inappropriate to use in all projects, as participation has been linked
to the failure or success of a project, with low levels leading to the failure of a project. Human relations
become a key factor in influencing the success or failure of a project, due to projects often a result of
lack of proper communication with stakeholders who are not project members. Pollack (2006)
concludes that there is little to no discussion on the theoretical framework of project management
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which he sees as necessary in order to further develop the theoretical framework, stating that an
examination of the literature indicates traditional project management as being heavily established in
the hard paradigm. The influence of the soft paradigm on project management is however expanding
due to authors identifying and questioning held beliefs and inadequacies.
Figure 3: Stakeholder management, Rowlinson and Cheung
The proposed model for stakeholder management by Rowlinson and Cheung (2008) can be
incorporated in the project management body of knowledge to be used generically within all projects.
Such approach would lead to stronger cooperation and collaboration within the stakeholder
management.
Nevertheless, taking the cultural impact into consideration when applying a model to the
stakeholder management is crucial for the outcome, by cultural both corporate and organizational
culture as well as culture in the society is to be counted as important to cover. Building on
empowerment of the stakeholders will build trust and commitment. Thus, create a proactive approach
by keeping the stakeholders informed to resolve emerging issues promptly.
Conclusion
In conclusion every project has stakeholders who are impacted by or can impact the project in
a positive or negative way. Some stakeholders may have a limited ability to influence the project’s
work or outcomes; others may have significant influence on the project and its expected outcomes.
Presented academic research and analysis highlights the importance of a structured approach to the
identification, prioritization, and engagement of all stakeholders. The ability of the project manager
12
to correctly identify and engage all stakeholders in an appropriate way can mean the difference
between project success and failure. The role of the project manager is also changing with a need for
more interpersonal skills in the management of different stakeholders.
13
References
Newcombe, R (2003). From client to project stakeholders: a stakeholder mapping approach.
Construction Management and Economics (December 2003) 21, 841-848.
Olander, S (2006). Stakeholder impact analysis in construction project management. Construction

Management and Economics (March 2007) 25, 277-287.
Pollack, J. (2007). The changing paradigms of project management. International journal of project
management, 25(3), 266-274.
Project Management Institute (2017). Guide to the Project Management Body of Knowledge
(PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI)
Rajhans, K (2008). Effective Communication Management: A Key to Stakeholder Relationship

Management in Project-Based Organizations. The IUP Journal of Soft Skills, vol. XII, No 4 2018,
47-66.
Rowlinson, S, Cheung, Y (2008). Stakeholder management through empowerment modelling project

success. Construction Management and Economics (June 2008) 26, 611-623
Yang, J, Qiping Shen, G, Ho, M, Drew, D, and Chan, A (2009). Exploring Critical Success Factors for
Stakeholder Management in Construction Projects. Journal of Civil Engineering and
Management 2009 15(4): 337-348.
14
CASE STUDY: HEATHROW TERMINAL 5 PROJECT
ACE225 Project Management in Construction

Chalmers Department of Architecture and Civil Engineering
UK Mega-Projects: Heathrow Terminal 5 Project – Success of failure?

Preliminary Case Analysis, Revision 0
Picture 1: T5 Overview (Image taken from http://www.hathaway-roofing.co.uk/project.asp?pid=8)
Case Study Analysis prepared by Group 1:
Abluch, Inam
Lönnqvist, Ulrika
Maher, Brad
Morosini, Assienah
Date: October 12, 2020
1
Contents
Key Words ............................................................................................................................................... 3

Case Introduction .................................................................................................................................... 3
Formal Project Set-up ............................................................................................................................. 4
Project Management challenges ............................................................................................................ 6
Analysis ................................................................................................................................................... 9
What did they do? .............................................................................................................................. 9
What went wrong? ........................................................................................................................... 12
What could/should they have done?................................................................................................ 12
Project Management Practices – A Reflection ..................................................................................... 13
References ............................................................................................................................................ 14
2
Key Words
T5 agreement, T5 Handbook, cost-reimbursable, cost-plus, integrated-teams, stakeholders
Case Introduction
Group One has decided to focus on the interesting case of the London Heathrow (LHR) Terminal
5 Project, which has its origin as back as far as 1982, when the question from British Airports
Authorities (BAA), whom at that time owned seven airports around the UK, was posed whether to
extend Stansted or extend Heathrow; the latter had backing from UK’s premier airline, British Airways
(BA). With BAA’s publication of the proposal for LHR’s T5 starting in 1992 and a planning application
in 1993, the public inquiry started in May 1995. Fast-forward to November of 2001 where the British
government finally decided to fund the planning permission of LHR T5 (Davies, 2008; Khilji, n. d.).
BAA engaged its main client and airport terminal experts, British Airways, along with 60+ main
contractors and suppliers to
undertake this programme on a cost-
reimbursable (cost plus) contract
basis. The design enabled an increase
in capacity of 30M passengers
annually, and allowed the terminal to
handle the Airbus A380, the world’s
largest aircraft at the time (Basu, Little
& Millard, 2009).
The £4.3bn (actual value

fluctuates depending on sources)
programme started construction on- Picture 2: T5 Project (Image taken from http://www.hathaway-
roofing.co.uk/project.asp?pid=8)
site in September of 2002, and was
delivered on time (3 days early, actually) and on budget in March, 2008. The programme consisted of
16 major projects ranging in size from £10m to £200 m and included road and rail links, service tunnels
and all airport infrastructure. It spanned over 260 Ha and comprised of two main terminal and satellite
buildings, respectively, places for 60+ aircrafts, a new 87-meter high air traffic control tower, a 4000+
capacity carpark, new feeding arterial extensions from the M25 (British motorway 25), 600-bed
capacity hotel, all while diverging two rivers and boring 13+ kms of tunnel and added extensions to
the existing Piccadilly and Heathrow Express Underground Line services. The magnitude of
construction work both above and below ground was hard to conceive. “Whichever way you view it,
BAA’s Terminal 5 project is mind bogglingly big”, stated John Milford, T5 Head of Buildings, in 2006
3
(Basu et al., 2009; Carter & Mukhtar, n. d.); and coincidentally it was not delivered without its share
of problems.
Among other things, the terminal was plagued with baggage system failures, huge lineups,
numerous gate closures and flight cancellations etc. on the very first day, and which extended into the
weeks and months forward. Prior to grand opening the programme appeared to have been a feat of
project management success; though after opening and taking into operation, there were (and still
are) different schools of thought which leaves us to ask; was Heathrow T5 a success or failure?
(Bedfordshire, n.d.; Doherty, 2008)
Timeline Overview
1986 – Initial planning begins
1993 – BAA submits a planning application
1995 – T5 Public Inquiry begins
1999 – T5 Public Inquiry finishes (longest in UK history)
2001 – The secretary of state for Transport grants planning consent for the terminal
2002 – Construction begins
2008 – Terminal opens
Formal Project Set-up

The programme’s 16+ projects were split into about 150 sub-projects consisting of 1000+ work
packages. The programme’s system of project management was a uniquely modified two-step
approach. The first step by BAA was creating a standardized process for their routine projects, and
this was done pre LHR T5 project. BAA has 100’s of routine capital projects ongoing at given time; and
had within recent years taken on John
Egan as chairman, who came from the
standardization-heavy automotive
industry. Egan couldn’t fathom the idea
that BAA had no standardized
procedures and that all projects started
from scratch. The second step, which
came specific for LHR T5, was to develop
a modified approach to traditional
construction project contracts, whereby
Figure 1: Taken from Brighton Business School, Tim Brady lecture; eliminating traditional “low-bid, gain on
"T5 - Success or Failure? Managing Mega Projects"
the litigated extra work”, and heavily
4
‘segmented’ contractor approach to construction. Instead BAA took all risk from the very beginning
and promoted the collaboration of all contractors and suppliers through integrated teams (Brady,
Davies, Gann & Rush, 2006; Davies, 2008).
At the programme’s base was the T5 handbook and T5 Agreement. The T5 Handbook,
developed by BAA, its major consultants and with input from ‘first-tier’ frame agreement contractors,
detailed how BAA intended to work on the T5. While
the T5 Agreement was the legal document based
heavily on the Handbook. It outlined the set of
expected collaborative behaviors and rules for all
integrated projects teams. Each ‘first-tier’
contractor was required to read the Handbook and
if they agreed to the content; it then became their
contract. It was an exercise in social engineering, if
you will, by aiming to change traditional
Figure 2: Taken from Brighton Business School, Tim
construction industry contractor behaviors. (Carter Brady lecture; "T5 - Success or Failure? Managing
Mega Projects"
& Mukhtar, n. d.; Gill, 2008)
BAA managed the complex, collaborative programme through a partnering-alliance approach

using a multi-tiered system for suppliers and contractors. BAA had only a direct contractual
relationship with ‘first tier’ suppliers (there existed between 60 and 100, depending on sources and
stage of project) who were then responsible for the appointment and management of ‘second tier’
and all subsequent suppliers or subcontractors in the same T5 Agreement spirit. In perspective, there
were approximately some 500 ‘second-tier’ suppliers, 5000 ‘third-tier’ suppliers and 15000 ‘fourth
tier’ suppliers; and so fittingly was the T5 Handbook ethos, “teamwork, commitment and trust” (Basu
et al., 2009; Carter & Mukhtar, n. d.; Gill, 2008).
BAA implemented all contracts on a sophisticated cost-plus incentive-contract model with

open-book accounting and auditing. However, as mentioned above, unlike other forms of cost-plus
contracts where the risks are traditionally shared between client and contractors, with the T5
Agreement BAA shouldered full responsibility for the risk with the intent of contractors focusing their
energy towards being on-time and on-budget. The client explicitly bearing project risk was a key
innovation that differentiated T5 from many other megaprojects, certainly in that era, and even by
today’s standards (Brady et al., 2006; Gil, 2008).
5
Integrated project teams were created

at the beginning of the planning inquiry to
build the general plan of the facility. They
were instructed under the guidance of BAA
staff, consultants, and using the ‘tiered-
contractor’ approach through the project’s
lifecycle. The contracts, interestingly
enough, did not state exactly the work to be
carried out by first tier suppliers, but rather
it was an obligation from the integrated
teams to ensure appropriate suppliers Figure 3: Taken from Brighton Business School, Tim Brady
lecture; “T5 - Success or Failure? Managing Mega Projects"
provided competence when and where it
was required at the time (Bartlett & Harrison, n. d.; Gill, 2008).
To add, BAA replaced traditional, fragmented and often ‘confrontational-laden’ contracts with
a standardized model that created a competitive yet collaborative environment. They used one master
digital project model (see figure 1 above) that everybody uses, and if changes are made everybody
sees those changes, minimizing/eliminating extra work due to misinformation. BAA retained all the
risks and allowed all tiers of contractors/suppliers to work towards a defined % profit levels with the
expectation of working alongside potential competitors, but as partners – to an extent. And even
though BAA had direct contracts (frame agreements) with ‘first-tier’ suppliers only, they stipulated in
those contracts expectations on how ‘second-tier’ contractors (and beyond) are to be handled, with
the idea to avoid key contracts at that level, which present significant risk to critical path, being let at
fixed prices and suffering from the competitive fate they worked so hard to avoid inside the T5
Agreement. BAA even went so far as to even draft ‘second-tier’ templates in some situations with the
intent to drive the T5 Agreement ethos down the chain (Basu et al. 2009; Brady et al., 2006; Gil, 2008).
To address some obvious challenges, such as site access restrictions and lack of laydown space,
BAA created two offsite consolidation areas where much prefab, assembly and testing could be done,
and allowing those two areas to be a main launching point for the Just In Time (JIT) logistics approach
from the automotive industry and adapted it to their needs; see (5) and (6) respectively, in Figure 1
above (Brady et al., 2006; Gil, 2008).
Project Management challenges

Most all projects face their share of challenges, often in an increasing number that positively
correlates with projects’ size and complexity. Based on the experiences of Group 1 members, how
6
these challenges are managed, usually determine the outcome of a project; all the while keeping in
mind that perception of project outcomes is often subjective, depending on one’s position.
The 11 Project Management knowledge areas as recognized by the Project Management

Institute in their book “A Guide to the Project Management Body of Knowledge”, or PMBOK® in short,
are listed here:
The 11 Project management Knowledge Areas
1. Project Integration Management 7. Project Communications Management

2. Project Scope Management 8. Project Risk Management
3. Project Schedule Management 9. Project Procurement Management
4. Project Cost Management 10. Project Stakeholder Management
5. Project Quality Management 11. Project Health, Safety, Security, and
Environmental Management (PMBOK
6. Project Resource Management
extension)
So, it can be extrapolated that the Heathrow T5 mega-project was not without its share of
problems and issues as well. There were many challenges faced by BAA that affected project
productivity and delivery procedures; the following is a tabular representation of the main challenges
faced by the PM team during the LHR T5 project with recognition of the related PMBOK® knowledge
areas. The categories were determined from the experiences of group members and referring to the
research from Cranfield University , as referenced by Tim Brady (Brady et al., 2008).
7
PM Challenges Category Direct related Secondary (overlap) Comments

knowledge area(s) knowledge area(s)
Project Risk/ Overall Risk All knowledge areas From shared experiences within Group 1, the general census is that
Uncertainty projects within the construction industry boil down to risk
management (accept, minimize, share or transfer); largest and
most complex project undertaken by BAA ever
Financial 4. Cost 7. Communications Cost overruns - £4.3Bn agreed in 2003. As a private sector client,
8. Risk 10. Stakeholder this investment constituted two thirds of BAA’s capital value
(~£6bn). If the budget was wrong the very viability of the company
could have been jeopardized.
Technical 2. Scope 4. Cost Integrated teams planning have different backgrounds, all have diff
5. Quality 7. Communications ideas about design/modelling, site specific conditions (soil, slope,
8. Risk 10 . Stakeholder UG; the ‘new’ IT system (video 29:00); systems integrations, many
diff technologies; emerging technologies, uncertainties surrounding
levels of (expected) change in the work (technology, environment;
the unknowns; tech testing prior to opening; resulted in opening
day chaos - baggage problems, cancelled flights etc.
Socio-political 1. Integration 2. Scope We are dealing with ‘PEOPLE’ – power, politics, organizations
Complexity 7. Communications 3. Schedule (difficult to quantify); numerous stakeholders – poor/excess
10. Stakeholders 8. Risk stakeholder engagement;
Contractual/ Legal 8. Risk 6. Resource What type of contracts and contractors/suppliers to use? So many
10. Stakeholders 7. Communications contractors on different levels; traditional ‘fragmented’ contract
11. HSSE 9. Procurement approach (always ends in litigation)?
Commercial 1. Integration 5. Quality Lengthy Public planning inquiry – longest in UK history (5900 public
2. Scope 6. Resource inquiry documents), 700 restrictive conditions; reputation of
3. Schedule 7. Communications BAA/contractors; rhetoric in press about failures, nothing about the
4. Cost actual complexities leading to public perception
Execution All knowledge areas Sheer project size - number of parts & components, levels of
interconnectivity between the parts of the “system”; site physically
constrained - logistics of materials and personnel, access to site,
restricted working times, airport remained open all while
construction; how to manage a very complex handover interface
Table 1: Project management issues / problems in the case in relation to the 11 PMBOK knowledge areas
8
Project uncertainty and complexity

affect the level of difficulty in managing
construction projects and programmes,
specifically megaprojects such as LHR T5.
When identifying uncertainties and
complexities at an early stage, it is possible
to tailor an approach that will, in the end,
mean the difference between success and
failure in the delivery. From the literature, Figure 4: BAA's approach to Risk management (Bedfordshire)
the running theme for Project Management challenges in the LHR T5 Project focus around poor
stakeholder engagement, ineffective communication, and technical issues.
Analysis
What did they do?
Long-term projects are challenging for all stakeholders involved in general, and for the project
management team in particular. Many uncertainties here in the T5 Terminal project were realized in
pre-construction phases. During the planning stage from 1986 to 2001, a public inquiry in the UK was
launched to analyze the interests of all the stakeholders who can potentially be affected by the
project. It was the longest in UK history lasting from 1995 to 1999 and resulted in 700 restrictions
being applied that the project management team shall consider and deal with. One if the biggest
challenges was the diversion of two rivers in order to be able to meet tough environmental
restrictions.
“The project opening date of 30th March 2008 was set in 2001 and a budget of £4.3bn was
established in 2003. Project was completed within the budget and schedule,”(Case Study-Davies,
2010). “During this planning phase, BAA prepared, developed and refined the approach that would be
used to deliver the project. In a project of such strategic importance and risk for BAA, it was decided
that the T5 Project Director should occupy a position on the company’s main Board to provide regular
reports about the progress of T5 from planning through design and construction to commissioning
and to acquire the resources and high-level support needed to overcome any problems hindering its
progression,” (Case Study-Davies, 2020).
Innovative approaches implemented during the project noticeably distinguish this project, in
many aspects, from numerous others within the same sector and scale worldwide, and UK in
particular. All UK mega project history to date had poor track-records and it was widely recognized.
BAA as an owner and sponsor of the project approached the project thoroughly prepared. In addition
9
to the huge volume of available data for previously completed projects of similar nature was analyzed;
in addition, BAA tried to take lessons from its own completed projects of minor scale as well.
Open book contracts and no-blame attitude: innovative model in mega construction
One of the main characteristics of all failed construction projects was that they all have been
fixed-price contracts with strict risk distribution among the parties involved when risks and
responsibility always transfers to the subcontractor as the party who originally performed misconduct.
This was/is the traditional method of executing contracts within construction business sector for the
majority of projects around the world and may seem logically relevant to the big extent. Economic
benefit is most-often the main goal in the traditional model; no-matter-what goes wrong during the
project (as it often happens), litigation ensures that the faulty party covers all the costs involved. So,
it’s no wonder that these types of projects end up with one party benefiting from results while another
suffering from losses. Sometimes, when it is unclear from circumstances which party shall cover extra
costs incurred, partners end up pointing the fingers at each other to try and avoid losses. This distracts
from the project's goal and transfers toward litigation, where parties then can hardly continue their
joint works. This model of “winner and loser” cooperation is reflected in the interview of Managing
Director of T5 Douglas in 2005. Right tailored form of contract is of high importance in establishing
good level of cooperation amongst different organizations (Schepker, D. J., Oh, W-Y., Martynov, A.,
Poppo, L., 2014).
BAA referenced a benchmark study conducted between 2000-2002 which examined the
traditional construction project approach that looked at every construction project over £1bn in
previous 10 years, and every international airport opened in the previous 15 years. When aiming to
model the T5 project based on statistics available at that point from that benchmark study, it was
predicted that the project would be 25% to 70% over budget, one to three years late and result in two
to 12 fatalities”. (Case Study-Davies, 2010; Brady, et al., 2006). Accounting for the scale of the project
and risks involved, the categorical reluctance to repeat the mistakes of previous projects along with
the stats gathered from their own recent smaller-scale projects, BAA made a rather unusual decision.
They decided to run the project where BAA, as a client, accepted all risks and responsibility, as well as
cover subcontractors’ actual costs and further allocated profit margin hinging on project’s
performance - the open-book, cost-reimbursable or cost-plus contract approach. This greatly
increased collaborative attitude amongst all subcontractors who reportedly no longer considered
themselves as representatives of their organizations but rather as members of the T5 team. In
situations of uncertainty and knowledge gaps, cooperation in the form of alliances allowed access to
the required knowledge and furthermore mitigated the risks involved (Grant and Baden-Fuller, 2004).
Knowledge management amongst members of different organizations is “first and foremost a people
10
issue” Cong and Pandya (2003). Importance of shifting from “knowledge is the power” to “knowledge
sharing is the power” was underpinned by both Al Ahbabi et.al (2019) and Cong and Pandya (2003)
and that was successfully developed by BAA during the project.
Visual, face-to face collaboration is a very effective method of knowledge sharing and
integration within large scale projects (Söderlund, 2009). Sharing the same location by different
project teams during the whole project, facilitated the consolidation of whole-project knowledge,
whereby members existing at the same locale did wonders for encouraging more effective interface
amongst different project teams. Tight collaborative partnerships was the red-thread of the whole
project, whereby if any subcontractors failed with schedule or scope, others within the same segment
would help using their knowledge and experience, rather than blaming and trying to point-out
responsibility, as would be the case in traditional contracting, However, the importance of close
monitoring of such cooperation of different organizations so as to maximize the benefit of it is
emphasized (Park, Srivastava, Gnyawali, 2013).
High technologies: good is better than best
Another strategy implemented was avoiding installation of new technologies that had
otherwise had not been successfully proved during BAA’s previous project organization. This decision
was based on their own study proving that implementation of high technologies may increase risks of
project run over time and cost.
New technique: last responsible moment
Flexibility and agility in such huge projects, where everything must be pre-planned and
scheduled to avoid fluctuations potentially leading to uncertainty, is a luxury which BAA could afford
during the project. Henceforth, they implemented “progressive design fixity” and “last responsible
moment” technique allowing last moment decision making strategy. By doing so, BAA put the
uncertainty factor more “under control” rather than trying to avoid it. To support this technique BAA
developed a virtual simulator which enabled digital coordination of design, integration and testing
processes in real-time (similar to 4D BIM, Digital Twin).
From construction to opening
Construction was completed in time, within budget and followed all safety standards and the
airport was opened at 4.00am on 2008-03-27. This shows how good the project team was with
collaboration and performing the tasks, and how good BAA were in planning and managing this mega
project. We could see that all vital decisions were very well thought out and aligned with all potential
risks and uncertainties; all critical activities were well planned and well scheduled.
11
What went wrong?
The project closing phase, where they transferred from construction to operation was not
without problems. Despite real life simulations being in place 6 month prior to opening, and 72 trials,
the first 12 days from opening could be described as disaster; total chaos with lost baggage, cancelled
flights etc. Total damage estimated at $31 million USD., and an unquantifiable damage to reputation.
How and why this could ever happen with such a perfectly developed project? Answers may lie with
accepting a few factors.
Main focus of BAA was to meet the planned opening date, despite knowing about potential risks
of non-compliance during transfer from construction to operation and trying to eliminate them during
6-month long trials. The handover to operation was not in management's focus and thus lacked the
same thorough approach which was present during planning, design and construction phases of the
project lifecycle. Whole focus was on the countdown-clock till opening day. A quote taken from Davies,
2010 referencing the T5 Project Director who also becomes Board member, which shall [should have]
ease[d] getting support from top management for the whole period of the project, “from planning
through design and construction to commissioning” is evidence that BAA’s project focus was
concentrated up to commissioning to that point only. The handover, and furthermore, operations-
integration was not a priority from the outset, and thus unfortunately did not become one at the final
stages of project completion. Compared with all previous phases, which were risk and uncertainty
ridden, operations traditionally are a more routine process based on following bureaucratic daily
routines and so may seem an easy thing to do. Underestimating the importance of this particular
phase and/or over-optimistic approach may be an answer and should fit the pattern if the same people
who run the project were in-charge for integration of the operation phase. In this case, there was a
risk realized whereby specific required hand-over formalities were omitted. This would almost never
happen in a case where an external actor is subcontracted to lead the commissioning and operation,
and when there is a transfer of responsibility from “contractor to client”, which in turn makes all trials
and final signing off the transfer meticulously done.
What could/should they have done?
Decision to open the airport three days earlier than originally planned seemed to be a political
decision, followed by widespread rhetoric in the press about the project's successful flow. “Brand-
making centric” behavioral pattern should be notably marked here. As reviewed in the course lecture
on “Political and Organizational Pressure” based on Flyvbjerg (2008), when at the earlier [project]
phases, such an over-optimistic assessment of readiness towards operations integration can be
explained by “optimism bias”. Then later, close to construction completion, this simply falls under
12
“strategic misrepresentation” as a result of high political and organizational pressure. The fact that a
dozen or more staff-personnel and public elevators were not operable on the opening day, along with
several baggage code-screening machines not recognizing pin-codes, coupled with unfamiliarity of
building layout and baggage flow structure, etc. also exemplifies the lack of consideration given to
operations handover. The fact that many flights were cancelled on opening day in midst of the chaos,
we can assume that there was a no decision or an over-optimistic approach to opening, whereby they
either consciously or inadvertently decided to address the situation, if and when it occurred. BAA still
could have had an opening, but with much fewer flights so as to allow familiarization with real-time
operations environment, all the while keeping the shortcomings low-profiled until the issues are fixed.
This would have held consistent with BAA’s “last responsible moment” technique, which reportedly
was perfectly used during all previous phases and which could have saved BAA from enormous critics
and additional costs linked to the chaos by flight delays and lost baggage episodes experienced during
the two-weeks days after opening.
Project Management Practices – A Reflection

Despite the T5 project being relatively unique in many terms and the approache used, it was
definitely not an “island” project (Engwall, 2003). All the critical decisions made were based on
analyses of empirical studies of similar cases worldwide as well as techniques and methods proved
during their own prior projects. Thus, experience and knowledge transferred from parent organization
to the project is difficult to overestimate.
13
References
Al Ahbabi, S.A., Singh, S.K., Balasubramanian, S., Gaur, S.S. (2019) Journal of Knowledge
Management 23(2), pp. 351-373.
Ares, E., Barclay, C., Butcher, L. & Mellows-Facer, A. (2009, February 4). Expansion of Heathrow
Airport. House of Commons Library. Retrieved from:
https://commonslibrary.parliament.uk/research-briefings/rp09-11/
Cong, X., Pandya, K.V. (2003), Issues of Knowledge Management in the Public Sector. Electronic
Journal of Knowledge Management 1(2), pp. 25-33.
Bartlett, M. & Harrison, J. (n. d.). Case study 2 – Heathrow Terminal 5 - A new paradigm for major
programme risk management. Retrieved from: https://docplayer.net/20001376-Case-study-2-
heathrow-terminal-5-a-new-paradigm-for-major-programme-risk-management.html
Basu, R., Little, C. & Millard, C. (2009). A fresh approach of the Balanced Scorecard in the Heathrow
Terminal 5 project. Measuring Business Excellence, 13(4), 23-33. (ISSN 1368-3047). Emerald
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e_Balanced_Scorecard_in_the_Heathrow_Terminal_5_project
Brady, T., Davies, A., Gann, D. M., & Rush, H. (2006, January). Learning to manage mega projects:
The case of BAA and Heathrow terminal 5. Retrieved from:
https://www.researchgate.net/publication/28550828_Learning_to_Manage_Mega_Projects_
The_case_of_BAA_and_Heathrow_Terminal_5
Carter, K. & Mukhtar, A. (n. d.). Partnering Heathrow terminal 5. Retrieved from:
https://www.irbnet.de/daten/iconda/CIB17591.pdf
Case Study BAA Terminal 5 Project. (n. d.) Retrieved from:

https://www.scribd.com/document/347802890/Terminal-5
Davies, A. (2010. January). From Iconic Design to Lost Luggage: Innovation at Heathrow Terminal 5.
Danish research unit for industrial dynamics. (DRUID Working Paper No. 10-09). Retrieved
from:
https://www.researchgate.net/publication/43524809_From_iconic_design_to_lost_luggage_I
nnovation_at_Heathrow_Terminal_5
de Valence, G. (2018, May 28). Procurement case study: Heathrow terminal 5 2007. A megaproject
incentive contract. Construction Industry Economics and Policy. Retrieved from: http://gerard-
de-valence.blogspot.com/2018/05/procurement-case-study-heathrow.html
Doherty, S. (2008). History in the making. West Sussex, England: John Wiley & Sons Ltd. Retrieved
from:
https://books.google.se/books?id=IviJxTXRJRAC&printsec=frontcover&source=kp_read_butto
n&redir_esc=y&hl=en&pli=1&auth=1weS88udWMHSPOGdl7ftihcAK0KBKyW5oI82DNq4xLzroc
28k40G55NwVXafCvCZ2z9z0g.#v=onepage&q&f=false
Engwall, M. (2003). No project is an island: linking projects to history and context. Research Policy 32
(2003), pp. 789–808.
Flyvbjerg, B. (2008). Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference
Class Forecasting in Practice, European Planning Studies Vol. 16, No. 1, January 2008.
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Gil, Dr. N. (2008). BAA The T5 project agreement (A). The University of Manchester, Manchester
Business School. Retrieved from:
https://personalpages.manchester.ac.uk/staff/nuno.gil/Teaching%20case%20studies/BAA%20
T5%20Agreement%20.pdf
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of management studies, 41(1), pp. 61-84.
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15

Group 1 Lit + Prelim Case

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STAKEHOLDER MANAGEMENT: A LITERATURE REVIEW

ACE225 Project Management in Construction

Case Study Analysis prepared by Group 1:

Date: October 12, 2020

To identify stakeholders includes analyzing and documenting relevant information regarding

Planning stakeholder engagement entails developing approaches to involve project

Managing stakeholder engagement is described as the process of communicating and working

To monitor stakeholder engagement is the process of monitoring project stakeholder

Effective Communication Management: A Key to Kirti Rajhans

From client to project stakeholders: a stakeholder Robert Newcombe

Stakeholder impact analysis in construction project Stefan Olander

Communication and Stakeholder Management

Figure 1: Communication Framework for Stakeholder Relationship Management

Project Success and Stakeholder Impact

1. stakeholders with social responsibilities (economic, legal, environmental, ethical)

All successful stakeholder management is based on a good communication plan. As described

Figure 3: Stakeholder management, Rowlinson and Cheung

Olander, S (2006). Stakeholder impact analysis in construction project management. Construction

Rajhans, K (2008). Effective Communication Management: A Key to Stakeholder Relationship

Rowlinson, S, Cheung, Y (2008). Stakeholder management through empowerment modelling project

ACE225 Project Management in Construction

UK Mega-Projects: Heathrow Terminal 5 Project – Success of failure?

Picture 1: T5 Overview (Image taken from http://www.hathaway-roofing.co.uk/project.asp?pid=8)

Case Study Analysis prepared by Group 1:

Date: October 12, 2020

Key Words ............................................................................................................................................... 3

The £4.3bn (actual value

Formal Project Set-up

BAA managed the complex, collaborative programme through a partnering-alliance approach

BAA implemented all contracts on a sophisticated cost-plus incentive-contract model with

Integrated project teams were created

Project Management challenges

The 11 Project Management knowledge areas as recognized by the Project Management

The 11 Project management Knowledge Areas

1. Project Integration Management 7. Project Communications Management

PM Challenges Category Direct related Secondary (overlap) Comments

Project uncertainty and complexity

What did they do?

High technologies: good is better than best

New technique: last responsible moment

From construction to opening

What went wrong?

What could/should they have done?

Project Management Practices – A Reflection

Case Study BAA Terminal 5 Project. (n. d.) Retrieved from:

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