Tim Brady in the Oulu Smart City Seminar on Wed 6th May, 2015

Managing mega-‐projects: comparing Heathrow Terminal 5 and the

2012 London Olympics'

Prof. Tim Brady University of Brighton, UK

Business in Built Environment Workshop May 6, 2015 Smart City Seminar Oulu, Finland.

Why do projects fail?

“Projects exhibit high failure rates because senior managers and project teams underes8mate, up front, the extent of uncertainty and complexity involved in their projects and fail to adapt their management style to the situa8on.” Source: Shenhar and Dvir, 2007 Reinven8ng Project Management, Harvard Business School, Boston MA.)

Is there a beYer way?

Back to the 1950s

Two approaches

Characterised by

Mr OpZmizer and Mr SkepZc

See Klein, B.H. and Meckling, W. (1958), “ApplicaZon of operaZons research to development decisions”, OperaZons Research, Vol. 6, pp. 352-‐63

Mr OpZmizer systemaZcally analyses and compares all the alternaZve promising final systems makes esZmates about the performance all the subsystems and components might achieve by the target date matches these alternaZves to a detailed model of the future operaZng environment then, according to some criteria for choosing the most efficient system among the alternaZves, a choice is made which end-‐product is best

Mr SkepZc refuses to define what is opZmal at an early stage contracts for several prototypes to be developed in the overall programme maintains flexibility by commifng resources to the development in stages, constantly reviewing enables learning to take place which allow beYer decision-‐making at later stages

Klein & Meckling’s findings If Mr OpZmizer’s assumpZons (guess) about performance of the single choice prove correct then certainly that soluZon will be more efficient But if they turn out wrong then there are serious consequences in terms of inferior quality, major cost escalaZon and schedule overruns Mr SkepZc’s strategy is ojen the most efficient

Why do some megaprojects succeed?

Any QuesZons?

Heathrow Terminal 5

•  Europe’s largest construcZon project £4.3bn

•  New infrastructure – system of systems

–  2 main terminal buildings –  60 aircraj stands –  baggage handling system –  600-‐bed hotel –  4,000 space car park –  Road and rail extensions –  Air traffic control tower –  2 rivers diversions –  Major tunnelling and excavaZon

London 2012 •  Large project -‐ original budget £8.1bn •  New infrastructure – system of

systems –  The Olympic stadium –  AquaZcs centre –  Velodrome + BMX track –  Basketball arena –  Eton Manor –  Olympic village –  IBC/MPC –  Energy Centre + associated

underground networks for gas, electricity, water, telecoms and sewage

–  Waterways, Wetlands, Green spaces/parklands, 30 bridges, underpasses, new road and rail links

Challenges they faced London 2012 Olympics •  Large and complex

construcZon programme •  MulZple stakeholders, some

with conflicZng objecZves •  Dual objecZves of delivering

the games and providing legacy benefits

•  Large public sector investment

•  Extremely high public profile •  Huge reputaZonal risks for

government and country •  An immovable deadline –

opening ceremony to take place on 27th July 2012

Heathrow Terminal 5 •  Largest and most complex

project undertaken by BAA •  Planning Inquiry: 700

condiZons •  Project risk: cost overruns

could affect survival of BAA as a company

•  T5 site: physically constrained; logisZcally challenged

•  Heathrow had to remain in service while T5 was built

•  Systems integraZon: many different knowledge bases and technologies

•  BAA set a deadline – T5 to open end-‐March 2008

•  structural complexity was dealt with by breaking the project down into 4 main areas and 147 sub-‐projects and the single model environment, pre fabrica7on

•  to deal with socio-‐poliZcal complexity BAA introduced the T5 agreement and integrated teams

•  emergent complexity was dealt with by BAA accep7ng all the risk, re-‐imbursible contracts, incen7ves to innovate during the project and the just-‐in-‐7me logis7cs

•  uncertainty was dealt with by early experimenta7on and standardisa7on of major components, by pre-‐assembly, by off site tes7ng to prove constructability, and a policy of not adop7ng untested technologies

The Heathrow T5 approach

•  structural complexity was dealt with by breaking the programme down into 70 projects in 6 different directorates –  Infrastructure; Venues; Security; LogisZcs; Village; Transport

•  socio-‐poliZcal complexity was dealt with by introducing strong governance with clear responsibili7es for assurance and repor7ng -‐the ODA appointed an experienced Delivery Partner (CLM) to oversee the whole programme and each project had its own management structure and was led by a Tier One Contractor who was accountable for delivery

•  emergent complexity and uncertainty were dealt with by using familiar partners and the loose-‐7ght approach and not adop7ng new technologies

The London 2012 approach

Observations from the cases •  both projects/programmes were complex in all forms: structural,

socio-‐poliZcal, and emergent and subject to strict Zme constraints

•  BAA was an intelligent client with in-‐house capability delivering serial projects/programmes

•  London 2012 was a one-‐off but the ODA was an intelligent client that led the approach and appointed a capable delivery partner

•  BAA adopted a single approach to contracts – the T5 agreement; ODA had a variety of contractual arrangements depending on the complexity of the project but both supported collaboraZve pracZce and integrated team working

•  neither T5 nor London 2012 did anything radically new •  both T5 and London 2012 had a long Zme to plan and prepare •  both exploited learning from earlier projects •  both had large adequate budgets

The hybrid opZmiser/skepZc model

Strong Client leadership and involvement Strong governance – assurance and reporZng CollaboraZve working – integrated teams Flexibility – ability to have different contracZng approaches in sub-‐projects according to the situaZon Adaptability – able to respond to changes Learning

The OpZc Model of Project Success

Strong Client

Strong gover-‐nance

Collab-‐oraZve working

Flexi-‐bility

Adapt-‐ability

Learn-‐ ing

Any QuesZons?

Tim Brady in the Oulu Smart City Seminar on Wed 6th May, 2015

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Transcript of Tim Brady in the Oulu Smart City Seminar on Wed 6th May, 2015