The transition imperative: from project to operations

Transcription

1 The transition imperative: from project to operations Dr Andy Davies* Breakfast Seminar, Friday 17 th June 2011 BI, Norwegian Business School * Innovation and Entrepreneurship Group Imperial College Business School

2 Project vs operations An organisation s activities are divided into two parts Each requires different skills and capabilities Projects unique, one-time initiatives e.g. launching new products, new organisations, or new ventures, improving existing products, and investing in a company s infrastructure OUTPUTS Operations repetitive, ongoing activities e.g. manufacturing, service and production OUTCOMES

3 The transition imperative: from project to operations Handover between the project and operations = crucial interface in the life of a strategy Transfer projects crisply to operations to reap the benefits This includes translating and connecting program and project outputs into ongoing operations to achieve the tangible outcomes the projects or programs were designed to create Morgan, Levitt & Malek, (2007) Executing Your Strategy Operational outcomes create solutions for customers

4 Transition challenges At transition, the world my be very different that it was when we put our plans together, Morgan, Levitt & Malek Opportunities to improve the thing we have built Organisations involved see things differently Customers have changed their view of the world Competitive landscape has changed New technology has changed, etc The smooth transition of projects and programs relies heavily on the alignment of outcomes and outputs to the original business case plus changes that have become necessary during the duration of the project or program, Morgan, Levitt & Malek

5 Commissioning and start up activities End of project requires more centralised structure Testing, quality assurance, systems integration End users learn how to operate the new hardware and software Design freeze limit design changes to the absolutely essential

6 Case example: BAA (British Airports Authority) BAA (owned by Ferrovial) owns and operates 6 UK airports: Heathrow, Stansted, Glasgow, Edinburgh, Aberdeen & Southampton Projects to maintain, renew and build airport infrastructure (runways, terminals, and connecting transport links) Operations day-to-day running of airports (handle airlines, passengers and cargo, safety and security, and retail) Customers passengers, airlines, retailers, transport companies, businesses, etc.

7 BAA s Heathrow Terminal 5 Project State-of-the-art terminal for British Airways at London Heathrow - 30m passengers per year Huge risk for BAA 4.3bn - largest construction project in Europe Biggest project BAA undertaken Performance and outcome Innovation in project delivery Delivered on time and within budget and good safety record Opened 4.00am 27 th March days early Landmark building

8 BAA knew about the challenge of opening airports We have a dozen benchmark programmes that we look at, and steal the lessons from them. We say look, airports don t open because that s what happened at Denver, that s what happened at Chek Lap Kok, and all the risks that happen in these programmes we know about, and we have documented, and we re putting in to our live, risk management process here Wolstenholme BAA T5 Project Manager, interview (2006).

9 Operational readiness Final phase of the project A joint BAA and BA start-finish team worked for over 3 three years to ensure that systems, people and processes would be prepared for the opening at 4.00am on 27 th March 2008 BAA began handover of terminal to BA in September months of systems testing, 72 proving trials, each involving 2,500 people 16,000 members of the public to test every aspect of the building: car parking, check-in, baggage systems, IT and security

10 Huge expectations of success Queen visited T5 two weeks before opening: It gives me great pleasure to open Terminal 5 this 21 st Century gateway to Britain and, to us, the wider world Mike Forster, BAA Strategy Director: We have a worldclass baggage system that is going to work perfectly on day one

11 Operational handover: from iconic design to lost luggage 27 th March 2008: Chaotic opening cost BA 17m in first five days Misplaced over 20,000 bags Cancelled 501 flights First full schedule 12 days after opening One year after opening: IATA best passenger experience in world

12 Systemic failure on the day of opening 1. Staff & passengers arriving at 4.00am had trouble locating car parking spaces Shortage of car parking spaces; overflow car parks not open 2. When staff reached the terminal building there were problems with signage Check-in attendant told the BBC: we don t know where we are going; we have been given no maps, no numbers to ring 3. Baggage handling system problems occurred after staff got through security Staff unable to log on to computer system, which allocated tasks But BA check-in staff continued to load bags Not enough baggage handlers to take luggage off underground conveyors Passengers experienced long delays before picking up baggage and continuing their journeys baggage handling system failed

13 What went wrong during the transition? There was a growing belief within BAA and BA that they could emulate what Lufthansa had achieved at Munich airport and move in one go to a fully operational facility. However, the associated increases in the complexity and scale of the task, and the difficulties entailed in sorting out problems when they occurred, were not fully appreciated Unfortunately staff who were on duty on the day of the opening should have ideally been trained the day before, and not six months earlier, so that it was fresh in their minds, an approach which was adopted on subsequent moves with successful outcomes Mike Forster, Formerly BAA Strategy Director interview, (2011).

14 What lessons have been learnt? A Government report concluded that the chaotic opening could have been avoided through better preparation and more effective joint working between BAA and BA (House of Commons Transport Committee, 2008). A major cause of the problem was BA s decision to press ahead with the opening in the knowledge that its staff had insufficient training and familiarity with the terminal s facilities and baggage handling system (Done, 2008; Williams & Done, 2008)

15 Lessons: engage with the customer There was one relationship that we didn t invest enough time in and that was some of the operational relationships with the end user, British Airways. And it would seem so simple looking back that that was probably the most important relationship of all. It was avoidable. Andrew Wolstenholme, Formerly BAA T5 Project Director, interview, (2009). With the benefit of hindsight it would have seemed more obvious to have done the move into T5 in more incremental steps, Andrew Wolstenholme, New Civil Engineer

16 Align project outputs and operational outcomes Outputs The tangible things a project creates Systems Hardware Software Processes Documentation Outcomes The results that the outputs create for the customer Greater productivity Better performance Faster response time Enhanced ease of use Transition executed as predictable, repeatable and orderly process Transition with little disruption to operations Operational part of the organisation should play an integral role in selection, oversight, and implementation of project goals The ongoing operation part of the transition is part of project management

17 The London Olympics: What could possibly go wrong?