heathrow terminal 5 construction case study

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Heathrow Terminal 5

United Kingdom

GBP4.3 billion

Cooperation

• British Airports Authority (BAA), a major airport operator, constructed Heathrow Terminal 5 (T5), the largest construction project in Europe in the early 2000s. T5 is a complex multi-modal transport interchange designed to handle 30 million passengers per year over a 260 Ha site. The program included two large terminal buildings, an air traffic control tower, a 14,000-space car park, an airport hotel, and road and railway transport links. In 2008 there were approximately 50,000 people involved in the project. 
• The program was split into 16 projects valued at between GBP10 million (USD13.8 million) and GBP200 million (USD276.9 million) each. These were further split into 147 sub-projects and over 1,000 work packages.
• BAA had never undertaken a program of the scale that Heathrow T5 represented and undertook extensive research prior to T5, to understand what factors made major projects successful. A two-year study included every major construction project in the United Kingdom over GBP1 billion (USD1.38 billion) and every international airport that opened in the past 15 years. The study found that no UK project had delivered to budget, time and quality, and that all the studied airports had opened late. BAA concluded that without a radically different approach on T5, there would be negative impacts to safety, cost, and delivery timeframes. 
• BAA identified two areas that would contribute to poor performance – poor collaboration, and reluctance for project participants to assume responsibility for risk.

Improvement

• To achieve the desired outcomes to budget, time and quality, BAA decided it needed a model to actively manage the risk on the project. It developed a bespoke relational contract (T5 agreement) for use with its T5 tier 1 suppliers, including architects and engineering design consultants, and general and specialised contractors and manufacturers. 
• A totally integrated project team was created between the client and suppliers. This was designed to mitigate conflicts between parties, which incentivised parties to collaborate and foster positive problem-solving behaviours. Suppliers, including architects, contractors, and consultants were co-located and requested to work together from the start of the project to manage risk, including with contractors who were traditionally competitors. 
• The T5 agreement was a cost-plus contract with BAA paying the suppliers’ actual cost plus an agreed fixed fee covering their overheads and profit, based on a partnering approach. BAA removed all the contractors’ risk contingency by retaining all major risks by taking out project-wide insurance covering loss or damage to property, injury, death, and professional indemnity. 
• Risk was pooled into a program-wide ‘risk pot’ for each major component of the project to enable easier allocation based on need and greater financial control. This lowered the contractors’ overall tender costs with the risk managed actively by the entire team. It also underpinned the cultural approach which was one of partnership and transparency.
• In its contract with the tier 1 contractors, BAA stipulated its expectations on how tier 2 suppliers were to be engaged to ensure that its approach was carried downstream throughout the project supply chain.
• BAA mandated ‘open book’ pricing, which involved looking in detail at suppliers’ internal cost structures. Incentivisation of all subcontractor pricing was necessary to achieve the intended outcomes. By using a target cost approach, contractors were aligned with BAA’s goals to deliver the project successfully. The incentive fund was created from the target cost for the whole project and provided a commercial incentive for suppliers to improve on their agreed plans and increase their profit. Any outperformance against the target budgets for each sub-project was split between the contractor, BAA, and a contingency fund until the entire project was completed.
• A long planning and design lead time (15 years) allowed BAA and contractors to refine plans and comply with 700 planning conditions. The planning period allowed for study of every international airport opened in the last 15 years, and all UK construction projects over USD2 billion in the preceding 10 years.
• The trial and testing regime involved favouring already-established technologies, to lower R&D costs. Any ‘new’ technology was first tested on BAA’s smaller airports. 70% of mechanical and electrical engineering components were manufactured off site.

Stakeholders

• British Airways – sole airline user of T5 on opening
• Tier 1 suppliers to T5, including architects, contractors, and consultants.
• September 2002 – Construction commenced
• 14 March 2008 – T5 opened.

Results / impact

• T5 was delivered on time and within its planned GBP4.3 billion (USD8.5 billion) budget, with the success of the commercial framework leading to its adoption by other projects. The integrated project team BAA developed with its tier 1 contractors enabled a collaborative partnership with the development of innovations, practices, knowledge, and tools. 
• The project’s success led to multiple awards: StructE Supreme Award (Best of the Best), StructE Best Commercial / Retail Structure, British Construction Industry Awards – Highly Commended, BCSA 40th Structural Steel Design Awards, RIBA National Award, and RIBA London Award.

Key lessons learnt

• The success of T5 shows that organisations must be willing to undertake new ways of working and delivering projects, such as greater risk retention by clients, risk pooling and project-wide insurance, and integrating or co-locating project teams. Standardised processes created and implemented in T5 demonstrate the need for successful mega-project delivery models. Organisations that have successfully delivered mega-projects can use the adopted processes and systems, while continuing to refine them to deliver the next project. 
• The transparency required in a contractual arrangement used on T5, achieved through use of open-book pricing, can be culturally challenging for some suppliers and may need to be gradually developed, with the understanding that this is the trade-off for the client carrying more of the risk. Additionally, success of this contracting approach requires a strong and competent client (BAA).
• The strong leadership of BAA’s CEO was key to success, with the ability to create a coherent vision aided by the use of key performance indicators to measure success. Organisational change programs also helped lead this mega-project to accomplishment. In addition, the in-house project management capability of BAA was an important consideration in the success of the delivery model.
• Using an aligned commercial approach allows all parties to focus on the technical delivery aspects of the project.

Related case studies

Useful links and related resources

STRUCTURES INSIDER

• Richard Jones
• May 6, 2021

HS2 and Heathrow Terminal 5: A case study on Project Management influence

Updated: Jul 27, 2021

Introduction

Construction projects can vary from very small local magnitude to large national dimensions with inherent features that make them complicated enterprises to run (e.g.HS2) characterised by high levels of complexity, uniqueness of works, uncertainty and extensive planning. Hereafter comes the role of the project manager which is responsible for the development and delivery of a project to the client’s requirements and specifications.

As an established discipline, management of whole projects from client’s idea to funding coordination, project managers (PM) have the responsibility of control and delivery of the procurement, production, administration, design, construction and personnel management of projects. As defined by the Construction Industry Council (CIC) the primary purpose of project management is to add significant and specific value to the process of delivering construction projects (CIOB, 2014).

London Heathrow Terminal 5, UK

The BAA Heathrow Terminal 5 (T5) was designed to add 50% to the capacity of Heathrow and has been described as a complex multidisciplinary project with a peak monthly spend of £80 million. Completed in 2008, T5 used an innovative legal contract, the ‘T5 Agreement’ which in essence was a cost-reimbursable form of contract in which suppliers’ profits were ring-fenced and the client retains all the risk (Potts, 2008).

By moving away from a lump-sum contract, BAA payments to contractors were based on meeting milestones set in that agreement as well as financial rewards of success due to project finishing on time and within budget was shared. Furthermore, by prioritising time and quality over cost, BAA decided to cover the costs when contractors made mistakes with the aim that they would be much more likely to own up quickly to the mistake and hence save money and time since all the risk was on the client’s side.

The philosophy of this project was found successful since T5 finished on time and under the agreed budget (Potts, 2008).

Further Reading

High speed 2, uk.

On the other hand, High Speed 2 has a less successful story. From an original budget of £32.7 billion set in 2012, current speculations of the Oakervee review expects the cost to be around £106 billion as shown in Figure below (Pratley, 2020).

The Oakervee review stresses the need for altering the procurement and contracting model used to cut cost as well as reflect on ways to improve cost estimates at early stages where a better evaluation of cost and time should be considered (Oakervee, 2019).

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Case study: Heathrow Terminal 5

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The BAA Heathrow Terminal 5 (T5 henceforth) is one of Europe’s largest and most complex construction projects. T5 was approved by the Secretary of State on 20 November 2001 after the longest public inquiry in British history (46 months) and when completed in March 2008 it will add 50% to the capacity of Heathrow and provide a spectacular gateway into London. Designed and engineered by Arup, with architects Richard Rogers Partnership and steel manufacturer Severfield Rowen, T5 has been described as engineering of Brunellian proportions.

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London Heathrow Terminal 5 - Building Performance Modelling

IES Consulting appointed as the sole energy and environmental modelling consultant.

• UK's Largest Free-Standing Structure
• Cost: £4 billion
• Won 2008 RIBA National Award
• Won World's Best Airport Terminal 2012 at Skytrax Awards

Heathrow Airport Terminal 5 was by far and away the largest project ever undertaken by BAA, and the move into the state-of-the-art terminal has transformed the flying experience of the 30 million passengers who pass through it each year.

Designed by the Richard Rogers Partnership, not only is the sheer scale of the building both imposing and impressive, but the sweeping waveform roof, which is a single span, provides a building interior with a vast and flexible space that can easily be adapted according to changing needs.

In order to understand and meet the energy and environmental challenges of the building, the design team needed both a new way of modelling the structure and one which was powerful enough to deal with a project of this size and complexity. It was also acknowledged that traditional ‘rules of thumb’ would have been completely inadequate for analysing a project of this scale. Following a detailed survey of the modelling software available and the consultancies who could potentially tackle a project of this scale, building services practice DSSR appointed Integrated Environmental Solutions Ltd as the sole energy and environmental modelling consultant.

The new main terminal building offers a challenge on an enormous scale for building services and the management of the interior environment; the interior space alone could accommodate around 50 football pitches. In addition, the large open spaces, extensive use of glazing and complex systems and processes all mean that traditional design calculations were inadequate to realise the most efficient and effective design.

IES was asked to apply the Virtual Environment (VE) software to analyse critical design factors including: the building’s thermal comfort, airflow, energy consumption, daylight and glare, from concept through to production design.

The VE provided the design team with accurate performance information on aspects of the building’s design such as form and fabric of the roof, facade and solar shading. The selection and sizing of the heating, cooling and ventilation system design could also be examined. Finally, at a later stage, the Virtual Environment was used to check and provide compliance with Part L of the Building Regulations.

DSSR and BAA selected IES Consulting and the IES VE for a number of important reasons. These included:

- The Virtual Environment was the most powerful modelling tool available.

- The unique integrated data model meant that the simulation processed faster and the data and analyses were managed in a controlled and structured manner.

- The software allowed DSSR to view, query and edit the model and simulation results at any time, providing tremendous flexibility.

In addition, IES was the only organisation which could provide the level of expertise and staff to handle the wide range of design and performance issues involved in such a consultancy role. Although no special customisation was required, IES had the capability of adapting the software if the needs of the project demanded.

IES and DSSR collaborated to create and manage the model and its outputs throughout the different stages of the design. As users of the IES VE, DSSR was able to clearly understand the inputs to the model and funnel information through to IES for interpretation and application to the model. This meant that the model was based on realistic information and all elements of the building’s design and operations were accounted for.

”IES and their Virtual Environment software proved themselves over a long period during the concept and definition stages of the services design. Their knowledge of software allowed the level of definition to be easily altered as more information became available culminating in detailed energy, environmental and daylighting models of each major facility. Many complex issues were investigated and the software enabled these to be evaluated and more easily explained to other members of the team using the in built reporting tools. In particular the software made a significant contribution in the calculations to demonstrate Part L2 compliance.”

The Terminal 5 project is an enormous building simulation model and one which pushed the tools to their limits. Very few projects are as large and complex as Terminal 5, however this project demonstrates what is possible with the VE and how building projects of any size can be implemented and benefit from the integrated approach that it offers.

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IT failure at Heathrow T5: What really happened

Anyone having the misfortune to pass recently through Heathrow's new Terminal 5 knows the huge project debuted as a case study in full-blown systems failure. Most reports have focused on stranded customers, a crazed supermodel, and Queen Elizabeth's grand opening speech, which called the terminal "a 21st Century gateway to Britain."

Here's my rundown of the major failures and why this debacle happened.

Project scope. Terminal 5 represents an enormous investment in buildings, systems, technology, systems, and human processes. From ComputerworldUK :

Terminal 5 has cost BA and the British Airports Authority £4.3bn [$8.5 billion] to build and outfit. BA says around £75m of these costs are for technology, while BAA invested at least another £175m in IT systems. The work has involved 180 IT suppliers and seen 163 IT systems installed.

The sheer physical size of the project is impressive. From the official brochure :

Terminal 5's technical complexity matches its physical size. According to the British Airports Authority ( BAA ), "It has taken 400,000 man-hours of software engineering just to develop the complex system, and coding work is set to continue even after the initial installation begins." From CIO UK :

The project is a complex one. T5 will involve 180 IT suppliers and run 163 IT systems, 546 interfaces, more than 9,000 connected devices, 2,100 PCs and “enough cable to lay to Istanbul and back”. It will contain 175 lifts, 131 escalators and 18km of conveyor belts for baggage handling. [British Airways CIO Paul] Coby says that even the construction of T5 involves: “creating a small town with a full telecommunications network for the construction workers, merely to enable the terminal to be built.”

Political fallout. The impact of the problem has hit the highest levels of British politics. The Guardian reports:

Foreign secretary David Miliband also joined the criticism of BA as it emerged that the crisis could cost the airline £50m. Miliband said a furious EU ministerial counterpart, whose bags had been lost at T5, had asked him to reprimand BA and BAA. Writing on his blog, the foreign secretary said he had been harangued at a gathering of EU foreign ministers, days after the terminal's opening was marred by a botched baggage handling operation and multiple flight cancellations.

UK Under-Secretary of State for Transport, Jim Fitzpatrick, testified before the House of Commons under harsh questioning:

The management of terminal 5 is an operational matter for British Airways and BAA, but that does not mean that the Government are not taking a keen interest in seeing that the difficulties T5 has faced since it opened last week are addressed and resolved as quickly as possible. On it first day in operation, T5’s bespoke baggage system was affected by a number of issues. First, there were technical software problems, but more significantly BA’s challenge was integrating teams of staff, and it has been addressing this as a priority.... [N]ational pride has been dented. Her Majesty opened T5 to national fanfare and delight in early March. The following week, when the A380 arrived for its first flight, many of us believed that Heathrow had turned a corner and that the bad publicity of recent years would turn into positive publicity, notwithstanding the importance of scrutiny as regards the expansion. Clearly, that was not the case.

Baggage systems failure. Stranded travelers immediately understood how problems with the baggage handling system affected them personally. A passenger told the BBC :

"Apparently the computer software told the baggage people that the flight had taken off. So everyone in the plane just watched as all their suitcases were taken back into the terminal instead of being loaded on." One baggage worker told the BBC the situation was "mayhem" and that the technical problems had been known about for some time. "They have been doing tests on the belt system for the last few weeks and knew it wasn't going right. The computer cannot cope with the number of bags going through."

Airport-technology.com describes the system:

The baggage handling system at T5 will be the largest baggage handling system in Europe for a single terminal. There will be two systems including a main baggage sorter and a fast track system. The system was designed by an integrated team from BAA, BA and Vanderlande Industries of the Netherlands, and will handle both intra-terminal and inter-terminal luggage and will actually process 70,000 bags a day. Bags undergo several processes on the way through the system including automatic identification, explosives screening, fast tracking for urgent bags, sorting and automatic sorting and passenger reconciliation.

Vanderlande adds technical detail:

The baggage handling system has a total of 12 transfer break lines and 132 check-in desks according to the ‘walk through’ concept for easy flow of large number of passengers. Bags are automatically read, screened and sorted to their final build location via two electrical HELIXORTERS™. Early bags are stored in a BAGSTORE™ warehouse with 4,000 positions, allowing individual access to each bag any time. Late bags can be transported at high speed via BAGTRAX™ directly to the head of stands where the awaiting aircraft are parked. Vanderlande Industries forms part of the T5 Strategic Team and is supported by BAA's Baggage Delivery Team. Vanderlande Industries is fully responsible for design, software development, manufacturing, installation, commissioning and integration of this baggage handling system.

Computer Weekly reports that IBM supplied software components:

The system was designed with Dutch company Vanderlande and IBM. The IBM software works out where the bags are supposed to be going, and logistics software works out the best way to get there.

Car park problems. Among all the other problems, the BBC reports that terminal staff had trouble new parking garages, which exacerbated the other issues. Given everything else, this one's just icing on the cake.

Privacy concerns. The British Airports Authority eliminated biometric security measures (fingerprinting all passengers) immediately prior to the terminal opening due to legal questions. Computer Weekly reports:

Heathrow Airport owner BAA is pulling a biometric fingerprint system at the new Terminal 5 the day before the building opens to the public, after the Information Commissioner’s Office (ICO) raised concerns about the system. The system would have taken the fingerprints of all domestic passengers as they passed through the security gates, and was intended to prevent illegal immigration.

Computing elaborated on this issue:

The Information Commissioner’s Office (ICO) expressed concern that the move may breach data protection laws – even though BAA planned to delete fingerprint data after 24 hours. "We have concerns about the routine collection of fingerprint information from passengers and we will require reassurance from BAA that the data protection implications of the proposals have been fully addressed," said an ICO spokeswoman. BAA will now use a single digital photograph to confirm passengers at the gate are the same as those that check in – a system used in most other international UK airports.

THE PROJECT FAILURES ANALYSIS

Canceled flights, lost baggage, and substantial delays were symptoms that arose from failures in management, planning, and testing on this expensive and complex project.

As reported in ComputerworldUK , the T5 systems represented a massive business transformation effort for British Airways:

The technology has let British Airways create what is believed to be one of the airline industry’s first Order Data Stores (ODS). The ODS will combine customer information from across the complete booking-to-fulfillment lifecycle in a single unified data layer. The software means British Airways can now implement new business processes that bridge disparate global distribution systems and passenger service systems, enabling it to action sophisticated workflows against end-to-end customer orders. BA said the capability is facilitating “the implementation of new business models and help[ing] the airline accelerate its transformation of the IT function into a business enabler to support key business goals and initiatives.”

British Airways CIO, Paul Coby, described the process changes the company is trying to incorporate into T5. From CIO UK :

Originally designed for the automotive industry, the lean model is popular in manufacturing circles as a process management philosophy that focuses on standardising processes in order to reduce costs and time waste and improve efficiency. T5, according to Coby, has many qualities that are similar to a factory, in that it aims to eliminate waste, simplify and streamline processes, create flow and create a culture of continuous improvement. BA uses the lean model to assist the carrier to reduce overheads and manage the enormous task of handling business change and the massive integration challenge involved in this large-scale project. Coby explains that lean involves using simple, repeatable processes and only adopting complex technology when there is no alternative.

Training issues. Given the new system's complexity, staff training and preparation was clearly lacking. BA acknowledged the critical importance of training in the kind of business transformation program that T5 represents. From Computing :

Training and familiarisation procedures were carried out for a year so that staff could test the new IT systems in place throughout the building.

“Delivering more than 200 IT projects was easy when compared to the people element of the plan,” said BA’s programme head of information management for T5, Glenn Morgan.

“Getting people to understand the new role of technology and buy into the new proposition was our biggest challenge,” he said. “For some projects, people were asking for new systems to support their work, but we actually changed the process and brought no IT.”

BA blamed the glitches on problems with "staff familiarisation", which had a knock-on effect on bags and flights. A BA spokeswoman said delays in getting staff screened for work and other technical difficulties had caused the airline problems.

Planning, testing, and software quality assurance (QA). British Airways started system testing a year ago. From CIO UK :

BA’s CIO, Paul Coby told CIO UK [in March 2007] the IT work to support such a large-scale, new-build project was also going well. “Devices are deployed, connections are being integrated and 2007 will be testing year. The airline is moving onto the T5 systems, so they run for a year ready to operate at the new terminal when it opens in 2008. This is the year we put the IT infrastructure and systems in place to manage our people and passengers,” he said.

However, BA underestimated the testing, integration, and release planning required to achieve a trouble-free launch. CIO UK described BA's misplaced sense of invincibility:

Almost every new airport has opened late, cost more and had major operational issues, and, according to [Nick Gaines, director of business critical systems and IT at the British Airports Authority], “system integration problems” are often blamed. “This will not be the case for T5. BAA and BA plan working together for system integration over two years, we’ve been focused on bringing systems together. Integration is not just plugging technology together; it’s about people, processes and systems working together.”

In a moment of understatement adding insult to injury, British Airways CEO, Willie Walsh, commented :

We are working hard to tackle the difficulties we have had with the terminal's baggage system. From time to time problems have developed that were not encountered during the extensive trials.

The systems incorporated in T5 severely taxed BA's planning, testing, and deployment capabilities. In an irony perhaps better suited to a BBC sitcom, the British Airports Authority recently solicited for software quality assurance vendors. In February, 2008 ComputerworldUK reported:

Airports authority BAA has begun looking for a service provider to work with it to help develop consistent IT systems at Heathrow and across the authority’s airports. It has put out a tender for a framework agreement to find suppliers able to risk-assess any new systems it develops – and to monitor and maintain those same systems once they are in use. The airports authority wants any suppliers to maintain software quality by putting in place rigorous development processes and testing procedures prior to systems go-live. And it said it also wants firms to “conduct risk and integrity analyses of proposed system architectures and provide guidance on assurance issues.”

My take: there's never enough time or budget to test, train, and prepare properly for launch. But after the deluge, when problems have been exposed and the bigwigs embarrassed by failure, time and money magically appear. Geez, isn't that always what seems to happen?

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Heathrow Terminal 5 Case Study

Group 6: farhan virji, farshid zavosh, gord elder, michael tsao, shawn chaput, heathrow t5.

In Uncategorized on March 20, 2010 by sfuheathrowcase

Chapter 1 – London Heathrow Airport

After nearly two decades of planning and construction, the highly congested London Heathrow Airport was finally on the verge of opening its much anticipated Terminal 5 (T5).  With its completion, Heathrow would be capable of providing important new capacity for its tenant airlines and increase its overall revenue while improving its public image and status. On March 27th, 2008, T5 would become the new home for British Airways International (BA), currently occupying the largest amount  of space at Heathrow compared to other airlines.  As the profitable summer season approached, both British Airport Authorities (BAA) and BA would be hoping for a windfall of revenue as a result of this expansion.

As typical with many large construction projects, timelines tend to slip and overall completion dates begin to move. The delays tended towards decisions impacting overall quality on a variety of areas such as a marked reduction in testing and staff orientation with the premises.  As these schedules slipped, the topic of postponement, however undersirable, had come up an option.   Any delays in the opening, however, were not to be taken lightly as the demand on the airport’s facilities were at their highest in the summer months.  Any delay would last not only weeks but months, with October being the only viable option to the March opening.  A six-month delay meant a six-month reduction in the expected increase in revenue, a loss of cost recovery options from a massive construction effort, angry tenants, failed contracts, drastic negative political implications and an expected public relations nightmare.  A delay would likely end the careers of many, and potentially place many companies in financial risk. However, to proceed on schedule could risk technical failures, business interruption, loss of confidence and customers and, again, negative publicity.

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