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Homework answers / question archive / Read the case study below and answer ALL the questions that follow
Read the case study below and answer ALL the questions that follow.
BRITISH AIRWAYS AUTHORITY (BAA) - TERMINAL 5
Overview of the Project
BAA has adopted a partnering technique to its Terminal 5 construction project not only taking full responsibility of all the risks to the success of the project but also securing a commitment towards uninterrupted improvement from its partners.
The Challenges facing BAA
1. Cost over-runs could have a damaging effect on BAA?s reputation, cash flow, balance sheet, and even future survival, given the scale of the project. Similarly, delays must be avoided, as there is a trend in the increase in the passenger numbers. This makes the undertaken project very significant for the BAA.
2. The site access is limited to one main route only. Hence, early planning work inferred that the project would cost over £1 billion more than was affordable and would be delivered two years late if an out-of-the-box approach is not followed.
3. A high degree of evolution is expected during the project by the BAA.
BAA’s response to the challenges: BAA’s approach works on the principles of the Latham and Egan initiatives, but it surpasses any solution so far applied in the UK.
1. The risks are to be borne by the client.
2. The Partners are given more importance than the suppliers - BAA has developed an “Integrated Project Team Approach”, so that the talented people involved with the project stay motivated and organized enough to get the maximum output from them.
Risk management
BAA believes that “project management is a tool of the risk management approach, not vice-versa”. Risk control ratings are set in the overall programme. These ratings cascade through the project’s management and transform into personal plans and objectives of all team members. The data in the system is supposed to be meaningful and purposeful.
The “root cause” of each risk is identified by the risk process which enables the risk to be eradicated in the most effective way. BAA identifies four levels of risk control. The primary objective is to keep all risks between level 2 and 3 in the following scale:
1. The solution does not manage the risk at an acceptable level.
2. The risk is managed at an acceptable level with the possibility of improvement.
3. The solution reached is optimal and cannot be improved upon.
4. The solution excels the level of risk, and should be adjusted.
5. Early on, the most critical risks are identified and where suitable, the solutions are tested beforehand to determine effectiveness of the solution.
An example of pre-emptive risk management
To understand the challenge in erecting a huge roof (that spreads across more than 150 meters), the designers, suppliers, fabricators and the T5 roof team pre-erected the roof abutment structure off-site in Yorkshire. The pilot pinpointed 140 significant lessons. Each had a risk mitigation plan enables in smoother workflow and faster construction on site. Overall, this pre-emptive risk management technique was pivotal in saving at least three months as studied by the project team. In this particular case, the time saved enabled the project team to cover-up for the delays that had previously arisen during the wet winter of 2001-02, which helped to keep the project on schedule.
Key Lessons
1. The risk is always borne by the client.
2. Project management is a tool for risk and opportunity management and not vice versa.
3. Those who are best able to manage the risk should be handed over the management activity, and take over forms of contract that supports a risk management approach.
4. All parties reap substantial benefits from collaborative, integrated working arrangement with suppliers.
QUESTION 1 (40 Marks)
QUESTION 4 (20 Marks)
Effective risk management involves a commitment to risk management by stakeholders, top management, the project steering committee, the project manager and project team members. By referring to a project you are familiar with, elaborate on the risk management principles as theorised by OGC (2009).
Question 5
Using risk management comes with its benefits that surpasses the consequences of not identifying and managing project risks. Articulate what the benefits of project risk management are using examples from a project of your choice. 20 marks answer.
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