Andy McKay

Mar 18, 2007

Heathrow Terminal 5

Terminal 5 is a very interesting project from how it has been approached from a project management point of view. I saw this on Newsnight the other night, and there's a long posting on the subject here.

If the performance of T5 had been in line with those schemes in terms of timing, cost and safety, according to Riley, it would have been 1-2 years late in completing, been 40 per cent above original cost estimates and we would have killed six people. So BAA looked in detail at why these projects had not met their targets.

Essentially a normal project tries to lock the contractors down into taking the risk on, the client provides vague outlines simply because until it's done not everyone is sure how it will go or how things will change. This in the end pushes the risk back to the client but in a more adversarial way.

Any contractor who's been at the end of a contract and been in one of those meetings where you are upset because you haven't been paid enough and the client is upset because they haven't got what they wanted... you know what that feels like. Except the size of Terminal 5 is about 18 gazillion times bigger than one of those projects. When the numbers are that big lawyers get involved really quickly.

One interesting point is this comment:

It is a very open process with the books of the suppliers being made available to BAA, a very different relationship than in many large public sector projects where companies hide behind considerations of commercial confidentiality.

That article was 2005 and it seems that things are going well. Just that for every Terminal 5 there's at least four other projects out there eg: Wembley stadium, Jubilee Line, Big Dig and my favourite the Canadian gun registry. The latter is probably unknown outside Canada but work out the percentage of this overrun:

The registry again became a political issue in the early 2000s when massive cost overruns were reported. The project which was meant to cost approximately $119 million ended up costing over a billion dollars to implement. Documents obtained by the Canadian Broadcasting Corporation now estimate the program cost at $2 billion.

... I think that is around 1700%. Good job Canada.