Tuesday, August 23, 2005

Terminal 5 is Lean

wMy local airport is Heathrow. Fortunately I’m not so close that I hear the planes so its mostly upside benefit, on a good day I can leave my place, get the tube to the airport, check-in (or what passes for check-in in these days of online and self-service checking) and through security in under and hour – not bad.

Anyway, I didn’t raise the subject of Heathrow to sing the praises of my house. The airport is in the middle of a major expansion with the construction of a fifth terminal – Terminal 5, this is due to increase the airports capacity by something close to 50%.

The project is massive, to give you some idea, the smaller of the two buildings is bigger than the existing Terminal 4, there are 13.5km of tunnels in the project and its going to cost about £4.2bn – or £4,200,000,000 – about $6.7bn.

For me there is something even more interesting about T5: the project is Lean. The team building the project have borrowed a lot of ideas and techniques from the lean production movement – also called Toyota Production System and best known for just-in-time production.

The owners of Heathrow are BAA (British Airports Authority as they used to be known) and they know Terminal 5 is risk, so risky it could sink the company. They also know their core-competence is running an airport. So, current management theory you would expect them to sub-contract this project to someone like Bechtel. But they didn’t, they took the attitude: this is so big a risk we have to manage it ourselves.

Because T5 is being built within the existing Heathrow perimeter space is at a premium. So stock is held offsite or brought direct from the supplier. There is only 24 hours of materials on site at any one time, if there is a delay it will be noticed quickly. Even if you had more space it might not be that useful, there is only one road in and out of the site.

When they came to raise the roof they took all the parts and sub-contractors to a large field and had a dry run. They then took it apart, took it to Heathrow and did it for real. now that’s real team building and training.

Then there is bonus payments: these are pooled, all sub-contractors share a bonus pool so there is an incentive to work together not waste time throw blame around. And if there is an unseen problem to solve, well that’s paid for out of the bonus pool too.

I could go one but I’ll leave you to read more yourself. There is a good piece in the Economist this week, and from last year’s Economist. Pieces crop up elsewhere, like the BBC’s In Business radio programme so keep your eyes and ears open.

What’s really interesting here is the way lean is breaking out of the production system. it came from car production, I know it in software and its gaining ground in the construction industry (check out Last Planner and the Lean Construction Institute.) For years people have pointed to the construction industry and said “they know how to plan and deliver” – thing is they don’t. How often is a construction project late and over budget? And unlike in software when you construction project goes wrong people get killed.

I used to think that the software industry took wrong turning somewhere about 1970. It decided to follow big Methodologies and project planning. I’m starting to wonder if the whole world took a wrong turn.