Tuesday, October 17, 2006

Compare and contrast: Terminal 5 and Wembley Stadium

If you can get a copy of today’s FT do so, there is a full page on the Heathrow Terminal 5 project – you can read it online but you need a subscription.  I’ve written about T5 before, and in truth there is little new in the FT piece that hasn’t been reported elsewhere.  Still, it is good to have an update and know it is still on schedule to open at 4am on 30 March 2008.

The thing that makes T5 so interesting is the approach taken by BAA (the owners of Heathrow) to the project.  Rather than take the traditional construction approach of asking “Who can do this cheapest?”  and load the contract with penalty clauses for the sub-contractor BAA has taken the approach that it needs the terminal to open on time so it has assumed responsibility for the risk and is managing it with innovative contracts.

One of the consequences is that BAA has adopted a number of techniques from the Lean production world.  Consequently the project is on time, on schedule and has a superior safety record than most construction projects.

What is especially striking is when you look a few miles up the road: 20 minutes from my house in one direction and I can be at Heathrow in South West London;  20 minutes in a different direction and I’m at Wembley stadium in North West London.  This project is nothing short of a scheduling disaster.

The British football association (who owned the old Wembley and commissioned the new one) took the traditional approach.  They sub-contracted the whole project to an Australian company called Multiplex – who, I believe, have a reputation for suing people.  This project is over budget, late, getting later and drove Multiplex to the edge of bankruptcy.

Of course the FA are OK, they signed a fixed price deal so what does it matter to them?  Well, it does matter, they don’t have a stadium yet and it was a stadium they wanted not financial compensation.  Wembley has been plagued by missed milestones, strikes, sub contractor problems and everything else we’ve come to expect from big construction projects.

Some people, like the former Government Minister David Mellor, seem to think this is quite reasonable:

The former chairman of the government's football task force, David Mellor, agreed, saying: "It's late, but tell me a building project that isn't late.  This is a major project, and I just think that the fact that it may be a few weeks late finishing, in the great order of things... doesn't matter tuppence.” (BBC, 21 February 2006)

Well, Wembley is more than a few weeks late now.  Its currently about a year late and has yet to open.  I don’t know is David Mellor has commented on Wembley more recently, or if he is aware of T5 but I’d really like know if he stands by his comment.

So, why make this contrast in a blog that is normally about software?

As I said before, T5 is built on risk sharing and lean principles, that does matter.  Terminal 5 shows that large engineering projects can be undertaken using these techniques and that they work.  And more importantly it shows that these principles transfer from car building to other areas.