British Airways London Eye - The Millennium Wheel - Operations management.
CONTENTS
Sr. No. TOPICS Page No.
. Part A: Executive compensation and Agency theory 2
2. Stages of project London Eye 3
3. Project Environment 4
4. Project Definition 7
5. Typology of London Eye 13
6. Project Planning 16
7. Project Control 21
8. Critical evaluation of planning & control 22
9. Conclusion 24
0. Bibliography 25
1. Appendices 26
INTRODUCTION
British Airways London Eye ('LE /The Millennium Wheel') is a remarkable piece of engineering in the heart of London offering visitors, a unique opportunity for a panoramic view of London. The concept of the wheel was an ideal symbol for London in the Millennium - representing the turning of the century. The wheel was an outcome of the united efforts of the project team comprising of Mace Ltd, Tussauds Group, Marks Barfield (the original conceiver of LE) and other specialists from different European nations making this masterpiece truly European.
Though the project was agreed to be sponsored by British Airways ('BA') back in 1996, LE was faced with contractual and technical challenges that delayed the project till February 2000. But the wait was worth the discrete experience of the memorable and ecstatic ride at LE.
This report discusses the issues central to the concept of planning and control of operations management of LE and analyses the following:
> Environment of LE;
> Typology of LE;
> Definition for the Millennium Wheel.
STAGES OF LONDON EYE
Every project can be divided into stages for its effective management. For the purpose of this report, project LE has been divided into four stages as discussed (figure 1).
STAGES OF LONDON EYE
Fig 1
SCANNING PROJECT ENVIRONMENT
Project environment comprises of all the factors which may affect the project before, during & after completion. It determines the setting and circumstances in which the project is executed. A feasibility study of the project environment is conducted prior to project initiation since the environment influences the way project is carried out and is also the main determinant of uncertainty surrounding it.
Project LE was conceptualized, structured and erected bearing in mind its environmental factors that influenced the planning and design of the wheel. Following variables comprised the environment of project LE during its operations (figure 2).
ENVIRONMENT OF LONDON EYE
Geographical environment
The geographical location of LE was attractive and appropriate for shipment of wheel parts using water transport. However, LE was faced with severe construction restrictions owing to limitation in space for storage of parts or lay-down areas. The tidal changes of River Thames and threat of interference from commercial shipping were come of the geographical factors affecting LE's operations.
Economic environment
The economy was stable with inflation rate of 1.1% in 1999 [Allis, A., (2003), Lecture notes] during LE's operations. The trade relationships with European nations were steady (contractors from all parts of Europe as LE's team).
Legal and Ecological environment:
Building restriction on foundation size of LE was imposed under the prevailing land rights law. Also, Environment Agency imposed restrictions on river-bed activity due to ecological reasons.
Resource environment
Resource environment broadly comprised of the following:
> Finance - LE was financed by Westdeutsche Landesbank and Sumitomo Bank;
> Human - professionally skilled engineers and management staff for LE's design and construction;
> Technology and material - design and technical support from specialists (Poma and Hollandia);
Contractors/Suppliers
European specialists were contracted for the project design and technical support of LE. (Example: bearings from Germany, cables from Italy)
Social environment
There was high involvement and support of media and mass spectators (local and international) to LE's site making it a highly visible project.
Customers
This project was innovative and technically complex creating anxiety among potential customers who were reasonably supportive during its operations.
National Culture
LE's operations involved different contractors speaking different languages from different parts of Europe creating language barrier during operations.
PROJECT DEFINITION
According to Slack, N.et al (2001), a project is a set of activities with a defined start point and a ...
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Social environment
There was high involvement and support of media and mass spectators (local and international) to LE's site making it a highly visible project.
Customers
This project was innovative and technically complex creating anxiety among potential customers who were reasonably supportive during its operations.
National Culture
LE's operations involved different contractors speaking different languages from different parts of Europe creating language barrier during operations.
PROJECT DEFINITION
According to Slack, N.et al (2001), a project is a set of activities with a defined start point and a defined end state, which pursues a defined goal and uses a defined set of resources.
LE was a well defined project with a definite output of creating a technically innovative wheel of premium quality and high safety within defined time period of 16 months.
Defining the project helps understand its objectives, scope and strategy. Definition of Millennium wheel contains the following three elements.
OBJECTIVES
Objectives are the end points towards which all activities are directed. LE had clear and measurable objectives with a definite mission statement of creating a unique engineering masterpiece with a perception of high customer utilisation to enable an early break even to the project.
The entire project's objectives were well connected with the objectives of the individual tasks within the project. LE's objectives and its significance can be illustrated in the form of Polar Model (figure 3) where each of the project objectives is rated on a scale of five.
. QUALTIY /SAFETY (rating = 5)
LE was a high risk project with BA's image being at stake till the completion of LE; hence quality was measured in terms of safety. Safety was the highest concern throughout the operations. Projections of 2.2 million customers in the first year of operation prompted confirmation to quality/safety.
2. SPEED (rating = 4)
LE was to be launched by the turn of the millennium and BA's project commitment in terms of time and image was subject to its safe and timely completion. Any delay in
operations would have a knock-on effect on project cost (initial estimate £11 million rose to £75 million), making operation speed an important objective to the project.
3. COST (rating =3)
LE was a capital intensive project, supported by two international banks. Project budget estimates were made having analysed the capital investment vis-à-vis breakeven point. Cost deviations had a direct effect on the expected net present value of LE, but in hierarchy of importance cost was only after safety and speed.
4. DEPENDABILITY (rating = 4)
LE was reliable in terms of timely delivery of project. The team involved was reliable in terms of timely material supply on site.
5. FLEXIBILITY (rating = 3.5)
LE was moderately flexible in its operations (changes in design and delay in operations). However, the project was not well equipped against contingencies as there was no plan B (alternate plan).
SCOPE
Scope is a boundary-setting exercise that sets the framework within which tasks need to be preformed. LE had a limited scope (wheel design to suit the environment, wheel completion by millennium) within which multiple complex tasks were to be performed. Responsibilities of LE's contractors/suppliers were defined and unambiguous.
Example: Contractors used various operational techniques like Just-In-Time ('JIT') and Materials Requirements Planning ("MRP') to perform their roles without ambiguity within the set project scope.
STRATEGY
Strategy is the most feasible alternative of handling complex tasks to achieve the defined objectives.
After assessing the present and anticipating the future, LE opted for specialisation of tasks by allocating the project responsibility, design and technical support to Mace Ltd and other specialists for attaining optimum utilisation of resources.
The project strategy consists of phases and milestones set in each phase of project LE.
Design phase
Designing the wheel to withstand high winds and dampen any natural-frequency resonance by use of technology and engineering was allocated to European specialists to enable LE to reap benefits of specialisation and economies of scale (figure 4).
Fig 4
Integration phase
JIT system was implemented to signal the appropriate specifications of materials at the right time to facilitate organising and assembly of wheel parts on site most effectively.
Testing phase
The testing phase examines the quality and dependability of the project. LE was test-run successfully for 490 hours, but faced a technical challenge in the last 10 hours of its safety test-run. LE adopted the strategy of involving the media to gain their support in prioritising quality and safety over time as their objective.
Delivery Phase
LE was completed safely and successfully and launched in February 2000 though not as per the predefined strategy but was quite close to the original plan.
As a part of the strategy, milestones were set to benchmark the following significant project events.
* Birth of original design 1994;
* B.A sponsorship -1996;
* Design modifications - August 1998;
* Entry of MACE - September 1998;
* Work initiation - January 11, 1999 (Week 2 of Gantt chart);
* Parts arrival - Late May1999- mid July 1999;
* Wheel up-ending - August 23, 1999;
Deviations from set milestones: There were deviations from set milestones due to unprecedented technical failures and subsequent knock-on effects in terms of project completion time and cost.
Examples:
> Failure of anchor blockheads (Sept 10, 1999);
> Delay of work for 2 days due to protestors ( October 25, 1999)
> Safety drill failure during its last 10 hours (December 30, 1999 )
TYPOLOGY OF PROJECT LONDON EYE
Typology of project helps to give a rational presentation of the vast range of undertakings where project management principles can be applied. It also gives a clue to the nature of the projects and the difficulties of managing them.
According to Slack, N. et al (2001), Typology of a project is according to its complexity in terms of size, value and the number of people involved in the project and its uncertainty of achieving the project objectives of cost, time and quality. Uncertainty particularly affects project planning and complexity particularly affects project control.
LE was highly complex project with a medium-high uncertainty level (Figure 5).
COMPLEXITY
LE was a high value, multi-task and technically innovative project with a highly complex typology (hence appears to the extreme right of the complexity scale). The whole project was broken down into 149 tasks, involving large number of European contractors. Hence, project control was a difficult task for the team.
UNCERTAINTY
This project is uncertain in terms of time, cost and technicality. Since this project had interconnected tasks, a change in one part of the project (failure of safety test-run in last 10 hours) had a knock-on effect on project tasks (delay in launch of wheel and rise in project cost, hence appears on medium-high of the uncertainty scale).
The rationale behind medium high uncertainty for project LE is given below (figure 6).
ASPECT OF LE'S PLANNING
UNCERTAINTY
HIGH
MEDIUM-HIGH
LOW
Planning Objectives
Determined
Extent of Planning
Clear
Outline of plan
Defined
Defined projects analyse and classify the projects in terms of complexity and uncertainty to understand typology of its operations.
TYPOLOGY OF OPERATIONS of LE can be explained using the 4 Vs Model (figure 7) in terms of Volume, Variety, Variation in demand and Visibility (Appendix).
FOUR Vs MODEL DURING PROJECT OPERATIONS
Fig 8
PROJECT PLANNING
According to Lockyer, K. & Gordon, J., planning is a unique process consisting of a set of coordinated and controlled activities with start and finish dates, undertaken to achieve an objective confirming to specific requirements including constraints of time, cost and resources.
Every project is broken into phases and sub-phases and each phase works under a different plan. LE's master-plan connected different phases in order to achieve the defined time-bound objectives.
At the planning stage, the project team brainstorms the requirements for the project (inputs) to produce the desired product/service ('output') by using the Input-Transformation-Output model ('ITO')The ITO model for project LE (fig 8) shows the inputs of the project that have been transformed to produce the output ('Millennium wheel').
ITO MODEL (Fig 8)
INPUT OUTPUT
Technically superb LE
TRANSFORMATION
Next, the team outlines the process of planning to determine the key issues involved and the limiting factors that override the project. LE's planning process (fig 9) was organised and well-co-ordinated with effective control mechanism.
Fig 9
> Identify activities
At this stage, the project team identifies the key issues of project. LE's key issues can be divided into primary, secondary and critical (figure 10).
ISSUES RELATED TO LONDON EYE
Primary Issues
> Project conceptualisation
> Project viability
> Project design and location
> Project Sponsors
> Project contractors
> Media and people
Secondary Issues
> Project cost
Critical Issues
> Safety/Quality
> Time
> Innovative complex technology
Fig 10
The above classification facilitates a systematic Work Break down Structure (LE's hierarchical division of work into tasks and sub-tasks) and control of multi-task operations by use of Gantt chart that offers the following benefits:
- Variety in planning;
- Logical time-task relationships; and
- Powerful aid in controlling LE
> Estimate time/resources
LE's team adopted the JIT system for making timely estimates of the resources to maintain a continuous flow of materials just enough to be stocked on the site and used for the next immediate task as per Gantt chart to control operations' cost and time.
> Identify relationships/dependencies
Interconnection of individual tasks led to dependant relationship of project tasks increasing the probability of knock-on effects in LE's operations (pulling up of wheel dependant upon the integration of wheel parts).
> Identify schedule constraints
The overriding priority was to complete the project within a given time though safety was always at the forefront. But during the execution stage, the project team was pressurised by the technical challenges, that's when safety took preference over time.
> Fix the schedule
Project team examined the limiting factor in the project (time and safety) and fixed the work schedule accordingly that best fitted the project objectives.
The progress in a project is not always uniform but instead follows life cycle curve. There are three stages in the project planning life cycle. LE's progress was not uniform (figure 12). It followed a three stage life cycle curve.
> Project initiation - Progress was slow initially as responsibilities were assigned and work organisation took time, [LE's conceptualisation, sponsor and allocation of design to contractors (from A to B - long time span from 1994 to January 1999)];
> Project implementation - Wheel was assembled, constructed and test-run (from B to C - January 1999 to December 1999); and
> Project termination - Rectification of technical failure was undertaken to ensure safety and quality (from C to D - December 30, 1999 to February 2000 - launch of wheel).
LIFE CYCLE CURVE OF LONDON EYE (Fig 12)
Project Initiation Project implementation Project termination
D
P
R
O
J
E
C
T
R
A
T
E
A
1994 1995 1996 1997 1998 1999 1999 2000
(JAN) (DEC) (FEB)
PROJECT CONTROL
Control is the essential link between planning and execution. It follows no particular sequence (figure 11). Planning and control are on-going activities that take place intermittently to track, report and correct the deviations in the project operation flow. LE used the JIT technique. Material requirement (capsules, rim segments) was predetermined to curb operation cost and time.
Examples:
o Floating cranes were off-hired when not required;
o Strong instructions were issued to suppliers about the delivery time. In case of delay in a task completion, other tasks were rescheduled through good planning and control systems like JIT and Gantt chart.
Effective control process involved the following 3 steps which were implemented by LE.
- Monitoring method used to check progress by identifying observations to be monitored;
Example: LE's technical performance and timely project completion were two major monitored observations that had knock-on effects on cost.
- Project performance assessed by comparing monitored observations of the project with its plan;
Example: LE's performance was constantly monitored and deviations from the plans were identified and set right.
- Intervention in the project and changes made to bring it back to plan.
Example: LE's tasks were interconnected, so a change to one part would have a knock-on effect on other tasks. LE's process was intervened when the anchor blockheads failed at the time of putting up the wheel and tasks had to be re-scheduled.
CRITICAL EVALUATION OF LE'S PLANNING AND CONTROL
In order to evaluate the effectiveness of LE's planning and control system, a Gap Analysis of LE's extent of uncertainty (affecting planning) and complexity (affecting control) of operations has been undertaken at the following two stages to demonstrate LE's deviations from original plan and the role of control mechanism thereon.
Initiation stage
LE had time-bound objectives and clear vision of completing the wheel by the turn of the millennium. LE's operations were relatively certain but highly complex (figure 14). Tasks were well planned and control mechanism was effective through the use of Gantt chart.
Execution stage
LE experienced technical mishaps and subsequent redesigning of wheel parts, thereby causing the original plan and cost to change, making the project more uncertain (figure 14). Also, the complexity had risen with the re-scheduling of tasks. But the team worked towards the target of completing the wheel by February 2000 without compromising of quality/safety with the help of effective control mechanism and constant monitoring of tasks.
CRITICAL EVALUATION OF PLANNING AND CONTROL OF LONDON EYE
PROJECT STAGES
(Fig 14)
CONCLUSION
LE is a super success attracting 3.5 million customers (more than projection of 2.2 million). in its very first year of operation helping it achieve an early break-even. Credibility of LE's success is owed to:
> Project management team who set an example of a strong partnership; and
> Supportive media and people, who encouraged this innovative idea to be turned into a reality.
This project is a trend setter for manoeuvring complex multi-task technical projects by effective use of management tools of planning, co-ordination and control.
Environmental and technical adversities faced by LE had not marred the team's conviction of inventing the world's biggest wheel. LE was a gift to London that enhanced the city's beauty by its unique shape and design situated on one of the most alluring locations of London, attracting tourists world wide.
BIBLIOGRAPHY
. British Airways London Eye available from: http://www.ba-londoneye.com;
2. Lock, D. (2001), The Essentials of Project Management, Second edition, England, Gower;
3. Mann A.P. , Thompson N. , Smiths M. (May 2001), Building the British Airways London Eye: [internet], Proceedings of ICE Conference o|Error! Bookmark not defined.n Safer Solutions in Sport and Leisure Available from: http://www.iceknowledge.com;
4. Cole, M. ,On site safety at the London Eye. Available from:<http://www.healthandsafetypeople.com/latestnews.htm>
5. Meredith, Jack R. , The Management Of Operations: A Conceptual Emphasis, Fourth edition, United States of America, John Wiley & Sons, Inc;
6. Slack, N. et al (2001), Operations Management, Third edition, Italy, Prentice Hall.
APPENDICES
Typology of operations has been illustrated with the help of 4 Vs model (page no.15 of this report). The typology of operations of LE has been explained in brief along with the rationale behind determining the type of operations of LE in terms of volume, variability, variation in demand and visibility
. HIGH VOLUME
LE had a high volume of tasks (149 tasks) within the project. The operations within the tasks were iterative (collecting barges sequentially, fixing 32 capsules) and highly specialised (designing wheel parts, upending the assembled wheel). The operations made use of high technology (planning and designing the hub, rim, spokes, capsules, spindle etc) making it capital intensive.
2. MEDIUM-LOW VARIETY
LE had well defined project operations. Operations within the project tasks were regular and standardised, however the unit cost of operation was high since it was a unique complex project.
3. LOW VARIATION IN DEMAND
Project LE's operations could be categorised as having a low variation in demand because its operations within the tasks on the whole were stable and routine in nature.
The demand for infrastructure and materials were predetermined and regularly obtained from the contractors during operations' stage ('JIT' system).
4. MEDIUM-HIGH VISIBILITY
The visibility of this project's operations was reasonably high and this was evitable due to the media involvement and support at the stage of up-ending the wheel. Also, the operations site of LE was open to the view of the masses and their perception about the innovative project. However, there was considerable time lag between conceptualisation, manufacturing and functioning of LE for customer utility.
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