Project Airbus free essay sample

The Airbus A380 project is one of the most complex projects to ever happen. An aircraft of such large size and complexity would always have problems. Although problems are always anticipated during such a large project, the management involved with this project mismanaged many aspects. The project’s success can be examined using many project management aspects. This report will analyse in particular the areas of project scheduling, stakeholder management and project leadership within the A380 project. The project will also be assessed against project success methods to analyse its problems and lack of success. Prior to the release of the A380, it was hailed as an unparalleled symbol of European manufacturing prowess: â€Å"When it takes to the skies, it will carry the colours of our Continent, and our technological ambitions, to even greater heights† (Clark, 2006). This statement by the French president at the time masked the issues plaguing the A380 project. The A380 project suffered many setbacks, many caused by poor project management or mismanagement. It will be seen that inflexible project scheduling, mismanagement of stakeholders and disingenuous project leaders all impacted harshly on the success of the project. The outcomes of the budgeting, performance, scheduling and client performance paint the project in an unflattering light. However, this report will show that despite the many problems involved which included delays and over budgeting, this aircraft has the potential, and is likely to become a significant aviation achievement. Table of Contents Cover PagePage 1 Executive SummaryPage 2 1. 0 IntroductionPage 4 1. BackgroundPage 5 2. 0 Project SchedulingPage 6 2. 1 Duration EstimationPage 6 3. 0 Risk ManagementPage 7 4. 0 Stakeholder managementPage 8 4. 1ClientsPage 8 4. 2 Suppliers Page 9 4. 3 CompetitorsPage 9 5. 0 Project LeadershipPage 10 6. 0 Project SuccessPage 11 6. 1 BudgetPage 11 6. 2 Client AcceptancePage 11 6. 3 SchedulePage 11 6. 4 PerformancePage 12 ConclusionPage 13 Reference ListPage 14 1. 0 Introduction Proj ects are unique, one-time processes that are created to carry out specific goals and objectives. They are important in aviation because of the complex nature of the industry. Aircraft manufacturer Airbus SAS has endeavoured to complete many aircraft designs and production throughout its history. Many of these projects have been a direct result of the competition with Boeing aircraft. Airbus has often committed its resources into aircraft manufacturing projects which in the past have been considered as successes. Although many of those projects have been deemed successful, some have faced difficulties. A mega-project that can be judged problematic is the development and manufacturing of the Airbus A380. Although the A380 is undoubtedly considered to be one of the most technologically advanced commercial airliners in the world. It is often thought of as a substantial feat of engineering and ingenuity. Despite this, many poor decisions within the project management resulted in the unsuccessful rollout of the plane. Project-related problems were not addressed correctly and factors such as poor project scheduling, stakeholder management, leadership and lace of risk management have caused the failure of many aspects of the project. This paper analyses the aspects of the A380 project that caused its difficulties, and offers recommendations on how these factors could have been executed differently for greater success will also be identified. 1. 1 Background Responding to airline preferences for a fuel-efficient, ultra-high-capacity airliner, Airbus announced the Airbus A380 in December of 2000 (Casino in the Sky, 2000). The â‚ ¬8. 8 billion project to launch the aircraft attracted fifty firm orders from six customers which were needed in order to make the project economically viable (Pae, 2000). Airbus claimed that the A380 would become the world’s largest passenger aircraft, ‘a superjumbo jet that will hold 555 passengers and come with bars and casinos’ (Casino in the Sky, 2000). Although the announcement for the A380 came in 2000, project selection into an ultra-high-capacity airliner began in the late 1980s, where a small group of advanced Airbus engineers began work in secret on the development of a plane, an aircraft that would break the market dominance that Boeing had enjoyed in prior decades, especially in the large-aircraft market (Norris, 2005). The first public indication that the project was failing was the announcement made by Airbus when company executives made their initial admission of ‘manufacturing troubles’ and stated its first delay of the project, at a cost of six months to the delivery schedule (Clark, 2006). Although the failures included in the A380 have been attributed to delivery delays, underlying problems with project management must also carry some blame. 2. 0 Project Scheduling Project scheduling demonstrates the conversion of project goals into an achievable methodology for their completion, and for project success. This topic encompasses various aspects such as; Networks, Critical Path, Lagging, Crashing and Duration Estimation, which is the next matter under discussion (Pinto, 2013). 2. 1 Duration Estimation Duration estimation is the estimate of the time required to complete activities. It is the core of time management in projects and must be calculated with precision for it to be successful. In relation to the A380 project, poor duration estimation was a big element in the project’s delivery delays. In 2006, co-president of the European workers’ committee at Airbus, Jean-Francois Knepper, told journalists Normally you need four to five years from the time you announce the launch of a new plane until delivery (Clark, 2006). This statement could possibly be true as the A380 was announced in late 2000, and estimated delivery into service in early 2006, a time period of just over six years. However, this time frame is relatively small for such a complex airliner with 100,000 different wires, which is 40,000 more than the A340, totalling 530 kilometres in length and a fuel system that is said to be ‘three to four times more complex than that of the A340’ according to Christopher Slack, Analysis Expert within Airbus Fuel Systems (Mathswork, 2013; Clark, 2006). For such a complex, new innovative airliner, more time had to be given to complete assembly and deliveries. This is backed up by a representative of the French workers union, Force Ouvriere, who stated that â€Å"Airbus had never built a plane of this complexity before, and yet managers did not take the precaution of building more flexibility into the delivery schedule. (Clark, 2006). An overambitious production timetable for a record breaking superjumbo airliner was not a good idea in terms of external stakeholder management. Airbus used experience-driven estimation in a poor manner, as the previous projects completed by them were not as complex. A recommendation for Airbus would have been to apply contingencies to these estimations for a more realistic delivery time frame. Another reason why this project has had less success than expected was the poor risk management associated. 3. 0 Risk Management The risk management process is the identification, analysis, planning and monitoring of risks which, when correctly applied, minimises the effect of issues during the project. Companies undergoing projects must use this process in order to successfully mitigate possible consequences from hazards. In the A380 project, many risks can be identified but not all were monitored and mitigated against. One such example is the computer software used to design the aircraft components. Since the 1990s, Airbus sites in France have used a three-dimensional computer modelling program called Catia and Circe. As this program was used successfully on the A340 project, Airbus officials wanted to use the same software on the A380 project. Despite this, trying to persuade the Hamburg design shops to adopt this French software was to no avail as the German engineers preferred working with the American designed software named Computervision. The American version was created in 1980s and was only capable of two-dimensional designs (Clark, 2006). It was clear in 2004 when Airbus was assembling its first A380 that the out-dated software was creating problems. Engineers in Hamburg were falling behind schedule and could only supply a fraction of what was needed, also leading to incompatible wiring being produced. The risk in this case was that two different providers were using different technology. The A380 project should have followed the practices of previous successful projects such as the A340, where only one software system was provided, Catia and Circe (Clark, 2006). Better risk identification via the use of past projects would have helped. The idea to use different technologies for different parts of the aircraft and then having to assemble them was a risk to which Airbus did not properly apply risk management, and the consequences were significant. Although changing to the newer software would have been costly and time consuming, it would have been a better decision as this would have mitigated the risk and fewer delays would have occurred (Clark, 2006). Had appropriate risk management been applied in the A380 project, these issues would have been identified at the planning, where there would have been time to implement a mitigation strategy. 4. 0 Stakeholder Management Stakeholders are ‘individuals or groups who have an active stake in the project and can potentially impact either positively or negatively, its development’. (Pinto, 2013, pp. 58). In project management, managers must respond to the concerns of the stakeholders even though it might offend or anger a separate stakeholder who has an entirely different agenda. Project managers must find the correct balance and satisfy and manage the high-powered, high interest stakeholders, as shown in the power/interest grid below. Amongst the set of external project stakeholders that the A380 project manager had to consider were the all airlines that ordered the plane, the part suppliers and their main competitor Boeing. Image A: The stakeholder power/interest grid. 4. 1 Clients The main consideration for clients, that is, airlines purchasing the product, is when the products is received, as the longer the project implementation, the longer the money invested sits without generating returns (Pinto, 2013). In relation to the A380 project, a prime example of stakeholder management was the ‘A380 Reveal’ of the first completed A380 in Toulouse, France, on the 18th of January 2005. Even though Airbus was aware of the looming delivery delays of the A380 to the clients, French president Jacques Chirac took an ambassador’s role claiming that the A380 â€Å"will carry the colours of our continent, and our technological ambitions, to even greater heights† (Clark, 2006). Even though Chirac wasn’t officially a project member, this attempt to mask the crisis that was unfolding behind the scenes is a great example of managing stakeholders. Despite this great attempt to satisfy client by using such colourful wording in describing the A380, delays were endemic and the announcement of the delay was imminent. Airbus did not acknowledge the problems until six months after Chirac’s speech on June 1, 2005, was the first public acknowledgment of manufacturing troubles and the announcement of a six month delay in the delivery schedule (Clark, 2006). Just over a year later, Airbus announced its second delay of another six to seven months due to ‘production ramp-up issues’, delays which cost Airbus â‚ ¬4. 8 billion over the next four years. To keep their clients satisfied and to keep their orders with Airbus, discounted deals for the A380 for Qantas were certain as they increased their order from 12 to 20 (A380 Delays, 2006). Chirac’s statements were a noble attempt to appease stakeholders, but they could only divert attention from the A380 issues for so long. 4. 2 Suppliers Suppliers are groups that provide material or resources that are needed by the project team in order for completion (Pinto, 2013). As mentioned previously, the main reason for the delays was associated with a communications breakdown between two factories manufacturing the A380, leading to incompatible wiring being made. Most of the wiring had to be removed and new wiring fitted, creating lengthy delays. Applying appropriate project stakeholder management and paying more attention to communications may have avoided such lengthy delays. Supply chain management is a type of stakeholder management that must be effectively managed for project success. The project manager should have ensured that the supplier in Hamburg was using the same software and was producing the correct wiring for the A380. 4. 3 Competitors Competitors are directly affected by the successful execution of a project (Pinto, 2013). The postponement of delivery to airlines was a blessing for Boeing. Some orders for the A380 were cancelled or deferred and many of the airliners turned to Boeing’s 747-800 instead (A380 Delays, 2006). In 2007, Airbus described the status of its A380 freighter version as ‘interrupted’, after diverting employees from the freighter program to work on the passenger version of the aircraft (Shannon, 2007). Having 27 orders for the freighter, this was welcome news for Boeing. Cargo operators FedEx cancelled their order for 20 A380-F and instead placed 15 firm orders for the Boeing 777 freighter with an option for 15 more (Roberts, 2006). To add to this, with Boeing’s announcement of the production of the 787 Dreamliner, Airbus diverted more resources to its future A350 design, rather than focusing wholly on the A380 project. Project managers need to find a balance in satisfying all stakeholders (Pinto, 2013). The management of stakeholders can therefore prove fatal to a project if not carried out correctly. Stakeholder prioritisation must be continually re-evaluated throughout any project, and this was done to a certain extent in the A380 project, however, the skills left a lot to be desired. 5. 0 Leadership Leadership is a vital aspect of any project, strong leadership and its continuity help deliver a project and make it successful. Unfortunately, the A380 project faced a number of issues with regards to its leaders, which had a devastating effect on the project. Most importantly, the project lacked continuity of leadership – project managers and advisors were constantly resigning or being demoted and moved around. Airbus chief Gustav Humbert and Noel Forgeard, joint CEO of Airbus parent EADS, were ousted only weeks after their initial appointment (Frost, 2006). Soon after in September of 2006, Mario Heinen replaced Charles Champion as project manager, who stepped down from the role after ‘successful certification of the A380 in 2006’ (Airbus Management Overview, 2012). I would like to thank Charles Champion on behalf of all employees at Airbus for his exceptional contribution to bring the A380 up to the final stages of certification† Christian Streiff, Airbus CEO stated. Despite Airbus’ appraisal of Charles Champion as project manager, it is evident that many of the project issu es were experienced under his leadership, prior to the certification of the A380. After the step down of Charles Champion, Mario Heinen was in office for only 22 months, and then was transferred into a new area where he managed cross-border division responsible for fuselage and cabins across the Airbus fleet instead. After Heinen’s stint as project manager, Alain Flourens entered the role in July 2008. (New appointments at Airbus, 2008) In addition, Airbus CEO Christian Streiff resigned from his position in October 2006, after only three months in the position, only three days after the announcement of the third delay to the project, amounting to a total of two years’ delay (Streiff Resigns, 2006). This continual change in leadership impacted on the project in a negative capacity. The constant change in leadership meant that ideas and project direction were constantly diverted, and as a result the project suffered considerably. There seems to be no evidence of management risk mitigation strategies in place in the A380 project, a vital factor in the project management life cycle. Management risk mitigation has been implemented successfully in other airline projects, such as the Boeing 787 project where issues with supply chain management were mitigated by employing a new staff member with considerable supply chain management expertise (Tang amp; Zimmerman, 2009). Such strategies were lacking in the A380 project. As a result, leadership in the A380 project posed a threat to the success of the project. It would have been advisable to employ a project manager from the start with the proven expertise to carry out such a complex project. This would have resulted in fewer management changes, greater continuity in management and therefore a more successful rollout of the aircraft. 6. 0 Project Success To determine the level of success with the Airbus A380 project, it is possible to assess it against the quadruple constraint of project success. The quadruple constraint deals with core areas of project success, which can be identified in terms of success or failure. Image B: The quadruple constraints of project success. Having examined all four aspects of the diagram, it is immediately noticeable how unsuccessful the project has become. 6. 1 Budget Projects must meet budgeted allowances in order to use resources as efficiently as possible (Pinto, 2013). The budget blew out of proportion from the very start. In 2004, Airbus admitted that the project was running â‚ ¬1. 45 billion over budget (A380 Over Budget, 2004). More recently, the project has cost several billion euros more than its original budget of â‚ ¬12 billion (Airbus Cost Cuts, 2012). The A380 project has not stayed within budget guidelines. Budgeting contingencies should have been applied to this project, as budget contingencies symbolise the recognition that project cost estimates are just that: estimates. (Pinto, 2013) 6. 2 Client Acceptance For the project to be deemed successful, the client or customer must accept the product and be satisfied. It can be said that client acceptance has not been positive, since many airlines cancelled their orders after more lengthy delay announcements. All 27 of the freighter orders have been cancelled, apart from Emirates who instead converted their two orders for freighters into passenger-based models. Client acceptance hasn’t been positive either, as many airlines have cancelled their orders for the airplane. Despite these setbacks, as problems continue to be rectified and more A380s are delivered into service, it is likely that client acceptance will increase. 6. 3 Schedule Projects are constrained by a specified time frame during which they must be completed (Pinto, 2013). For the A380 projects, there was a total of two years’ delay. Firstly in June 2005 there was a six month delay, followed a year later with a six to seven month delay in July 2006. A third round of delays occurred on October 2006 where Airbus announced a year long delay. All these delays added up to a setback of about two years, compared with original delivery dates (More Delays for A380, 2006). In order for the A380 project to break-even financially, it was initially required to sell 270 aircraft but due to delays, has increased to 420, in 2006 (Heinen, 2006). Part of project success is the ability to deliver the product on or before the established schedule, but for the A380, delivery has come two years late. 6. 4 Performance The next aspect, performance, is how successful the final product really was. The most notable problem was with the Qantas Flight 32, in which an A380 suffered an engine failure which caused the grounding of the rest of the Qantas A380 fleet and other A380s in Lufthansa and Singapore Airlines. To add to this, during repairs to the plane following the Qantas incident, cracks were discovered in fittings within the wings (Waugh, 2012). In February of 2012, checks for the faults were to cover all 68 A380s in service with costs of repairs to be over $130 million, to be paid by Airbus (Boynton, 2012). This fault caused groundings of fleets which highlights the ineffectual performance of the Airbus. As mentioned previously, in time, the A380 will overcome its complications, and its performance in range, fuel efficiency and passenger numbers will be unrivalled. Despite the difficulties faced by the project, the A380 is still a new aircraft with a long future ahead and has the potential to become a great icon for the aviation industry. Conclusion Airbus has successfully manufactured many aircraft types, though none as large or as complex as the A380. The project encountered many difficulties throughout its development life cycle, including leadership and management discord, mismanagement of stakeholders and unsuccessful scheduling of the project timeframes. These issues plagued the project and caused many problems for Airbus, including the cancellation of orders for the aircraft and subsequent loss of revenue and profit. Despite the apparent issues with the project implementation, â€Å"The A380 continues to win new customers and many are coming back with repeat orders. † Mr Leahy added. â€Å"The A380 is a long term programme. Over the next twenty years we see a market of over 1,300 passenger aircraft in the very large aircraft segment. † (Airbus Press Centre, 2011). It is important to note that the majority of the project problems occurred before the certification of the aircraft, and thus it is possible to claim that this project could become a huge aviation pioneering milestone in decades to come. Reference List -A380 Delays, (2006), Retrieved from http://news. bbc. co. uk/2/hi/business/5405524. stm -A380 Over Budget. (2004). Retrieved from http://news. bbc. co. uk/2/hi/business/4097885. stm Airbus Press Centre. (2011) Retrieved from http://www. airbus. com/presscentre/pressreleases/press-release-detail/detail/ilfc-selects-100-a320neo-family-aircraft/ -Airbus management overview. 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