Governance at heathrow - final for sharing (gov100615)

APM Governance SIG, Wednesday 10th June 2015

Governance at Heathrow Helen Gamlin

Today’s session

• Who on earth is Helen Gamlin?

• Heathrow Development Journey May 2012 – June 2015 – Our Vision

– Our Strategic Programmes

– Our Organisation and Supplier framework

– Our Stakeholders

– Our Governance

• What next for Heathrow Development?

• How does this compare?

Today’s session


• Heathrow Development Journey May 2012 – June 2015 – Our vision




– Our Governance



Heathrow is the UK’s only hub airport

36% Transfer Passengers

(26.3m)

93% International

7% Domestic

73.4 million passengers and 471,000 flights

a year

Flights to 185

destinations in 84

countries

30% - business

70% - leisure

Employs 76,000 people- 110,000 indirect

jobs

We have a new vision

Where we are now compared to when we last presented in May 2015

The next 5 years show a change in scope for Development at Heathrow

• Bigger spend on Asset Management Projects than

Passenger Experience projects

• Lower capital investment than in previous

Quinquenniums

• Multiple small projects rather than “Big New Build”

Today’s session


• Heathrow Development Journey May 2012 – June 2015 – Change in Heathrow vision




– Our Governance



But not everything has changed….we are still building on the principles of

Strategic Programmes that were set up in Q5

Deliver a noticeably better,

‘hub of choice’ passenger

experience

An ASQ rating of >4.0 and leading amongst

European hub airports with 80% of passengers

rating Heathrow as excellent or very good

Deliver improved resilience

and sufficient hub capacity

At least 80% of departing and arriving flights are

punctual to within 15mins of scheduled time;

with an aspiration to approach 90% punctuality

Ensure a competitive total

cost of operation

To be at the frontier of efficiency for major

European hub airports, by reducing our

underlying operating costs over Q6 by 9.4%

Strategic programmes

Terminal 2 (£282m)

Q6 Realisation (£29m)

Hub Capacity

Passenger Experience (£401m)

Airport Resilience (£526m)

Baggage (£593m)

Asset Management (£957m)

Better level of understanding of what lower levels of investment will give

c£2bn Investment

Sustain a passenger

experience consistent with

an improving European

average

An ASQ rating > 3.9

Protect existing levels of

resilience and hub capacity

70 – 80% of departing and arriving flights

are punctual to within 15mins of schedules

time


cost of airport operation




Deliver a noticeably better,

‘hub of choice’ passenger

experience

An ASQ rating of >4.0 and leading amongst

European hub airports with 80% of passengers

rating Heathrow as excellent or very good

Deliver improved resilience

and sufficient hub capacity

At least 80% of departing and arriving flights are

punctual to within 15mins of scheduled time;

with an aspiration to approach 90% punctuality


cost of operation




c£3bn Investment

We have a clear link from our Heathrow objectives through to Director

personal objectives

Deliver improved

resilience and sufficient

hub capacity The Airport Resilience

Programme vision is to provide a

resilient airport with capability to

meet demand and recover quickly.

This will be achieved through a

series of objectives whose

cumulative effects will mean an

improved headroom for the

operation and improved punctuality

Today’s session


• Heathrow Development Journey May 2012 – June 2015 – Change in Heathrow vision




– Our Governance



2006

2003

2000 2nd Generation Frameworks

T5 Agreement

3rd Generation (Value in

Partnership) Frameworks

Heathrow Development’s Journey

1st Generation Frameworks

1994

2009 Start of Open Competition

(movement away from frameworks)

“Integrating Construction” Client

“Partnering” Client

“Project Management” Client

“Intelligent” Client

2010

Launch of Capital Re-Engineering,

18 month change programme.

2013

“Programme Management” Client

2015 Professional Collaboration The Q6 Model

Changes to Heathrow Development Model

Arups Arups Atkins Jacobs

Airport Resilience

Passenger

Experience

Baggage

Asset Mngt

Turner & Townsend Wilson James

Programme Management Office

Balfour Beatty MACE Ferrovial

Agroman Morgan Sindall

A/S & L/S

North

A/S & L/S

South T1 & T2 T4 T3 T5

Delivery Teams

A model based on Professional Collaboration

Keeping Everyone Safe Uncompromising

commitment by all parties to Health and

Safety

Treating Everyone

with Respect

Encourage

everyone to put

their views forward

constructively,

listen to each other

and respond

respectfully

Giving Excellent

Service

Provide the basics

of delivery brilliantly,

constructively

challenge, bring the

best market

innovation to us

Working Together

Work collaboratively and keep all relevant

parties involved and informed

Improving Every Day

Continually improving what you deliver

and how you deliver it

Doing the Right Thing

Focus on the right things that make the

biggest difference

Sub- contractor

2nd Tier Design

Heathrow

Cost & Commercial Consultant

Designer

Logistics Integrator

Delivery Integrator

Collaboration

Business relationships formed by committed

organisations to maximise performance for the

achievement of aligned objectives and creation of

additional value

Professional

Competent or skilled in a particular activity

The role of Sponsors……or Business Case Owners

• Provide guidance and

recommendations to the

Programme Lead to ensure

the requirements of the

executive sponsor (i.e.

benefits realisation) are

actively managed

Executive Sponsor

• Owns the vision

• Shapes, champions & advocates the programme

• Owns the Business Case

• Accountable for the benefits and outcomes

• Manages interfaces with key stakeholders

• Works with the Programme

and Delivery Directors to

ensure the requirements are

clear and the scope and

solution is agreed

• With Development, jointly

presents the business cases

for approval

Business Case Owner

• Act on behalf of the executive

programme sponsor to own the business

case and ensure benefits are realised

• Unblocks issues and owns internal business

change activities

Sponsor’s Agent

• Act on behalf of the executive programme

sponsor to test and challenge the aims,

business case, benefit realisation and

progress of the strategic programme

• Focus the Exec sponsor, and sponsoring

group on the relevant decisions and

issues to ensure success

Today’s session






– Our Governance



A number of stakeholders think they “Govern” Development Business

Cases

PMO

Shareholders

Heathrow Engineering

Heathrow Operation

Airlines Independent

Organisations

Airline Operations

Heathrow

Finance

Independent Fund

Surveyor

What do our shareholders say?

What do the Airlines say?

Introducing the Independent

Funds Surveyor

Service and

standards

Technology

What do Operations say?

Increase CAPEX to reduce OPEX

Don’t disrupt the operation!

Today’s session






– Our Governance



Heathrow Portfolio, Programmes & Projects

Identify

Programmes

Defining a

Programme

P1

P2

Programme

Brief

Programme

Sanction Benefits

Realised

Closing

P4 P3

Managing the Tranche

Delivering the Capability

Realising Benefits

Manage Functional Portfolio:

Scan environment & change Briefs Manage Portfolio efficiency

Benefit

Cost

Risk

G1 G2 G3 G4 G5 G6 G7 D8 G0

Initiate Options Solution

Development Implement Transition Operation

Close

down Definition

G1 G2 G3 G4 G5 G6 G7 D8 G0

Initiate Options Solution

Development Implement Transition Operation

Close

down Definition

Cost

Quality Time

Portfolio

Definition

Portfolio

Strategy

Portfolio

Delivery

Portfolio

Re-Definition

Strategic

Benefit

Resource

Investment

Business

Risk

• Industry best practise identifies the following are need for successful transformation or investment programmes

– Strong Sponsorship

– Clear vision for success to generate alignment

– Strong ownership of the benefits

Good Governance – where we were..

• The Strategic Programme Sponsoring Groups will drive Heathrow governance

– The governance groups of the business at Heathrow

– Formal committees of the Executive

– Responsible for managing budgets

– Cross-functional

• Terms of reference for the Sponsoring Groups

– Define the authority of a sponsoring group and the delegation from the Executive including financial authority

– Define responsibilities – what’s within scope, cross-functional engagement

• Good governance is vital for our business

– Clear lines of delegated authority with limits on approval of financial expenditure

– Defined approval processes – who is responsible for what





Good Governance – where we were..

• The Strategic Programme Sponsoring Groups will drive Heathrow governance

– The governance groups of the business at Heathrow

– Formal committees of the Executive

– Responsible for managing budgets

– Cross-functional

• Terms of reference for the Sponsoring Groups

– Define the authority of a sponsoring group and the delegation from the Executive including financial authority

– Define responsibilities – what’s within scope, cross-functional engagement








Good Governance – ..and where we are now

• Matrix determines Governance route for each business case

• Delegated Authority to Business Case Owner, Programme Director

• Delegated Authority to Business Case Steering Group

• Large, complex Business Cases require Governance Service Transformation Team and Sub Group of Executive

• Further Governance required at HAHL Board for some financial approvals

• Consultation with Airline Community throughout and engagement with the Independent Funds Surveyor (IFS) if required




Good Governance – Projects are categorised

Does the investment … Low Medium Significant

Reduce the expected benefits from the

overall Business Case None / Minor Moderate Significant

Negatively impact EBITDA

(requires budget holder sign-off) <£0.5k pa <£1m pa >£1m pa

Negatively impact passenger experience

or resilience?

Minimal short term;

No long term

Significant short term

Or minimal long term Significant long term

Negatively impact airport capacity? None / Minor Moderate

Reduce / significantly

increase published

capacity declaration

Impact an airline’s efficiency or

competitiveness? No No Yes

Qualify as a Key Project or have triggers No Yes – Key Project Yes – Trigger Project

Have capex value of £0 - £1m £1 - £5m >£5m

Governance route for Investment

Decisions (Gateway 3)

Business Case Owner

Programme Director

Investment Finance

Executive Sponsor

Business Case Owner

Programme Director

Investment Finance

STT

Q6 Realisation Sponsor

Group (Q6RSG)

Our Governance is based on the project classification

Reflected in Heathrow Gateway Management Plan

Today’s session






– Our Governance



What next for Governance at Heathrow

• Remain with flexible Governance approach determined by size of investment, complexity of project and business change

• Continuous Improvement will remain (e.g. integrating Gateway Management Plans and Project Management Plans)

• Strong sponsorship and benefits driven decision making

• Sponsor Groups?

• Organisation change to accommodate “big build” again?

• A consolidation of the best of Q5 and Q6 Governance

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