Systems Integration and Competitive Advantage
Managing Complex Projects, Products, and Systems
Introduction
Complex product Systems (CoPS) are expensive, engineering-intensive networks, systems, and constructs that often form the main backbone of the modern society and economy. They are technology-intensive goods that often constitute a high proportion of the output of industrial products and fixed capital formation where consumer services and goods are produced and traded. The management of a complex project is often considered a process that contributes to the success or failure of an organization (Davies & Hobday, 2005). Management challenges were the main cause of project failure at the London Heathrow Terminal. The project failure and delay evidenced at Heathrow T5 was facilitated by project complexity, political involvement, and interaction with non-experts. System integration and competitive advantage London Heathrow Terminal 5 was characterized by challenges associated with project complexity, project management capability, and innovation dynamics that affected the success of the project.
System Integration and Competitive Advantage
The ability of a project to benefit from competitive advantage begins with the understanding that system integration involves the process of bringing various components of a subsystem into a single system while ensuring that the distinct subsystems function effectively as one system. Although this is expected of every CoPS, London Heathrow Terminal 5 was not successful at achieving competitive advantage through system integration (Davies, Gann, and Douglas, 2009). The management failed to understand that unlike consumer goods of high volume, each CoPS is high cost and is often made up of various interconnected customized parts such as sub-systems, control units, and embedded components that have been designed in a specific hierarchical and tailor-made manner for particular customers. As a result of this complexity, the management remained unaware that CoPS often tend to exhibit emergent and non-linear properties during production since unexpected and unpredicted interactions and events tend to occur during the design, system integration and engineering (Ren & Yeo, 2006). As Davies and Hobday (2005) explain, emerging properties and challenges can also occur from one product generation to another since a change in the system’s design can cause huge alterations in other parts such as to require new materials and control systems. The focus of competitive advantage at T5 should be been derived from project management and system integration in contrast with other consumer goods that are mass-produced that focus on product planning and R&D.
Challenges of Initiating a London Heathrow Terminal 5 CoPS
Organizations that are mandated with the production of megaprojects often face performance paradox owing to challenges associated with time, cost, safety, and quality objectives coupled with revenue predictions. Megaprojects are logistically and technologically demanding and often exceed a period of 5 years; most of them are often characterized by failures owing to the size, time, cost, and complexity of projects. However, the success of these projects is not often guaranteed due to failure to meet the anticipated project outcomes in relation to cost estimation and cost schedules (Prencipe, Davies, & Hobday, 2003). This challenge was characteristic of the Denver Airport T5 whose completion was delayed coupled with costs overruns and legal failures.
The proposal to build another terminal at the London Heathrow started was started in 1995 and was completed in 1999 which was considered the longest inquiry in the history of British planning. After the $5billion project was opened, it was approximately 200% more than the anticipated budget and was late by 16 months. Additionally, the legal costs were 80m while the planning costs that were at risk amounted to 320m. Davies, Gann, and Douglas (2009) explain that the construction of Denver airport infrastructure is an example of megaproject that faced challenges that were associated with time, budget and operational challenges. After opening, the project was plagued with disruptions owing to baggage handling systems and computer-related problems. An analysis of the London Heathrow Terminal 5 showed that every project should have a clear governance structure, internal economy, and a production system that is established on a temporary basis. However, although the main goal of megaprojects is to develop a unique project, the production processes can be simplified, standardized, and repeated such as to enhance performance.
A study of T5 by BAA and Laing O’Rourke (LOR) showed that expanding Heathrow airport to enhance operations required an improved mechanism of managing the megaprojects. This need facilitated the development of approaches and strategies that encourage project management such as to meet budget, time, cost, and quality targets. This was important since T5 is an example of a technology-intensive capital project that tends to underpin the manufacturing capability and provision of services thus making it to form the backbone for technology assets in the modern economy. In order to achieve success in the projects, the management should have considered the management of complex activities through technological innovation and prioritization of program urgency. As Brusoni and Prencipe (2001) explain, the implementation should consider the integration of multidisciplinary inputs from different organizations through the investment of a wide scope of research.
Megaprojects are often characterized by the complexity which affects the manner in which such projects should be executed and managed. The complexity at T5 was facilitated by increased societal interactions, high customer expectations, and high expectations on performance. Political interactions, the complexity of provided solutions, and interaction with non-experts also contributed to the operational challenges experienced particularly during initiation and execution of the project. According to Davies and Hobday (2005) complex projects often require a higher degree of management during the initiation and execution stages since the complexity experienced in such projects can be applied in diverse dimensions such as technology, environment, and decision making. In order to achieve the desired level of success in T5 complex projects, the organization in charge (British Airport Authority) should have considered an adaptive approach in order to ensure that different parts of the project are treated differently.
Systems Integration Challenges of Complex Projects
Systems integration is a significant challenge that is often experienced in megaprojects and particularly in firms that produce such projects such as Ericsson, IBM, Shell, and Rolls Royce, among others. Efficient execution of a megaproject requires system integration such as to coordinate the integration, design, engineering, and delivery of an effectively functioning system. However, this was not the case since T5 was affected by various system integration challenges that ranged from coordination, design, and engineering of various components. In order to ensure project success, system integrators at the project must outsource different portions of production, design, and construction activities while ensuring the maintenance of in-house capability in order to integrate different components and deliver fully functioning system against quality, cost, and time targets (Brusoni & Prencipe, 2001). While these aspects are important, integration challenges at T5 were facilitated by integration challenges such as systems scale, range of technologies, interfaces, components, and the total number of external supplies and activities that must be coordinated.
The success of a megaproject is often founded on the success of the project governance structure, project processes, and operational processes. CoPS organizations are likely to face challenges in deciding on the most appropriate project governance structure. Although the management at Denver Airport understood the importance of adopting an appropriate governance structure, T5 was subject to system integration challenges as a result of the poor governance structure. As Davies and Hobday (2005) explain, system integration decisions should be made on how best to manage various project risks, contractual approach, and the tasks that should be outsourced or undertaken in-house.
Program management is another essential component in a megaproject that is often required to support the integrated supply chain and digital design technologies in order to sustain construction, design, integration, and maintenance activities at the megaproject. In order to increase efficiency and speed, megaprojects should consider just-in-time logistics to ensure coordination of materials, among other operational processes. Without operational integration, it is difficult to undertake tests, trials, and the preparation of operations for handing-over. These strategies are important due to the discontinuity that happens between the delivery of the project and the activities involved in the operation of the final results as a result of project complexity. Megaprojects such as the T5 must prioritize these processes and ensure that they are well planned and perfectly executed to achieve the anticipated project success.
Source: Davies, Gann, & Douglas (2009).
System integration challenges at the T5 megaproject could be reduced by ensuring that new technologies are tested in a low-risk environment before the integration process to ensure a smooth integration of systems into the functional infrastructure. This could be achieved through the management of projects using temporary institutional structures that provide the senior directors’ flexibility and autonomy while ensuring effective application of capabilities and resources from parent organizations (Chesbrough, 2003). Going by the system integration approach at London Heathrow Terminal, decisions should be made on the most effective contractual approach, management of project risks, and on the essential aspects that should be outsourced, to reduce the project delay that was experienced.
Effects of Cultural Issues on the Project
Although the initiation and execution of the project were coupled with various system integration weaknesses, the success evidenced upon completion was facilitated by BAA’s ability to employ various megaproject processes such as operational and project processes. After Heathrow express evidenced additional operational challenges following the collapse of one of its tunnels in 1994, BAA assumed full responsibility of the project and decided to partner with qualified suppliers as part of the project team. Through the adoption of essential project management processes and operational procedures, the rescue of the project was successful. After setting another target date, the project was completed successfully in 1998 (Davies, Gann, and Douglas, 2009). This success was owed to the ability of BAA to employ integrated teams on Heathrow Express including senior managers, project managers, and casual staff. The project delivery strategy was also informed by a systematic benchmarking study that revealed that no projects in the construction industry had been completed within budget, on time, and within the stipulated quality (2019).
Before these strategic measures were taken, the management realized that the failure evidenced in the organization was facilitated by poor performance, the reluctance of clients to assume responsibility, and lack of collaboration with project partners. The research was undertaken by BAA also showed issues of system integration and delivery during project execution, a reason why the airport failed to open at the anticipated time. Further challenges evidenced at the facility upon reopening was due to the fact that the staff were unfamiliar with the new systems. This aspect caused the baggage system to become clogged with bags since the staff that were available to unload them were few. It was concluded that transferring the risks evidenced to the contractor did not provide protection for the clients. The management identified that the only way that the T5 project could succeed was through the establishment of the new structure of governance and commercial principles that are embodied in the terminal agreement (Davies, Gann, and Douglas, 2009). In a bid to enhance performance, BAA realized that the processes that were involved in the delivery should be simplified and standardized such as to enhance performance. Although the project success was affected by structural factors in the organization, it was successful in the end owing to the ability of the management to adopt effective operational processes such as, just-in-time and lean production techniques that were found in retailing and automobile in a bid to achieve a replicable and predicable approach to project delivery and design.
Although this project was not completed on time, it is still considered a success. Operational processes were implemented to support the project success during handover and construction phases of the megaproject. The ongoing success evidenced at the megaproject after its completion has been facilitated by the implementation of advanced production mechanisms that reduced costs and increased safety, flexibility, and efficiency of the airport (Davies, Gann, and Douglas, 2009). Just-in-Time coordination in the supply chain helped to manage materials, workers, subsystems, among other components. Just-in-time (JIT) coordination of the supply chain is required to manage the flow of large numbers of workers and high-volumes of materials, parts, subsystems, and components to the project (Brusoni & Prencipe, 2001). Additionally, the use of demand-fulfilment software was used to prioritize efficient delivery of components, materials and subsystems. The application of a detailed plan gave the megaproject guidance on training, skills, and working practices needed by the occupiers and customers in the facility.
Conclusion
System integration and competitive advantage London Heathrow Terminal 5 was characterized by challenges associated with project complexity, project management capability, and innovation dynamics that affected the success of the project. Megaprojects are often characterized by uncertainty and complexity, an aspect that creates risks for contractors and clients. Unlike fixed-price contracts that have reduced chances of risks, megaprojects such as the T5 are likely to face unacceptable risks for contractors and clients. As such, CoPS organizations must ensure the maintenance of in-house capabilities that are required to bear risks, lead the project, and work with other teams such as to control and coordinate the construction activities. However, although T5 used this approach client system integration are likely to fail since clients lack the incentive to develop important in-house capabilities. The problems evidenced in megaprojects can, however, be improved through learning and innovation since a project is a process. In order to increase the chances of success, the management of complex projects systems requires an individual to understand that CoPS are often supplied by a particular unit of production that can be in a single firm or a production unit that involves various firms.
References
Amos, J., (2016 February 29). SpaceX calls last-second rocket abort. BBC. Retrieved from https://www.bbc.com/news/science-environment-35686713
Brusoni, S., & Prencipe, A. (2001). Unpacking the black box of modularity: technologies, products and organizations. Industrial and Corporate Change, 10(1), 179-205. https://doi.org/10.1093/icc/10.1.179
Chesbrough, H. (2003). Towards a dynamics of modularity: a cyclical model of technical advance. The business of systems integration, 174, 181.
Davies, A., Gann, D., & Douglas, T. (2009). Innovation in megaprojects: systems integration at London Heathrow Terminal 5. California Management Review, 51(2), 101-125. https://doi.org/10.2307/41166482
Prencipe, A., Davies, A., & Hobday, M. (2003). The Business of Systems Integration Oxford University Press.
Ren, Y. T., & Yeo, K. T. (2006). Research challenges on complex product systems (CoPS) innovation. Journal of the Chinese Institute of Industrial Engineers, 23(6), 519-529. https://doi.org/10.1080/10170660609509348