Governance at Heathrow follow up event
Posted by APM on 30th Jun 2015
On 10th June the APM Governance SIG (GovSIG) hosted an event at etc.venues in Hatton Garden, London to share good practice in governance of project management. We on the GovSIG committee were delighted to welcome Helen Gamlin from Heathrow who delivered an intriguing presentation on how the governance arrangements have changed at Heathrow since we last heard from a colleague of Helen's in 2012.
The GovSIG Chair, Martin Samphire, introduced the evening by explaining the objective of the GovSIG, trailing some future events (i.e. Magna Carta session on 8th July and Governance conference on 1st October) and explaining that recent research provides further evidence that good governance is the crucial success factor in project outcomes.
The audience recognised that few of them had seen or used the APM best practice guidelines, particularly Directing Change, and that we are not good at embedding the guidelines into our organisations.
Helen then introduced her session and described the context and environment that Heathrow operated within. She explained the new and simpler vision and objectives for Heathrow:
Helen explained that the business is regulated and has a complex mix of stakeholders where the airlines are its prime business to business customers. Heathrow works to a regulator-agreed five year plan (quinquennial – currently Q6) where the return on investment is set for the period by the regulator. This is set against an agreed set of parameters (forecasted passenger number, expected revenue, expected cost) and Heathrow can improve its return on investment by improving on forecasted parameters. The capital investment portfolio includes strategic programmes that address the key investment priorities of passenger experience, airport resilience, baggage and asset management.
Heathrow has adopted a “collaborative partnering” model to deliver their Q6 portfolio using a number of well-known suppliers to deliver each programme within the portfolio (see below).
Helen explained the phases that Heathrow had gone through to get to this stage of maturity and how it differed from 2012. Helen’s presentation touched on, and reinforced, some core elements of good governance practice:
- Industry best practice
- Strong Sponsorship
- Clear vision for success to generate alignment
- Strong ownership of benefits
- Benefits are actively measured – currently at project level which raised some debate as to whether this might be better exercised at programme level
- Absolute alignment of the portfolio from the strategic objectives and priorities through individual programmes to project outcomes within programmes (see further down)
- Due to the complex stakeholder environment, different parties feel they “own” and can direct projects. Users want no disruption to operations (and to utilise Capex rather than Opex), shareholders want a good return over and above that set by the regulator, airlines want maximum value for their regulated spend focussing on passenger facing projects, finance want delivery to cost which generates maximum benefit
- Decision making is constrained through formal governance channels determined by characteristics of the individual projects. Having clear lines of delegated authority with limits on approval of financial expenditure
- Formal stage gates are exercised at both programme and project level (see further down) with defined approval processes and who is responsible for what
- The current Heathrow portfolio is made up of lots of small projects – very different from previous years where large “standalone” projects had dominated the portfolio. (The recent APM Conditions for Project Success research had highlighted that smaller projects were much more successful than bigger ones).
- Collaboration is at the core of the delivery approach, utilising the available expertise in the market – “business relationships formed by committed organisations to maximise performance for the achievement of aligned objectives and creation of additional value”
- ‘Sponsor Agents’ are no more! Now the executive sponsor is accountable to the Board and owns the business case and benefits realisation at the programme level; the business case owner owns the business case and benefits delivery at the project level
- Regulation still plays a big part in how the capital plan is set up and run. Heathrow has to meet conditions on the way consultation is carried out with the airlines which has led to the appointment of an independent funds surveyor. This enables an independent scrutiny of value add to “assure” the airlines of the value of projects invested.
- A Heathrow ‘matrix’ determines the 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.
Helen concluded by saying that Heathrow continues to develop their governance model and in future Q’s they will keep evolving to align with the structure of the portfolio. We look forward to welcoming Helen and Heathrow back to the APM GovSIG in the future to see how this journey develops”
For a full set of the slides presented please click here.