Project Management involved in Formation of Airbus
The report investigates factors that led to the A380 project crisis. Analysis of the project revealed that Airbus did not integrate an effective project management model into the project lifecycle leading the project to be two years behind schedule, which eventually led to the costs escalations. The report reveals several lessons to be learned from the A380 project crisis. A project management needs to integrate effective cost management, time management and risk management in the project lifecycle. A mega project such as A380 needs to integrate a detailed risk management, cost and time management plan before project's implementation.
The case illustrates how project management integration could lead to a project success. In 2000, Airbus undertook the largest and the most ambitious project ever developed by the company. Airbus undertook A380 project, which was projected to be similar to superjumbo jets capable of carrying 853 passengers and crew. The A380 project was the first biggest aircraft ever built by the Airbus and the project intended to address the market needs and hub airport congestion. The project was also to induce more than 200,000 jobs globally. Despite the benefits that the Airbus A380 was to deliver, the project faced several complexities before it was finally completed. The project was behind schedule leading to the escalation of the project costs. The development cost was estimated to $10 Billion; however, the development costs had increased to more than $14 Billion by the time the project was finally completed. The overall factors leading the project crisis was lack of effective integration of project management model in the project lifecycle. (Sinha, 2009).
This reports aims to investigate the impact of project management model on the Airbus A380 project. This paper reveals the shortcomings in the project and this was caused by failing to integrate project management model in the project life cycle. This paper presents several lessons to be learned from the Airbus A380 project crisis.
Airbus is a subsidiary of EADS focusing on manufacturing of commercial aircraft. Airbus is also a global leader in the manufacturing of aircraft. In enhancing its business operations, the company focuses in delivering efficient products for its customer. Over the years, the company has successfully completed many projects and part of the projects completed consist of the single-aisle A320 Family, the wide-body long-range A330/A340, next generation A350 XWB Family, and double-decker A380 Family. The company has also broadened its scope by expanding its expertise in military market, freighter aircraft. Despite the success of Airbus over the years, Airbus made headlines with the problem associated the Airbus A380 project. Typically, Airbus mega project was two-year behind schedule making the Airbus parent company to secure a loss of $6.1 billion. (Dougherty, 2006). The project failed because it suffered from several integration management problems. (Schwalbe, 2010). The launching of A380 project was supposed to be a huge success for the company and suppose to elevate the company in achieving a market leading position within the airline industry. However, the cancellation of customer's orders of Airbus A380 following a delay in completing the project had been a major blow to the company, which could have pushed the company into a bankruptcy. The major cause of Airbus A380 failure was that the company did not integrate the strategic project management principles in project lifecycle. (Garfein, 2008).
Activities and Skills of Project Management
The concept project is undertaken to create new product and services and Airbus Company attempted to undertake a new project in order to create a new Air Bus A380. The huge costs that are always associated with project require stakeholders to integrate an effective project management to enhance successful completion of a project. The project management is the application of skill, knowledge, techniques and tools to project activities to meet project objectives. (Project Management Institute, 2007). A project manager must strive to meet specific time, scope, costs as well as quality goal of project before the entire project's meet the needs of customer. (PricewaterhouseCoopers, 2004).The core functions of project management that must be integrated into a project lifecycle include:
Cost management. (Claude and Brian 2006).
More importantly, project integration management must be included into the project life cycle to enhance project's success. The project integration management includes:
Human resource management
The Airbus A380 project failed to meet the project time and costs because management failed to integrate some of these project requirements listed above. The implication of these shortcomings made the A380 project to be two years behind schedule causing the Airbus parent company to secure a loss of $6.1 Billion within the span of four years.
To address the project's problem such as A380 project, the report provides the activities of project management that must contribute to the project success or failure.
Success of project largely depends on a skilled project manager who has a wide knowledge on project integration management and core project functions. A project manager is a professional having ability to integrate the project integration management to meet the needs and expectation of stakeholders. A project manager must understand the topics related to accounting, procurement management, financial management, marketing, sales, logistics, strategic planning and supply chain. It is critical for project managers to have a lot of experience to make an important project decision. (Thomas, & Mullaiy, 2005).
Some of the activities and skilled that must be integrated into a project to achieve a project success include:
Project cost management: A project cost management involves preparing and managing a budget that must be used to complete a project. A management needs to carry out the return on investment (ROI), payback analysis, net present value, cost management plan and cost estimates of a project before embarking on a project to avoid a project failure and achieve a success in a project.
Project time management: A project time management involving successfully estimating the appropriate time to complete project. It is also critical to develop an appropriate time schedule to deliver a timely completion of a project. The tools and technique to enhance project time management is to use project network diagrams, Gantt chart, schedule performance measurements and critical path analysis to develop effective time management technique for a project. (Milosevic, & lewwongcharoen, 2004).
Project risk management: The project risk management is one of the most important aspects of project management. Project management must possess the risk management skills to avoid project failure and achieve a project success. A risk management includes ability to identify, analyze as well as responding to the risk related project. The risk registers, risk management plan, risk ranking and probability risk matrix are the important tools and techniques that could be used to manage a project risk.
Project communications management: is a technique of collecting, generating, storing and disseminating information project information. Some of the tools and techniques to enhance project communication management include kick-off meetings, status and progress reports, and project web sites.
Project procurement management: This involves procuring and acquiring the goods and services needed to complete a project. Requests for proposals or quotes, make-or-buy analyses, supplier evaluation matrices, and source selection are the tools and techniques used to integrate procurement management within the project lifecycle.
Project scope management: It involves managing and defining all works required to complete a project successfully. Scope management plans, statements of work, scope verification techniques, work breakdown structures, scope statements, requirements analyses, and scope change controls are the tools and techniques used to integrate project scope management to avoid a project failure.
Project quality management is to ensure that a project satisfies the stated requirements. A project management must use tools and techniques, which include quality control charts, statistical methods, Pareto diagrams, quality metrics, maturity models, checklists, and fishbone diagrams to access the quality of a project. Using combination of these tools will assist project management to deliver a quality project that meet the need of project stakeholders.
Project human resource management is very important in the success of a project, and human resources management is concerned with making effective use of workers involved in the project. To achieve a project success, a project manager must use combination of tools and techniques, which include motivation techniques, project organizational charts, empathic listening, team building exercise, resource histograms, and assignment matrices. (Chang Chuah, & Li 2004).
Airbus A380 Project Management
Despite the activities and skills needed to carry out the project's success, Airbus management failed to integrate some of these project management skills in the project lifecycle. For example, the Airbus management failed to integrate risk management in the project, which led to the project failure. In 2005, the company announced that the project was behind schedule because of the technical problems. While the delay in delivering the A 380 aircraft was to last for 6 months, however, on the 13 June 2006, the company announced again that the project would be delayed for…