Page 1 of 20Consultancy opportunities atSnowham International AirportOPERATIONS AND PROJECT MANAGEMENTASSIGNMENTAll the information based upon these organisations is purely fictitious andhas been prepared for the case study. Any resemblance of asset,corporate entity, location or person included is purely coincidental.GuidanceYou are advised to read all the information through VERY CAREFULLY, makes notes and raiseany questions you may have with the lecturer as soon as possible.Snowham International Airport is an expanding regional airport in the south of England. It hasone main runway and four interconnected terminal buildings, one of which handles airfreight.The airport has good road and rail connections, and is surrounded by parking lots andhotels.The airport provides services to a set of airlines which are regularly using its facilities. Someoffer scheduled passenger services – mostly to short haul European destinations One (MustangPage 2 of 20Airways) is considering the launch of a new daily service to New York. Other airlines use theairport to offer charter flights to their customers, typically to popular holiday destinations inEurope. Others offer airfreight services only from Terminal One.You DO NOT work for the airport or one of the airlines but have recently been hired as agraduate trainee by an experienced firm of management consultants who specialise inimproving the operations of their clients.The Sales Director of your consulting firm has recently spent a lot of time at the airport talkingto various companies working at the airport – collecting information and looking for newbusiness opportunities.The Sales Director has provided you with all this information in this document. You are requiredto analyse the information and make a series of recommendations as to how each potentialclient could improve their operations performance, and in doing so generate increasedprofitability.The Sales Director wants to use your analysis to negotiate new consultancy contracts so theaccuracy and clarity of your arguments and calculations are essential. You are to submityour work in the form of a highquality consultancy report that would impress a potential client.In total, nine potential clients and consultancy projects were identified by the Sales Director:• SverigeTech – new Air Traffic Control system – project planning• The Airport Transit System project – resource optimisation• Terminal Four refurbishment project – progress analysis• Harvey Talbot – coffee procurement• The new Juicemasters outlet – outlet layout and design• Staff capacity planning for the Turista call centre• Sycamore Security Systems – process analysis• Baggage handling service – quality management• A new fire engine for the airport – procurement processEach section is worth 10 marks.The overall structure and presentation quality of the report will also be worth 10 marks.Page 3 of 201 The Airport Transportation System (ATS)Diagram 1 – ATS ProjectOver the past three years, Snowham Airport was starting to suffer from its own success withincreasing passenger congestion. In response a project was planned to improve transportationefficiency at the airport via an underground subway system. The new subway, called the AirportTransportation System (ATS), was designed to improve the transit time and experience ofpassengers travelling between the three passenger terminals.The ATS project was conceived as a single one way loop serving five subway stations as outlinedin Diagram 1. Passengers would be transported on a fleet of automatic rail cars travelling swiftlyand safely between the stations.The tunnel for the project would need to be excavated using a tunnel boring machine (TBM).Given the geological conditions, a TBM was expected to make progress at a rate of 30m per tenhour shift. In total the project would require a 3000m tunnel.Despite widespread enthusiasm for the project, Snowham airport authority (the project owner)had become very concerned about the potential cost. To facilitate rapid transportation, theATS link was intended as a free service to passengers, so no revenue streams would beforthcoming once the ATS was in service.After numerous revisions the airport authority decided that the project must be delivered forno more than £12 million.The project manager had given assurances that, as the major part of the project was beingcarried out underground, disruption to the smooth running of the airport would be minimal.Page 4 of 20The Project Plan: CodeTask descriptionDuration(weeks)Predecessor/s1Prepare station sites2–2Construct platforms513Install CCTV systems124Fit terminal escalators225Erect information boards126TBM tunnel work2017Fit electrical services368Install ventilation269Lay railway track67,810Test Subway system13,4,5,9 Table 1 – ATS Project Plan Version 1The original schedule in Table 1 was based on all staff working normal five shifts a week.Costs of the project were estimated as:Fixed costs: £2,000,000Project team: £200,000 per week while any part of the project is inprogressTBM and equipment: £300,000 per week only while Task 6 is in progressTBM crew: £100,000 per week only while Task 6 is in progress (£20,000 for each ofthe five day shifts per week 0700-1700)At a meeting of the airport authority board three months before the project was due to start,the ATS project manager presented an update on the status of the plan and the projected costs.He summarised by concluding that it was IMPOSSIBLE to deliver the project for less than £16million.The airport procurement manager who was present at the meeting, asked a question. ’Whatis the extra cost if a TBM crew work a weekend or night shift?’ he asked.’Generally about 25% more,’ replied the project manager. ’Why?’’Well if that is the case I see no reason why you cannot deliver the project for less than £12million,’ said the procurement manager.’Just what do you know about tunnel construction?’ demanded the project manager.’This is not about tunnelling knowledge,’ came the reply. ’This is about basic projectmanagement. If the TBM and TBM crew are your most expensive resource then it makessense to minimise that cost.’He continued: ’If you work weekends and night shifts I see no reason why you cannot work 14shifts a week instead of five. So unless the TBM breaks down, you should be able to achievePage 5 of 20about 400m per week. That makes a revised planned duration for Task 6 as eight weeks.’’But the TBM crew costs will rise massively,’ protested the project manager.’Not massively but £325,000 per week. The original estimate was £20,000 per shift or £25,000per night or weekend shift. Each week we would need an extra nine shifts costing £225,000more – making a revised tunnel crew cost of £325,000 per week – only while Task 6 (TBM tunnelwork) is in progress.’Consultancy guidanceExplain, with relevant workings, why the ATS project manager believed it was not possible tocarry out the project for less than £16 million.Analyse all the available information and determine whether or not the project can be carriedout within the £12m budget. Explain all your workings very clearly.Page 6 of 202 SverigeTech – Air Traffic Control systemAt the end of a busy day, the Sales Director went to the Airport Bar for a quick drink beforereturning home. At the bar he came across a young man in a suit looking thoroughly miserable.‘Bad day?’ said the Director.‘The worst,’ said the young man. ‘I will probably be fired on Thursday, and the wife is pregnantagain with our second kid.’‘What exactly is the problem?’The young man explained that SverigeTech, his Swedish employer was in the business ofdesigning and installing new air traffic control systems, and his employer had recently won a bigcontract from Snowham Airport to upgrade their existing system.The upgraded system had been designed and fabricated at the SverigeTech factory inGothenburg and an experienced project manager (Gustav Akesson) appointed to supervise theinstallation and testing in the Snowham airport control tower. The young man had only beenwith the company for three months and had been assigned to the project just to observe andlearn (as part of his probation period).Quite unexpectedly Akesson the project manager had resigned, and the senior SverigeTechexecutives in Sweden decided that the young man would have to manage the entire Snowhamproject, supervising a team of five company engineers.All he had to work with was a basic Gantt chart, that had been sketched out by Akesson beforehe left.Akesson planning notes: All module work is flexible but Integration cannot start until the four module tasks are all100% complete. Testing must follow Integration. Client flexible on completion timing but needs to plan ahead forTesting and Go-Live.Page 7 of 20All the work would be carried out by engineers as shown against the tasks. For example, theFlight clearance module requires two engineers for the entire duration of the task (4 weeks).Whenever necessary, Akesson was planning to hire additional engineers from a recruitmentagency in London. The young man knew this because he had been present at a meeting withthe agency two weeks ago.‘And then I get another call from head office this morning,’ he moaned. ‘We just lost a bigcontract in China, so there is no money at all available to spend on any extra agency staff.All I have now is the five SverigeTech engineers that will be flying in from Sweden at somepoint.’‘Can you do the work of an engineer?’ asked the Director.The young man shook his head.‘No, all that stuff is really, really technical. It is just the five engineers who are qualified.’‘What exactly is the company expecting you to do?’ asked the Director.‘Well most of the pressure is coming from the client – the Airport General Manager. He wantsus to commit to some definite dates for the Testing week and the Go-Live date because thatalso involves their ATC staff. If I do not come up with this information by Thursday, they maywell cancel the entire contract, and then my company will get rid of me. We are supposed tobe starting the project on May 11.’‘The company HR people are also on my back,’ he moaned. ‘They want the exact start and finishdates for each and every SverigeTech engineer. How am I supposed to figure that out?’‘Leave it with me for 24 hours,’ said the Director. ‘I will get one of my graduates to take a look.It may not be as difficult as you think.’Consultancy guidanceAnalyse the planning problem using a resource histogram to identify any resourcing problems.Reschedule the plan to eliminate the need for any additional engineers.Use the rescheduled plan to determine the start date of the Testing week and the planned GoLive date.Page 8 of 203 Terminal Four refurbishment project – progress analysisThe departures area within the Terminal Four structure at the airport was dated and was inurgent need of improvement. Currently the Terminal is closed for six months whilst a majorrefurbishment project is in progress. The work scope for this project was designated into sixstages as follows: Check-in FacilitiesCheck-in Counter FrontageCheck-in Counter AreaAirline Ticket OfficesDeparture Lounge AreaCirculation areasFlooringPublic SeatingMeet/Greet LobbyBaggage Handling ServicesBaggage Claim FrontageBaggage Claim AreaDelayed Baggage StorageOutbound Baggage ScreeningConcessions unitsRental CarsPassenger ConcessionsRetail unitsRestaurant/BarBuilding ServicesMechanical ServicesElectrical ServicesPlumbing ServicesHeating and AC ServicesTerminal Support servicesPassenger Security ScreeningPrivate Search RoomsToilets and ShowersStaff facilities A high level schedule was developed and authorised by the Airport management team. It wascritical that the project completed on time as flights were due to resume from Terminal Four inearly July.Page 9 of 20All six stages were to be worked on as separate, independent tasks EXCEPT that Task F(Terminal Support services) could not be started before Task C (Building Services) had beencompleted.On 1st March, a full day meeting was convened to review progress. All the projectstakeholders were represented. In preparation for the meeting the senior planning engineersupplied the following information about actual progress.• Check-in Facilities is proceeding well and is now 70% complete.• Baggage Handling Services is 40% complete• Building Services is in the early stages – 15% complete• Circulation areas is 60% complete• Work on Concessions units and Terminal Support services has yet to startConsultancy guidanceOn behalf of the Airport General Manager, analyse the progress achieved (planned v. actual) onstage task (on 1 March) and highlight any problems that are now arising. Assign a colour codefor each task, explaining clearly your choice of colour:Red – Task in progress falling more than 5% behind planAmber – Task in progress (broadly in line with the plan) or not yet startedGreen – Task completed or at least 5% ahead of planSecondly, using your progress analysis, determine an approximate expected completion date forthe entire project. Explain your analysis and state any assumptions very clearly.Page 10 of 204 Harvey Talbot – coffee procurementHarvey Talbot (HT) is a chain of American style restaurants throughout the UK which offers high quality filter coffee to its customers. They have one restaurant at Snowham airport.company coffee is supplied by one company – Kenyan Coffee Supplies (KCS) Ltd.All the By chance the Sales Director met with the HT Finance Director who was visiting the airportrestaurant and they started an informal discussion about the increasing cost of buying coffee.The Finance Director had only been working with HT for two months and was concerned thattheir current purchasing policy was far from optimal. Margins are very tight and the HT FinanceDirector wants to improve their overall performance by reducing purchasing spend on allconsumables. He plans to start with coffee.Currently the unit cost of one standard coffee container is £14.50 and in total the companygenerally gets through about 200 containers each fortnight (2 weeks).The HT company trades 52 weeks a year. The cost of placing an order with KCS is £40 and theholding cost is known to be £9 per container per year.The coffee is delivered by KCS to HT’s central warehouse in Swindon and from there it isshipped with other supplies to the 45 HT restaurants – at a yearly cost of £7,500. Occasionallydeliveries are late and restaurants run out of coffee for a few days.The HT Finance Director had found that the total costs of procuring coffee were currently£94,000 p.a. with no consistent order policy i.e. HT purchase orders with KCS were placed in ahaphazard manner in terms of frequency and amounts ordered.The Director had two ideas as to how they could improve the terms of their contract with KCS.The first is a suggestion that ordering would be more efficient if the Economic Order Quantity(EOQ) method was being used.The second suggestion is that KCS would probably give the company a discount for bulk buying.And after discussions with the KCS Sales Director, KCS offered to give HT a bulk buy discount,charging only £12.75 per container, if KCS were prepared to order at least 2,500 containers at aPage 11 of 20time.The HT restaurant manager at the Airport was also present at the informal meeting andsuggested that HT should abandon the centralised contract arrangement with KCS and thecompany should let each restaurant manager order coffee individually from local suppliers asthey see fit.Consultancy guidanceExplore whether either (or both) of the two suggestions from the HT Finance Director wouldreduce the total annual cost of procuring coffee. Show all calculations clearly.Separately, discuss the merits and demerits of the restaurant manager’s suggestion.Page 12 of 205 The new Juicemasters outletLike many airports the concourse area where outgoing passengers wait before flying has anumber of food and retail outlets. One of the outlets has recently become vacant and has beenleased by an independent company called Juice-masters. This company specialise in a widerange of healthy juice and smoothie options together with some cold vegetarian snacks such asbaguettes. Specialty teas and coffees would also be available to customers.The company has opened successful outlets in three other airports and the Chief Executive isvery enthusiastic about a new outlet at Snowham. One of the senior members of staff fromanother Juice-masters outlet has been recruited to manage the new outlet.In Appendix A, there is a diagram showing the floor layout of the empty outlet. Some basicmarket research has provided the following information in terms of the number of customersthat could be expected to use the new outlet when it opens. PeriodAverage customers per hour0000-0600600600-11001101100-14001901400-18001401800-000050 The person appointed to manage the new Juice-masters outlet is has several years ofexperience in terms of creating and selling the products but has no experience in operationsmanagement. She is extremely worried about how to deal with the challenge of getting thenew unit up and running and the rest of the company are just too busy to help.Consultancy guidanceUsing the plan in Appendix A, design a layout of the recommended floor layout – with cleardetails of exactly how the queueing, ordering, delivery and payment processes would work.Include all the furniture and equipment required in the main area. Define all the job roles(precisely who is going to perform which job roles). You should consider how these aspectsmight change from shift to shift. Recommend appropriate opening hours.Page 13 of 206 Staff planning for the Turista call centreTurista Airways operates flights from a number of UK airports. Although the vast majority ofclients book flights through the Turista web site, it maintains a small call centre at Snowhamairport which handles calls from customers throughout the year. The calls are often quitecomplex to deal with.The call centre works a 250 working day year (50 weeks x 5 days a week). Last year the callcentre dealt with 26,200 calls in total but there were different patterns of demand.There are three different periods during the year.The number of calls from customers is fairly slow in the first period. Between working days 0and 100 there were 5200 calls. The peak holiday period is between day 100 and day 150 when atotal of 15000 calls were received. After day 150, there were 6000 calls in total.The department has two permanent members of staff, who are capable of processing 30 callsper day each. Neither are allowed to take any holidays during the peak period.Turista are confident that the coming year will have similar levels and patterns of demand aslast year.Consultancy guidanceIf a temporary member of staff can handle 20 calls a day, determine how many extra temporarystaff Turista will need to recruit during each period next year. If temporary staff cost thebusiness an average of £60 per day worked, calculate the total annual budget required fortemporary staff only.An IT company has developed a new web based call handling system which they claim will allowexperienced, permanent staff to increase their productivity to process at least 50 calls per dayand untrained temporary staff to 40 calls a day. If this claim is true and the system is priced at afixed cost of £24,000, calculate the cost savings of hiring temporary staff and advise thecompany whether or not to proceed with the system.Page 14 of 207 Sycamore Security SystemsThe airport was having a new CCTV system installed and the Sales Director watched twoinstallation technicians complete an installation. There were wearing uniforms showing thename of their company -Sycamore Security Systems (SSS). When they had finished about 2pm,they went for a cup of tea in an airport cafe.However, the Director was very surprised to see them still there drinking tea two hours later.He sat down on a nearby table and said “No more work today lads?”“That’s right,” the taller one said, “we have done everything we can. And to be honest it is rarethat we have enough work to keep us fully occupied for an entire week. The company knowsthis and don’t seem to mind provided we do all our installations properly.”“So why don’t you just go home?”“We would – except that we are waiting to see the SSS Ops Manager to discuss work for nextweek.”After the meeting between the SSS Ops Manager and the technicians had finished, the SalesDirector had a chat with the Ops Manager who explained the way in which the SSS companyoperated. SSS is an international company which designs and installs CCTV systems for a widevariety of corporate clients – including airports. Each system is designed and constructedspecifically for each location. The full process for each job is as follows:The salesmen, surveyors and teams all work on an independent basis. So for example eachsurveyor can perform 1 survey every 16 hours.Page 15 of 20The average price charged for a complete integrated CCTV system is £160,000. The total unitcost (including all materials and staff costs) is £128,000 per system. All other fixed overheadscost the company £90,000 per week. Everyone in the company works a typical 8 hour day, 5days a week. The company trades for 50 weeks a year.When asked about temporary staff, the Ops Manager said they had been in touch with a localemployment agency which can provide additional staff at the following inclusive rates:Salesman – £300 p/daySurveyor – £400 p/dayManufacturing technician – £1000 p/week (3 technicians = 1 team)Installation technician – £1500 p/week (4 technicians = 1 team)The Ops Manager said demand from clients was usually about 8-9 systems a week. Howeverover the next 12 months the company sales team was very confident that this would rise to atleast 10-11 systems a week.Consultancy guidanceFirstly, determine the maximum production capacity of the company each week. Identify theprocess bottleneck and explain your reasoning. Calculate the gross annual profit beinggenerated by the business (using the information provided).Secondly, if the company decide to use the services of the employment agency, assess what staffshould be recruited and calculate much extra annual profit could be generated. Explain youranalysis and workings very clearly.Page 16 of 208 Baggage handling problems at Snowham AirportAs part of the service provided to all airlines, the airport baggage staff handle all the outgoingbags checked in by passengers. Every bag is tagged with a bar-coded label. Ted Jones is theAirport Baggage Handling Manager. His team handle an average of 2000 bags a day, 365 days ayear.Clearly it is very important that the baggage staff get the right bags onto the right aircraft.Mistakes result in very angry passengers and equally angry airline managers demandingcompensation for their upset passengers.A conveyor belt system delivers all the outgoing bags from the check-in zone to a centralbaggage station. All bags are then X-rayed and some are opened to check the contents by hand.After X-ray checking, the bags are returned to the main handling area and from there, the bagsare sorted onto different flight trolleys by Internal Baggage Handlers.These trolleys are then taken outside and loaded into the aircraft. Usually two BaggageHandlers deal with each aircraft.Incoming baggage is simpler to handle. Aircraft are unloaded onto trolleys and the baggage istaken directly to the carousel system. No sorting is required.When outgoing flights are being loaded the Baggage Handlers are expected to double-checkthat every bag label is correct. If they find a mistake (i.e. find a bag that should not be loaded onthis aircraft) then the bag is taken off the loading trolley and delivered immediately to thecorrect aircraft. But in the rush to load an aircraft, not all mistakes are detected.The airport is aware that in general 0.5% of bags are loaded onto the incorrect trolley. If thishappens the chance of the mistake being found during aircraft loading is about 70%.If a bag misses the correct flight or is loaded onto a wrong flight. the total cost of compensationaverages £125 per bag. But if the mistake is detected by Baggage Handlers just before loadingthen the cost of relocating the bag to the correct aircraft is only about £40.Page 17 of 20Aware of these constant problems, three suggestions have been developed by the airport staff:Joey Wong, the Airport Operations Manager immediately asked for a £800,000 budget toimprove the baggage handling technology environment. This should – he argued – cut handlingdefects by 50% (i.e. to 0.25% not 0.5%).Ted Jones asked for permission to recruit four new “Baggage Inspectors”. He argued thiswould enable his staff to inspect the bags more carefully and detect more mistakes whilesorting and loading – increasing the chance of any mistake being found from 70% to 90%. Thetotal cost in employment costs would be about £58,000 per year.Dougie McDonald, one of the senior baggage handlers, suggested that most problems werecaused by inexperienced, badly trained and low paid Baggage Handlers. If each handler wastrained properly, supervised in a positive manner and given responsibility for their own success– and rewarded accordingly – he believes errors (loading bags onto the wrong trolley) woulddrop to 0.1% or less.Consultancy guidanceFirstly determine the total quality costs (internal and external) of the baggage handlingoperation as it is at the moment. Set out your calculations clearly.Secondly, assess the business value of each proposal in comparison with the current costs andderive a coherent recommendation for the Airport.Page 18 of 209 A new fire engine for the airportThe airport safety manager has been given authorised to add a new fire engine to its small fleetof rescue and firefighting vehicles. This was an exciting prospect but the manager was lesspleased when the Board demanded that a structured procurement process be applied todemonstrate clearly how the best vehicle was selected.After some market research, three candidate vehicles were short-listed from specialistmanufacturers (McDougal, GVX and Schellinger).A team of airport staff (from the Finance, Procurement, Operations and Safety departments)had visited each manufacturer to inspect and test each vehicle – and afterwards ranked eachoption as follows: Decision Factor (each marked 1-10)McDougalGVXSchelllingerCompatibility with existing airport equipment368Ease of maintenance and servicing678Overall fire-fighting performance754Durability and build quality854Client references465 At a management meeting after the visits, weightings were agreed as follows: Factor Weight(1-10)Compatibility with existing airport equipment5Ease of maintenance and servicing6Overall fire-fighting performance8Durability and build quality9Client references4 The purchase price of each vehicle was quoted in writing by each company as follows:Page 19 of 20 McDougalPurchase price(£000’s)347Annual servicing/maintenance(if carried out by vendor)Free of ChargeGVX289£18,000Schellinger295£15,000 Each vehicle was expected to last for at least 4 years at which point its resale value would beapproximately 25% of the original purchase price.In addition, GVX offered a three year vehicle leasing option which involved a cost of £129,000per year for three years. They would guarantee performance and carry out all servicing andmaintenance free of charge. At the end of three years the airport could either return thevehicle or buy it outright at a price of £129,000.The Airport safety manager would have been content with any of the three options but wasconfused by all the information and had no idea how to formulate a structured response.Consultancy guidanceAnalyse all the information provided and use a weighted scoring system to derive a coherentrecommendation as to which vehicle option the airport should select.Justify your recommendation with clear evidence, calculations and written arguments.END OF CASE SCENARIOAppendix A – New Juice-masters outlet Clothes Store next doorStaff ToiletStoragespaceStoragespaceAccessories shop next door 15m 17m window door windowPage 20 of 20Interior of airport concourse


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