A critical analysis of risk management in airport project: An empirical study of airport projects in Oman

Oct 24, 2018 | 0 comments

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A critical analysis of risk management in airport project: An empirical study of airport projects in Oman
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Table of Contents

Chapter 1 5

Introduction 5

Airport Projects: Complexity and overview 6

Project Management in Airport Projects 7

Challenges and Complexities of Airport Projects 7

Advantage of Information Technology framework 7

Airport in Sultanate of Oman 7

Project Management in Airports in Oman 7

Future of Airports in Sultanate of Oman 7

Airport Project in the Gulf region 7

Problem statement 7

Research objective 8

Key questions for the research 8

Intended outcomes 9

Rationale behind the proposed Research 9

Summary 9

Chapter 2 10

Literature review 10

Risk 11

Risk Management 11

Operational Risk Management 11

Airport Projects 12

Airport Projects as Mega Project 12

Operational Readiness, Activation and Transition (ORAT) 16

State of Airports in Gulf Region 18

Airports in Oman – Business perspective 18

Oman Economy and market analysis 18

Rationale behind the research 18

Summary 18

Chapter 3 19

Research Methodology 19

Primary data 20

Secondary data 20

Chapter 4 22

Research Analysis 22

Critical analysis 23

Chapter 5 24

Conclusion and Findings 24

Recommended framework 25

Conclusion 25

Self-reflection 25

Appendixes 26

References 27

Chapter 1

Introduction

Airport Projects: Overview

The airport operations are critical to any airport project, and the management of any activities become hard because of the unstable environment which is part of any airport project. Managing the operational risks is a target for the operations to measure how far the airport project is ready and to activate the airport or the terminal. Going through the stages of any airport project, there are many risks which make the work toward the airport activation difficult. The primary goal of this research is to find and create a framework which will help the operations to identify the possible risks and to propose a framework to address or mitigate them. The outcome of this research can be a system which will help the operations of any airport to identify the risks and manage them in a proper way. Before the start of this study there is a need to define the meaning of airport project which is the backbone of the research. Airport project is any project meant for building a new airport or a new terminal with new systems and facilities.. The focus of this research on the operational management side will be go alongside the progress of the airport project. That is the area that deals with the operations and assess the products and services delivered, and how the airport operations adapts to the new facilities and products. The progress from the project stage to the operation stage takes much effort and therefore, there is need for wider understanding of the four aspects of operations which includes people, systems, facilities and processes.

Project Management in Airport Projects

The implementation of project phases is important in the airport projects because of high pressure from the public and government. The decision making can take up to more than forty years like what happened in Lisbon airport in Portugal (Partidário and Coutinho 2011. (Partidário and Coutinho, 2011) One of the major issues facing the airport projects is the delay in the schedule which leads to other problems.

Another issue is the changing technology which forces the operators to deal with technologies that are outdated or redundant (Kozak-Holland and Procter 2014). (Kozak-Holland and Procter, 2014). Planning phase of any airport project should consider the scope required for the project and include all stakeholder from the beginning to cover all requirements and to avoid any future changes which might increase the cost of the project (Prather 1998). (Prather, 1998)

The success of any project is demonstrated by it achieving the targeted goals within the agreed budget, time, scope and quality. However, sometimes with airport project, it is difficult to evaluate a project as successful because of many factors which effect the scope and time. Most of the studies in the success factors of projects agreed on three factors which are the support of top management of the organization, realistic and direct objectives for the project and detailed up to date plan for all phases of the project (Rolstadas, Tommelein and Schiefloe 2014) (Rolstadas, Tommelein and Schiefloe, 2014) all of these compared to the airport projects, the support of the top management of the country or the government is always available but there are many problem in the project objectives and the detailed plan for the project implementation, for instance inDenver airport (Prather 1998). (Prather, 1998)and Berlin Brandenburg Airport in Germany (BRANDENBURG: TOO LITTLE, TOO LATE 2014) (BRANDENBURG: TOO LITTLE, TOO LATE, 2014)

The most important airport projects in Oman are the new Muscat Airport and new Salalah Airport projects. Both of them are facing delay in time and numerous changes which affect the overall cost of the project. For both projects, ADPI Company handles all activities of project management to ensure the progress of work in the plan is smooth (Unsupported source type (Interview) for source Dou15.).

Challenges and Complexities of Airport Projects

Challenges and failures in different projects around the world are different and varies from one country to the other.. Most of airport projects are facing problems in the decision making for the location of the airport. This is a big challenge and nobody is ready for theconsequences of this decision (Partidário and Coutinho 2011; Prather, 1998). (Partidário and Coutinho, 2011) (Prather, 1998) because of that, Prather (1998) indicated that most of the airport authorities conduct public survey to come up with the right decisions from the survey findings. For instance, from the public survey conducted on Denver Airport, the findings indicated that there was need for building a new airport instead of maintaining the existing one. (Prather, 1998)

Airport Capacity (mppa) Floor Sqm Construction Months
London Heathrow T5 28 353,000 72
Madrid 42 757,000 70
Bangkok 45 563,000 60
Kuala Lumpur 25 479,000 54
Beijing 43 900,000 52
Delhi T3 34 552,000 37

Airport projects are classified as mega projects as they involve many stakeholders, have complex structures and big budgets. With such a project, there are many challenges in delivering the project in time and within the specified cost. According to Sridharan (2015), Delhi Terminal 2 was one of the few airport projects which was completed and openned within the specified timeframe and budget as shown in Table 1 (Sridharan, 2015). The increasing flowof passengers as shown in ACI statistics in figure 3 makes the airports authorities face the big challenge of handling these number of passengers which definitely need the facilities and systems to serve them.

The complexity of mega projects is measured through six categories including several elements for each category. He et al (2015) indicated that the six categories include Technology complexity, Organizational complexity, Goal complexity, Environment complexity, Cultural complexity and Information complexity. (He et al., 2015). Technology complexity deals with the integration of the systems and number of systems implemented in the project and how the project is dealing with these systems. on the other hand, technology complexity includes the construction and the related materials used in the construction. Furthermore, organizational complexity entails the structure of the project and how the project stakeholder’s structure and teams work to achieve the completion of the project. similarly, goal complexity entails the different requirements from different stakeholders with different task lists which conflict with each other and make the work scope unclear and very difficult to understand and prioritize. Environmental complexity, on the other hand, entails the difficulty of the surrounding environment and how it is difficult to implement what is required in very difficult conditions. He et al (2015) stated that environment complexity include natural, political and regulatory conditions related to the project. Cultural complexity is meant for the diversity of the people from different countries and mind-set. Lastly, the information complexity entails the information flow between the stakeholders which shape the transactions between the different stakeholders (He et al 2015).(He et al., 2015).

Advantage of Information Technology framework in Airport Project

Because of the challenges and the complexities that exist in the airport project within the culture, information, organization, goal, environment and information technology, there is a need to implement supported systems to help in solving the issues coming up in the progress of the project (He et al 2015). (He et al., 2015). The agreed processes will facilitate the implementation of any system to minimize the complexity issues and problems that might occur in the project. As noted from the interviews conducted to the six experts in the airport projects, no system is available for the risk management except excel spread sheet which make the work manual and not up to the level required. Information technology is used within the construction before and after the commencement of the project, and this helps in getting the right information at the right time (Sener 2015). (Sener, 2015)

Airports in Sultanate of Oman

The aviation industry in Sultanate of Oman is growing and this is characterised by construction of new airports and launching the operations of several regional airports. The geographical location of Sultanate of Oman is a big advantage because it is located in the middle between Asia, Africa and Europe to connect all flights. The government of Sultanate of Oman is investing in the transportation industry to cope with the development in the transportation industry, both inthe air, land or sea. The projects within airports industry is growing with two major international airports in Sultanate of Oman ; New Muscat Airport and New Salalah Airport. The opening of New Salalah Airport was in 15 of June 2015 which made a bigger constributionto the airport industry in Oman with new technologies and facilities. Currently, all Omanis’ are expecting the opening of New Muscat Airport, one of the biggest airports in Oman. The location of Sultanate of Oman is circled in red in the figure 5 below.

The regional airports is a plan which government of Sultanate of Oman executing by opening multiple of them for the past two years. Al Duqum Airport, Sohar Airport are examples of operational airport which are currently serving the community. The Plan for the future is to open Ras Al Had Airport to boost the tourism industry in the country (OAMC, 2015). (OAMC, 2015).

Project Management in Oman Airports

The airport project’s work is the responsibility of Ministry of Transportation and Communication, and the ministry is entrusted in managingall these projects in Sultanate of Oman. From flouting the tenders to choosing the contractors , these processes happens away from the operator of the airport, that is Oman Airports Management Company. The client of all airport projects is the Ministry of Transportation and Communication and the main project manager is ADPI Consulting Company (OAMC 2015). (OAMC, 2015) The project has been divided into different major contracts and standard national contracts, with each one of them being responsible for each package as indicated in table 2 & 3 below (OAMC 2015). (OAMC, 2015) (Unsupported source type (Interview) for source Dou15.).

Main and Standard National Contracts for the New Muscat International Airport (OAMC, 2015)

Contracts Description Contract Awarded to
Project Management Project Management Consulting Service adpi
Principal Consultant Principal Consultant for Design and Supervision Hill International
MC1 Civil Works – new Runway, Taxiway, Apron, landside development. Access road to terminal Consolidated Contractors Company – TAV Joint Venture
MC2 Air Traffic Control (ATC), Air Traffic Management (ATM), Data Centre (DC2), Contingency & Training Building (C&T), Crash, Fire & Rescue (CFR) Carillion Alawi
MC3 Passenger Terminal Building (PTB) Bechtel-ENKA-Bahwan Engineering Company – Joint Venture
MC4A Civil Aviation Head Quarters Building Towell Construction Co. LLC
MC6 IT & Security Systems Ultra Electronics
MC7 Operational Readiness & Airport Transfer (ORAT) Munich Airport
MC8 Baggage Handling Systems Vanderlande Industries
SNC9 Air Traffic Management Systems Indra
SNC10 Navigational Aids Systems Thales
SNC11 Passenger Boarding Bridges JBT Corporation
MC12 Detail Design and Construction of Cargo and Maintenance, Repair and Over-haul Facilities Awarded
MC13 Detail Design and Construction of Catering Facilities Awarded

Other Contracts Awarded for the New Muscat International Airport (OAMC, 2015)

Contract Description Contract Awarded to
Dredging works and soil reclamation Boskalis Westminister
Improving and strengthening the soil (Ground Improvement) Solitanche Pachy
Construction of channels to discharge wadi water and roadside paving works and installation of Culverts Desert Line Projects
Design, supply, install and commission a new radar Raytheon
Construction of rock fill for new runway and taxiway Galfar Engineering and Contracting
Relocation of water pipe lines and security fences Al Matar Company
Design and Construction Supervision services for Maintenance, Repair and Overhaul Hangars and Cargo facilities Ghafari Associates LLC
Design and Construction Supervision for In-Flight catering facilities Al-Hatmy Engineering

Future of Airports in Sultanate of Oman

The government of Sultanate of Oman is moving on with the projects of building new passenger buildings for Sohar Airport, Al Duqum Airport and Ras Al Had Airport with Oman Airports Management Company coordination. The focus for now is on opening of the new Muscat Airport which will be a change of big scale from everything existing.

New Muscat International Airport Facts

Description Facts
Terminal Building Capacity – Stage 1 12 million passengers per annum (mppa.)
Terminal Building Capacity – Stage 2 / 3 / 4 24 / 36 / 48 mppa.
Total Gross Floor Area Terminal Building 334,995 m²
Car Parking Capacity 8,000
Air Traffic Control Tower Height 97m
Existing runway length after extension 4,000 x 60m
New Runway Specifications 4,000 x 60m
Boarding Bridges / Contact Stands 29
Bus Boarding Lounges 10
Remote Aircraft Stands Stage 1 / 2 10 / 30
Check-In Counters 86
Self service check-in kiosks 20
Emigration Counters – Departures 31
Immigration Counters – Arrivals 56
Arrivals Carousels 8 international + 2 domestic
Transfer Counters 12  Counters
In-Flight Catering Capacity 24,000 meals per day
Aircraft Hangar Capacity 2 wide body + 4 narrow body
Airside Hotel Capacity 90 rooms

There is a plan for new Muscat Airport to reach to 48 mppa after the opening by addition of a new terminal to the new onethis has been considered by the Ministry of Transportation and Communication. There are many projects within the airports industry in the coming years with a lot of opportunities to enrich Sultanate of Oman’s economy.

Airport Project in the Gulf region

The gulf region include many of airport projects which are either brand new airports or new terminals. One of the growing airport industries is the United Arab Emirates which have different airport projects between Dubai and Abu Dhabi. The new Abu Dhabi International Airport, the new International Al Maktom Airport and the new terminal in Dubai international Airport are examples of new airports with scale of more than 100 mppa. Additionally, the new Hamad International Airport in Qatar is a big change in the size of the old airport to the new one which gives more space in everything including the stands of the airplanes and the passenger building. The new Hajj terminal in King Abdulaziz International Airport is a big addition to the airports in Jeddah in Saudi Arabia. This terminal is helping after the successful opening to manage the Hajj season which is expected to receive more 1 million passengers. In the below graph or figure 6 show how the Middle East is investing in the airport industry compared to others. It is clear that the investment is high due the challenges which face the Middle East countries within coming years.

Figure 7 shows a graphical presentation of how big the airport projects compared to the investment which gives an indicator how big these projects and how it is important to the countries to support the national economy through the big facilities and latest systems and products.

Problem statement

It is important to explain the issue that is related to the airport project,what the research is focusing on as a problem and what are the dimensions of this problem. Clarifying the problem is making the way shorter to the solution and to get the right steps for the requested framework and output. Airport project is any project related to building a new airport or new terminal with new systems and facilities.

Airport project are very complex projects and usually attracts a lot of publicity. They receive a high level of investment and budget raising the construction work and the required systems to operate the airport to a higher standards. These project usually take long time and require a lot of effort in constructing them and later operating them. Along with that, comes many risks for delivering the project and more importantly making sure that the final product is fit for purpose in order to achieve the operational goals the airport operator is to accomplish. There is a need to handle risks from the operational perspective well in advance before the final project is delivered. This issue is not covered previously and needed to be highlighted and a solution should be provided. This thesis tries to achieve that.

Research objective

The airport project become more important and significant within these days for the huge demand for the transportation either for passengers or cargos. The list of objective will help to make this project more focused in specific points and to give a better results to help airport industry. The objectives of this project are listed below:

Objective 1: To study the relevance of risk and managing risks in airport projects

Objective 2: To critically analyse the risks in airport project and the role of Information Technology in managing risks

Objective 3: To propose framework using IT knowledge base based on critical analysis and study of airport projects

Key questions for the research

How important is the IT knowledge used in risk management of airports projects?

Is there a possibility to create a framework for risk management by using the IT knowledge for airports projects?

Intended outcomes

The research in the airports industry became wider and there are different perspectives when thinking in the airports industry for example marketing, environmental, construction, operations, aviation, project management or planning and strategy. For this project, the focus will be to provide the following outcomes which will help the airports industry:

  1. A study about risk management in airport projects
  2. A report about the role of information technology in managing the risks in airport projects
  3. A framework in identifying risks in airports projects through using the IT knowledge

Rationale behind the proposed Research

The process of operation readiness for a new airport is very critical for the successful opening as can be understood from the interviews conducted. Maintaining all information during this period is important. Moreover, there is need to share it with all stakeholders to avoid any risk which will stop the opening of the new airport. Currently, there is no such clear process on how to manage the risk during the airport activation other than creating the spread sheet list of risks manually and sharing this list with others by email. The industry airport projects is moving forward with many new opportunities in the future and need to minimize the delay in time and work within the time specified. The new airport projects is considered as complex project as mentioned previously and need to be managed very well while taking in consideration the complexities types mentioned.

Summary

Airport projects represents the future for any country and need to be structured very well. Sultanate of Oman is growing in the airport industry and there is need to shape the future with very knowledgeable man power to counter the challenges coming within the new airport projects. This dissertation is giving an idea on how to make the process of maintaining the risks in operational readiness stage of any airport projects. This will help the future airport projects to consider the proposed framework as a practice and work through the airport readiness risk assessment in efficient way.

Chapter 2

Literature review

Risk: Overview

The definition of risk need to clarified and investigated as it is important in the in depth description of risk management and all related topics. The definition of risk is twofold, that isqualitative and quantitative. Qualitative risk definition is about describing risk in relation to uncertainty, hazards, damages, safeguards and probability. Quantitative risk definition, on the other hand, depend on the input of risks data and how to mitigate these risks (Kaplan and Garrick 1981). (Kaplan and Garrick, 1981) According to Ehiemere (2013),the risk has several components which form the the risk in overall, and they include;uncertainty, hazards, damages, safeguards and probability (Ehiemere, 2013)

Uncertainty is the basic component and is one of major issues within any projects and needs prediction. Damages forms the second level of risks after uncertainty and is the result of any action or impact that will be expected in the project. Both the uncertainty and damages components form the equation of risk together.The equation of risk states that the risk is a combination of damages and the uncertainty (Kaplan and Garrick 1981). (Kaplan and Garrick, 1981)

Safeguards form the level of defence of risks which is known as mitigations. Knowing how much the damages can cost is important in creating proper safeguards for the risk to minimize the effect of damages of the risk (Kaplan and Garrick 1981). (Kaplan and Garrick, 1981). The probability of risk is the result of how many times the risk occur within a number of trails. The probability ensure providing the percentage of risk occurring will help to avoid or mitigate any similar risk in the future (Ehiemere 2013). (Ehiemere, 2013).

Risk Management

The risk management in airport project is viewed differ between the project management side and the operational airport readiness. The focus in this research is the operational airport readiness to get a framework which will help the operations to make the new facilities ready and fit for the purposes intended.

Operational Risk Management

The operational risk management is one of the key factors in the preparation of opening mega project like an airport project which follow several steps with all project stakeholders. Because of the complexity of any airport project, there is need to make the airport testing and commissioning smooth but this will not be possible unless there is a proper plan. Also, there is need to have a plan for the airport activation which will help in includingthe critical issues during the opening. All stages of testing and commissioning, and airport activation are part of Operational Readiness, Activation and Transition (ORAT) process. ORAT process represent the process of activatingthe airport with consideration and involvement of all stakeholders. Additionally,, Operational Readiness, Activation and Transition (ORAT) takes care of risk management from the operational side (Mccoomb 2015). (Mccoomb, 2015)

 

Airport Projects

Airport project is one of unique projects in any country around the world which has special attention from the public and need special arrangement. Most of the time, an airport project is considered a mega project and tend to have much of the efforts in completing all the phases of the project (Mccoomb 2015). (Mccoomb, 2015).

Airport Projects as Mega Project

An Airport project is considered a mega project in any country which makes this project a complex project. The definition of mega project complexity contain different category frameworks of complexity which are technological complexity, organizational complexity Goal complexity, Environment complexity, Cultural complexity and Information complexity (He et al 2015).(He et al., 2015)

Table 1 Complexity Framework Categories (He et al., 2015)

No Complexity Framework Category Description
1 Technological The mega construction project such as airport projects consist of a technological complexities that of different types such as type of building, overlapping of design and construction work, and dependency on project operation. Many other researches mention other types such as diversity of technology dependency of technological process, interaction between the technology systems and the external environment, and risk of highly difficult technology. Heading to the green and innovative technologies is making the construction more complex by depending on the technologies such as three-dimensional technology, energy conservation technologies, and new construction materials.
2 Organizational The structure of the project teams and organizations is one of the factors of the project complexity. The project staff, organizational structure and various teams also form the factors which shape the project complexity. furthermore, the hierarchies and department of organizational structure effect the project complexity as members experience as well.
3 Goal Goal complexity is shaped through the demand of different requirement from various project participants and stack holders. Goal complexity is created because of project task complexity and limited resources. Also, having multiple objectives with ambiguity in the definition lead to project complexity. Moreover, unshared goals and goal path make the complexity of the project to increase. Proposed a three-level categorization framework of project goal, including managerial, functional and other goals.
4 Environment Environmental complexity involve the natural, market, political and regulatory environment which shape the complexity of the project. Also, the stakeholder’s needs effected by the environmentare also part of the project complexity.
5 Cultural The mega projects such as airport project contain cultural diversity with different cultures and different perspectives. It results fromdifferent people from different nationalities which are usually part of any mega projects. thais can lead to different problems such as losing team trust, emotional quotient and system thinking difference.
6 Information The information complexity is affected by several factors for example information systems, the degree of obtaining information, level of processing and transmission of information. The information complexity results from complicated communications among big number of stakeholders. That is all under complicated arrangement inside the mega project.

The operations management is the management of systems or processes that create goods and/or provide services. The operations of a new airport is linked to the processof airport activation which ensures the successful opening of the airport or the terminal (Mccoomb 2015). (Mccoomb, 2015)

The focus within the airport activation is in four main pillars which shape the whole stage of the airport activation which are Systems, People, Processes and facility. These four represent the main targets which the Operational Readiness, Activation and Transition (ORAT) process is relaying on.

There is a need for the risk measurement module to evaluate all risks within airport activation which evaluate and generate the list of uncompleted work and tasks within the project. Developing an application to help the project team to manage the operational risks is one of the factors to make any airport project more efficient.

Operational Readiness, Activation and Transition (ORAT)

Operational Readiness, Activation and Transition (ORAT) is the process of making all stakeholders of any airport project ready to handle the airport activities from the first day. It includes many activities and process which cover the training, testing, checking the convenience of the facilities and many others. The target is to make all stake holders concerned to handle all requested tasks for the airport from the opening date onward.

Figure 1 Arup’s ORAT methodology

The process of airport activation consist of several steps which include:

  1. Confirmirtion of the delivery of all requested building materials and equipments for the airport project. Moreover, it finalize all binding work by the contractor by applying the testing and commissioning for all products in the projects.
  2. Ensure availability of all stakeholders of the airport project with ready process, staff, training, and all essential tools for operating the airport.
  3. Create and implement all required training, familiarization and recruiting programs for the airport opening in conjunction with airport authority, airline and all stakeholders.
  4. Develop coordination of operations risk and disaster recovery plan document which cover all unexpected or unplanned activities.
  5. Managing the public media news and publications which report on what happened during the airport activation and report all activities to the public.

State of Airports in Gulf Region

The growth in the airport industry in the gulf is rising with a big amount of investments which shows how much this industry is vital to the gulf countries. Many new airport projects and new terminals which are in progress and are to be openned within the near future include new Muscat airport in Muscat, Al Maktoom Airport in Dubai and New Abu Dahabi Airport in Abu Dhabi .

Airport Industry Overview

The passenger growth is expected to increase between 2012 and 2032 and this will affect the overall business in the region. The Middle East market is expected to receive 2610 aircraft between 2012 and 2017 with a value of 550 billion USD, which indicates how the airlines industry is growing in the region. Moreover, the total fleet size is expected to reach 2850 aircraft in 2032 in the Middle East. All these, gives an indication of what the airports are facing within the coming period and how much the challenge in satisfying all these number of aircrafts and passengers.

Development of Airport Industry in the Gulf

For the past decade, many airports have mushroomed up and this shows the potential of the airports industry in the gulf region growing to higher levels. . The development of airport industry is linked to the airport projects for a new terminals or a new airports. This section will present a brief description of some airports in gulf region which has top rated impressive facilities

Al Maktoum International Airport

This airport was built to compete other international airports and to become the busiest airport in the world with capacity of more than 120 million passenger annually by 2020. It was constructed on a 54 mile square area to create an airport city which consisted of residential units, new commercial units and state of art passenger facilities. It is located in Dubai World Central in Dubai with more than 30 billion USD as investment until its completion with plan to be complete in 2020. It is planned to handle and accommodate 100 airbus 380 superjumbos which shows how large is the airport is built.

Hamad International Airport

This airport is a replacement to Doha International Airport in Qatar and it is built with cost of 16 billion USD. It consist of 70 retail outlets, two hotels, squash courts, public mosque, spa and 30 cafes and restaurant. It is expected to handle 50 million passengers annually and two million tonnes of cargo.

Kuwait International Airport

The plan for this airport is to be ready by 2025 with budget of 4.8 billion USD in Kuwait. It is part of the expansion plan to build a new runway with passenger terminal to handle 25 million passengers annually. currently the airport is handling 7 million passengers, and thiswill be a huge difference between the existing and the planned one.

Abu Dhabi International Airport

The expansion of Abu Dhabi International Airport in United Arab Emirates will consist of new terminal, third runway, enhancement of the maintenance facilities and other commercial developments. The terminal cost is estiated to be around 3 billion USD and scheduled to be openned in 2017 with increase in number of passenger from 17 million to 55 million passengers annually. The new runway will be 4100 meter length to serve the airport and to help achieving the target number of passenger in the future.

Muscat International Airport in Oman

This new terminal and runways will turn the existing airport to handle more than 12 million passengers annually. Furthermore, the airport has a plan after completion of four phases in the project to reach up to 48 million passengers every year. The project will consist of new passenger terminal with more than 335 thousand square meter, cargo terminal with capacity of 26 thousand tonnes annually, a four star airside hotel with 90 bed capacity, shopping centres, restaurants, cafes, and lounges. It cost the government of Sultanate of Oman 1.8 billion USD to build the new Muscat International airport near the old airport. The old Muscat Airport is currrently using the new runways until the opening of the new terminal.

King Abdulaziz International Airport in Saudi Arabia

The Jeddah’s airport is being expanded to include 670 thousand square meter passenger terminal, double-deck A380 access, an airside hotel, 46 contact gates, lounges and catering and retail facilities. The first phase plan cost 1.5 billion USD and it is expected to handle 30 million passenger annually compared to 13 million of the existing airport. The target capacity for passengers after completion is 80 million passengers annually and it is expected to be finished by 2035.

Additionally, the King Khaled International Airport and the Bahrain International Airport are being expanded. Riyadh’s King Khaled International Airport, where expansion is in progress and will be completed in 2017, is increasing its passenger handling capacity to 35 million annually in the first phase and to 47 million in the second phase. The Bahrain International Airport is implementing a 2 billion USD upgrade plan. The upgrade would increase the airport’s passenger handling capacity to 13.5 million per year in five years. Its cargo carrying capacity is being increased to 60,000 tonnes per year from the current 38,000 tonnes per year.

Being strategically located at approximately an eight-hour flying distance from

two-thirds of the world’s population, the Gulf acts as a central aviation hub and a

key link between the Eastern and the Western worlds. Further abundant oil

reserves in the region ensure a stable fuel supply for the region’s carriers at a

cost lower than their global competitors.

Moreover,an expanding population base in the Gulf particularly that of the foreign nationals

who travel to their native countries frequently is likely to propel the growth of the

airline operators. Additionally, growing urbanization in the region is also expected

to drive the demand for aviation services.

The demand for business and leisure travel by air is slated to rise in the wake of

higher income levels across the GCC. Further, an increasing number of wealthy

individuals in the region is also likely to trigger the demand for air charter

services.

• The Gulf countries have embarked upon ambitious plans to develop tourism

across segments such as medical, adventure, sports, religious, and business.

This is likely to draw more tourists into the region, increasing air travel across the GCC.

Most of the region’s airports and allied infrastructure are undergoing significant

expansion to accommodate the growth in cargo and passenger traffic carried by

the Gulf carriers. Growing air traffic has triggered an aggressive fleet expansion

by the Gulf carriers.

• A limited rail network and lack of any other easy and efficient mode of transport in

the Gulf is also fueling the demand for aviation services.

• The GCC countries have pursued liberalized and progressive aviation policies

over the past few years to enhance the transparency and competitiveness of the

sector.

Challenges of airport industry in the Gulf Region

Everyday issues that airport managers face are covered in this two-day program. Attendees are actively encouraged to participate in order to find solutions to some of the daily challenges that airports face, as well as to understand management principles that will improve operations and prevent some of issues in the future. The issues to be addressed include:

  • Airport business plans
  • Leasing policies
  • Rates and charges policies for non-airline interests
  • Minimum standards
  • Rules and regulations
  • Market value and market rent
  • Lease structures, negotiation and alternatives
  • Appraisals and appraisers
  • Comparing airports for benchmarking
  • Financial self-sustainability
  • FAA grants
  • Alternative and creative revenue sources
  • Corporate self-fueling
  • FBO competition
  • FBO management alternatives
  • Reversionary clauses and other lease terms and conditions
  • Lease adjustments
  • “Through-the-fence” developments
  • Preparing for special events

Airports in Sultanate of Oman from Business perspective

The airports management is a responsibility of Oman Airports Management Company (OAMC) in Sultanate of Oman. OAMC is responsible of managing the airports in Sultanate of Oman from different functions mentioned below (OAMC 2015). (OAMC, 2015):

  • Manage the Airport Assets, Facilities, Infrastructure, Projects and Maintenance Plans.
  • Manage the Aerodrome Certification & Compliance, Emergency Planning, Capacity Management and Customer Services.
  • Be ready for the new airport and to ensure that OAMC is fully manned, prepared and equipped to operate all the new airports.
  • Airfield, Terminal, Flight Information and Fire Fighting Management.
  • Manage all the commercial areas such as retail, real estate, fuel farm, concession agreements, car park, airport space adverting, corporate communications and airline marketing.
  • Manage Information, Communications and Technology at the Airports.
  • Undertake Financial Management and revenue collection from aeronautical and non-aeronautical sources and expenditure payments.
  • Development of procurement policies and procedures.
  • Provide Human Resources and administration support for the corporate company
  • Facilitate and manage security
  • Undertake Health, Safety and Environmental Management for all organizations operating within the Airport Boundaries.

All these functions indicates that the airport business is controlled by OAMC which manage the main functions within the airport. OAMC is a company owned 100% by the government of Sultanate of Oman and an independent which implies that its an autonomous entity from the government and looking to maximize the profits within the Sultanate of Oman’s airports (OAMC, 2015).

Aeronautical Revenues

Aeronautical revenues are the revenues related to the airside and airlines and includes a list of fees and taxes that differ from any airport to other. The following is the list of aeronautical revenues related to the existing Muscat Airport ((Oman Airports Management Company OAMC, 2015). (Oman Airports Management Company OAMC, 2015):

  1. Passenger Fees
  2. Landing Fees
  3. Aircraft Parking Fees

Non-aeronautical Revenues

The Non-aeronautical revenues are revenues related to the landside and not related to the airlines. These revenues are related to the management of terminals and any other related issues. For Oman Airports Management Company OAMC, the non-aeronautical revenues for Muscat Airport include the following:

  1. Property Rental
  2. Car Parking fees
  3. Concessioners fees
    1. Terminal catering
    2. Terminal Retails
    3. Advertising
    4. Fuel Throughput

The concessioners fees are fees collected as per agreement between the airport operator and any company that needs to be offered the services mentioned above. This agreement have two sides which include the monthly rental and the percentage of revenues earned from this company. OAMC calculate the revenues as monthly rental plus the agreed percentage from the revenues.

Sultanate of Oman’s Economy and market analysis

The GDP Growth Rate currently shows a decease because of the effect of the oil prices which decreased by 41.5%. As illustrated in figure 13 below, the non- oil sector is affected as well which makes the expectations for the second quarter of 2015 not promising with increase in the total GDP (National Center for Statistics and Information ( NCSI ) 2015). (National Center for Statistics and Information ( NCSI ), 2015)

The prices of crude oil is increasingly moving down even less than the average which the government set for oil prices as shown from the figure 14 below (Ministry of Oil and Gas 2015). (Ministry of Oil and Gas , 2015):

This is a big challenge to all airport projects which are currently in progress from the financial side. This will affect development of the future airports and any related projects which were planned for the coming few years.

Airport Case Studies

The case studies are important in showing the real practice of airport projects in different countries and offers an opportunity for learning and extracting new procedures and technics. While the information in airport projects are not readily available, the study majorly focussed on case studies which gave more information and ideas about how to make airport projects more efficient.

The arguments in all the case studies discussed the risk management in ORAT phase and how the project delivery team can overcome all issues related to opening of the terminal or airport.

Dublin Airport Terminal Two

The Ireland Republic is one of the European countries which has 12 airports to serve the public regionally and internationally as shown in the table 6 below. Three airports are Dublin, Cork and Shannon. All three airports were managed by a company called Aer Rianta from 1969 until 1, October 2004. After that Dublin Airport Authority handled Dublin Airport, Cork Airport and Shannon Airport. Shannon Airport separated in January 1 2013 from DAA to become independent airport.

No Airport Name IATA Code ICAO Code Airport Type
1 Dublin Airport DUB EIDW International
2 Belfast International Airport BFS EGAA International
3 George Best Belfast City Airport BHD EGAC Regional
4 Cork Airport ORK EICK International
5 Shannon Airport SNN EINN International
6 Ireland West Airport Knock NOC EIKN Regional
7 Kerry Airport KIR EIKY Regional
8 City of Derry Airport LDY EGAE Regional
9 Galway Airport GWY EICM Regional
10 Waterford Airport WAT EIWF Regional
11 Donegal Airport CFN EIDL Regional
12 Sligo Airport SXL EISG Regional

The decision to build a new terminal came after the increase in number of passengers and due to the competitition from the European airports which had better facilities and services. The separation of the three airports made the competition more healthy and there was a need to introduce a new terminal in Dublin Airport with better services after complaints from airlines from the service level compared to the fees given to the airport (McLay and Reynolds-Feighan 2006). (McLay and Reynolds-Feighan, 2006).

The Terminal 2 Project

The vision statement for Dublin airport is “To deliver a quality airport travel experience to the best international standards” which was one of the drivers for the project of Terminal Two in Dublin Airport. The project stakeholders included the following:

  1. DAA Group Infrastructure – Project Management of T2, including Specialist Systems
  2. ARUP – Design and Delivery of all T2 packages
  3. Mace – Construction Integrator
  4. DLPKS – Cost Management
  5. SITA – Prime Contractor for Specialist Systems
  6. Mercury – Prime Contractor for Mechanical & Electrical (MEP)
  7. Siemens – Prime Contractor for Baggage Systems

The project Architect was Pascall and Watson Architects Ltd and the idea of the terminal was introduced in 2006 to enable the Dublin Airport to handle the increase passenger numbers which reached more than 15 Million passengers annually in 2003 as can be seen from the table 7 below.

ORAT in Terminal 2

The delivery of a terminal like Terminal 2 in Dublin Airport require a lot of preparations and planning to ensure the successful opening with minimum chances of failingin the opening day. The ORAT of Terminal 2 in Dublin Airport went through a process which was discussed prior through a committee consisting of employees from Dublin Airports Authority DAA and Aer Lingus. Figure 15 below shows the collaboration process which was between the two organizations for the ORAT phase.

 

The collaborative approach helped the DAA to deliver the Terminal 2 in a better view to the process, facilities, people and systems.

  • Training
  • Testing
  • Trialling
  • Auditing

Risk management in Terminal 2 ORAT Phase

The concept of risk management is differ from the operational view of the project delivery which is totally different than the project management view. The target of the risk management in the operational view is the systems, process, people and facilities. These four pillers are main target for all employees working in the delivery of the project and in the ORAT phase.

Heathrow Airport Terminal 5

New Salalah Airport

 

Rationale behind the research

Summary

Chapter 3

Research Methodology

The research methodology is meant for the tools used for the research and how to get the data required for the analysis. The methodology which used in the research are interview, survey and research about the best practices of airport projects.

Interviews with project managers worked in airport projects. The project managers have an experience with all problems and issues related to the airport project which will help enrich the project with realistic information of existing airports projects.

Looking at the best practices in risk management for airports projects and that by reading about case studies of different airports. Get closer to different airports projects will help to identify risks sources and categories.

The survey will help to get information from the workers in Oman Airports Projects which will give an overview about their knowledge about airport projects in Oman.

Research methods

The methodology used for the research are case studies, survey and interviews. The case studies selected are for airport projects which different in structure from each other and have different issues which give some ideas about the nature of problems in the airport projects. The survey is distributed for all employees worked in Salalah airport opening and this to ensure the quality of information collected for the survey. The last methodology is the interviews which were with different experts in airport project.

The case studies of different airport projects are helping the research to learn from the lessons learned during these projects (Maisch 2015). Airport projects for new airport or terminal are not that type of projects which can be seen every day or happen for several of times (Cole,2015). Also, Airport projects are taking long times and classified as mega projects because of their complexity.

The survey will help to collect information from all workers in new Salalah Airport which contained some experts in different field and they can be very helpful in the research to give more information about airport projects. The need for the survey is coming from the scarcity of information about airport projects and their details. The questions chosen in the survey are too measure the level of awareness in the airport project risk management and how risk management is important for airport project. The tool used for the survey is Questionpro website (Questionpro,2015) which is online survey tool which allow the participants to fill the survey questions online. The major questions addressed in the survey are related to project management, operational prospective and interaction among various components of airport activation phase.

Last methodology used is the interviews with experts whom are Nicholas Cole, Readiness Operation Manager, Nicholas Novacek, Master Control Center Manager, Moritz Maisch, ORAT Senior Project Consultant, Pablo Lorenz, Trail Manager, Stephan Dauba, Project Manager, Liza Fontun, ORAT Project Consultant which were very helpful to extract very important information about some project in different locations and compare them to the new Salalah Airport project to give a better understanding about the nature of problems in any airport projects and how the risk management is managed in other locations in the world.

Quantitative approach

Qualitative approach

Interview

Survey

Primary data

Interviews with project managers to extract a framework used for risk management using IT knowledge in airport projects

Report about using IT knowledge in risk management for airport projects

Secondary data

Research in best practices in using risk management within airport projects

Question Pro – As a tool to capture data

Sampling

Analysis techniques

Summary

Chapter 4

Research Analysis

Critical analysis

The survey is distributed based in the participants experience in the new Salalah Airport and other airport projects. A pilot study conducted for the survey to ensure the full convenient for the purpose. There were some questions modified to clarify the purpose of the question for the participants. Also, new sections was added regarding the mitigations and planning with related question.

The survey indicates that there is no clarity among the operational activities and project management activities among the stakeholders of the project. Also, it is showing manual process of identifying the risks, document them and mitigate them later on. The current process is handled by each stakeholder by their own without any coordination in this for the whole project. Also, there is not system to automate the work of risk management for airport projects which help organizing the process and work. The survey shows the operational view of airport project delivery which showed the important of risk management for them.

The interview conducted with experts further confirms the findings of the survey. All six interviewees agreed that risk management in operations and project management is critical. They observed that there is no integrated approach to the issue which is faced across airport projects. It is evident from the Heathrow Terminal 5 project that the integrated approach is essential for the success of the project (Lorenz,2015)(Fontun,2015).

The priority of the risk management in airport projects is varied from one project to another. The interview and survey results shows that risk analysis is less prioritized, and has not given the right attention from the stakeholders of the project. The risk management managed mostly in a manual sheets and managed through meetings within periodically basis which agreed by all experts interviewed. Also, the interviews showed the automation level is low and the working in the risk identification is good but the setup of mitigations is not available within the critical times of the openings.

Fig. 2. Survey results and statistics

The link between the operation and project management is showing in the interviews conducted for the project manager. The link is not established and the final risks from each prospective is managed separately from the other. The link between the project management and operations has to be managed in a process which agreed between all stakeholders to manage the risks. The risk management need to be managed between all stakeholders in the project in the ORAT phase. This will help to avoid the delay in delivering the project and in the maximizing the cost of the project. In other words, the study indicates that integrated approach in managing risk is essential for the airport activation phase.

Objective 1: Study the relevance of risk and managing risks in airport projects

Objective 2: Critical analyses the risk in airport project and role of Information Technology in managing risks

Objective 3: Propose framework using IT knowledge base based on critical analysis and study of airport projects

Chapter 5

Conclusion and Findings

Recommended framework

Conclusion

Self-reflection

Appendixes

References

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