6th March 2014

Chris Beach and Helen Preston

APM Portfolio Management & Benefits Management SIGSetting the Foundations for Benefits Management at Heathrow

72 million passengers each year –

191,000 every day

470,000 flights per year –

82 airlines, 180 destinations

Total size of Heathrow Airport: 1,227

hectares

2 runways – operating at 99% capacity

76,000 people work at Heathrow

100,000 additional local jobs are

supported by Heathrow

200 companies to get passenger from

arrival to their plane

400 retail outlets

3

Developing HAL’s Portfolio Management Approach

A Regulated Airport

CostsCosts IncomeIncome

Heathrow’s Vision & Strategic Intents

5

Priorities in Q6

6

The Challenges for Q6

7

First Challenge: To understand, categorise and

prioritise, relative to Strategic Priorities, the hundreds

of ideas and concepts and produce a proposed Q6

Portfolio for consultation with the airlines and CAA.

Second Challenge: To ensure the Q6 Portfolio is

balanced such that the business change is both

sufficient, necessary and affordable to deliver the

Vision and Strategic Priorities.

Third Challenge: To establish the Portfolio Baseline (Cost / Benefit / Risk) against which the success of

Portfolio Management can be measured, monitored

and assessed and an agreed Delivery Plan.

Step 1: Passenger Gap Analysis

8

Step 2: Concept Proposals – over 700

9

Focus on ‘Big boulders’

• Asset replacement

• T1 closure

• T3 refurbishment

• T4 wide body growth

• T5 enhancements

• Airfield & airspace

• Baggage

• Surface access

• Technology

• Master plan

10

Value - Strategic Alignment

Financial Impact

Risk

Combined in Prioritisation Score

Value - Strategic Alignment

Financial Impact

Risk

Combined in Prioritisation Score

Asset replacement £1.5bn

Passenger experience £0.4bn

Hub resilience £0.8bn

Reducing Costs £0.3bn

£3.0bn

Tornado diagrams used

to articulate a multi-

dimensional view of

cost, benefits & risk

Step 3: Prioritised Investment Options and Baseline

Executive Level Review

Portfolio Critical Path

Tools: Portfolio Management System

11

• Enterprise System

• User Access Control

• Full Business Case Capture

• Consistent Structure

• Version Control

• Configurable Analysis

The Journey to the Final Q6 Plan in January 2014

12

HAL Plans CAA Proposals

and Decision

2012

Jan 14

Developing HAL’s Benefits Management Approach

13

14

Benefit = Physical Asset + BusinessChange

Collection of Projects;

delivering Physical Assets;

defined on Day 1

Q5

Benefits Management

approach

“force-fitted” to projects

The journey

Business Change

managed separately

+

Portfolio of Business Cases

delivering Benefits

quantified on Day 1

Clear benefits-driven rationale

at the heart of the Portfolio

Q6

Business Cases arranged in coherent

Programmes with responsibility

for Business Change

+

The Context for Change

Benefits Management activity during Q6 Portfolio Definition

15

Benefits & Risk Workshops

• Engaged business case

owners and stakeholders

• Identified benefits, risks and

dependencies resulting in

– Benefits map

– Risk analysis

Follow-on Analysis

• Applied weightings to reflect

strategic importance

• Resulted in scores that

reflected contribution to:

Q6 Strategic Priorities

Q6 Service Propositions

Developing our Benefits Categories

Responded to the inconsistency in how Q6 business case benefits were articulated

16

Worked up proposals for BENEFITS CATEGORIES linked to our

Strategic Intents

Used Best Practice guidance to develop suitable MEASURES and

ELIGIBILITY CRITERIA

Road-tested against real Q6 business cases

Language Other

frameworks

Aligning Benefits

17

Q6 Strategic Priorities

Q6 Service Propositions

Passenger Satisfaction Drivers

Operational KPIs

Asset Management Objectives

Strategic Intents

Vision

A Pragmatic Approach

18

Q6 Strategic Priorities

Q6 Service Propositions

Passenger Satisfaction Drivers

Operational KPIs

Asset Management Objectives

Strategic Intents

Vision

The H

eath

row

Benefits

Fra

mew

ork

19

Vision Strategic Intent

Security wait time (QSM) 4.07

Border control waiting time (QSM) 4.1

Overall satisfaction with Connections

(QSM)4.06

Asset data quality 3.53

Airside retail participation 71.50%

Arrivals elapsed time 36.5 mins

LHR Delay Reduction (mins) tbc

Headroom (appropriate capacity) tbc

Staff helpfulness and courtesy (QSM) 4.10

Aircraft related incident rate1.21

per 10,000 ATMs

Injury rate - staff (LTI)

0.57

per 100,000 hours

worked

Injury rate - passengers and members of

the public

0.70

per million pax

Recycled Waste (excluding Cat 3)60%

of total waste recycled

Air Quality tbc

Noise tbc

CO2 emissions reduction tbc

NOX emissions reduction tbc

Gross Opex £1,264M

Total terminal passengers 71.12M

Net retail income per passenger £6.36

Win support

for our airport vision

Succeed through

airline success

Supporting Benefit

Number of lost time injuries at

Heathrow

14.0 bags

per 1,000 pax

7.5 days

per FTE pa

Baggage misconnect rate

Staff absence rateMake every journey better

(Pulse)

Headline Benefit

Contribution to improved Passenger Experience

Th

e U

K’s

dir

ect co

nn

ectio

n to

the w

orl

d a

nd

Eu

rop

e’s

hu

b o

f ch

oic

e

by m

akin

g e

very

jou

rney b

ett

er

Transform the airport

Focus people and teams

on service and results

Punctuality

(Departures)Improve airport operations

every day

Deliver the business plan

for this Strategic Intent the contribution is reflected through the other headline and supporting benefits

“Heathrow is important to the UK Economy” - contribution measured by public survey

Airline Satisfaction - contribution measured by airline survey

EBITDA

Regulatory requirement (license to operate)

Operational requirement

Other Non-Aeronautical Revenue

Run our airport responsibly,

safely and securely

Make Heathrow the preferred

choice for passengers

Passenger Experience

(ASQ)

Compliance

Resilience

Environmental Sustainability

Key features of the Framework

It provides a common language for benefits which:

• Acknowledges current business maturity

• Sets the bar for Business Cases:

• If you can’t map to one or more of these benefits why are you pursuing

the change?

• Supports articulation of next steps:

• Find suitable measures to fill any remaining gaps

• Put measurement regimes in place – baselines, targets, reporting

20

Vision Strategic Intent

Security wait time (QSM) 4.07

Border control waiting time (QSM) 4.1

Overall satisfaction with Connections

(QSM)4.06

Asset data quality 3.53

Airside retail participation 71.50%

Arrivals elapsed time 36.5 mins

LHR Delay Reduction (mins) tbc

Headroom (appropriate capacity) tbc

Staff helpfulness and courtesy (QSM) 4.10

Aircraft related incident rate1.21

per 10,000 ATMs

Injury rate - staff (LTI)

0.57

per 100,000 hours

worked

Injury rate - passengers and members of

the public

0.70

per million pax

Recycled Waste (excluding Cat 3)60%

of total waste recycled

Air Quality tbc

Noise tbc

CO2 emissions reduction tbc

NOX emissions reduction tbc

Gross Opex £1,264M

Total terminal passengers 71.12M

Net retail income per passenger £6.36

Win support

for our airport vision

Succeed through

airline success

Supporting Benefit

Number of lost time injuries at

Heathrow

14.0 bags

per 1,000 pax

7.5 days

per FTE pa

Baggage misconnect rate

Staff absence rateMake every journey better

(Pulse)

Headline Benefit

Contribution to improved Passenger Experience

Th

e U

K’s

dir

ec

t c

on

ne

cti

on

to

th

e w

orl

d a

nd

Eu

rop

e’s

hu

b o

f c

ho

ice

by

ma

kin

g e

ve

ry jo

urn

ey

be

tte

r

Transform the airport

Focus people and teams

on service and results

Punctuality

(Departures)Improve airport operations

every day

Deliver the business plan

for this Strategic Intent the contribution is reflected through the other headline and supporting benefits

“Heathrow is important to the UK Economy” - contribution measured by public survey

Airline Satisfaction - contribution measured by airline survey

EBITDA

Regulatory requirement (license to operate)

Operational requirement

Other Non-Aeronautical Revenue

Run our airport responsibly,

safely and securely

Make Heathrow the preferred

choice for passengers

Passenger Experience

(ASQ)

Compliance

Resilience

Environmental Sustainability

Vision Strategic Intent

Security wait time (QSM) 4.07

Border control waiting time (QSM) 4.1

Overall satisfaction with Connections

(QSM)4.06

Asset data quality 3.53

Airside retail participation 71.50%

Arrivals elapsed time 36.5 mins

LHR Delay Reduction (mins) tbc

Headroom (appropriate capacity) tbc

Staff helpfulness and courtesy (QSM) 4.10

Aircraft related incident rate1.21

per 10,000 ATMs

Injury rate - staff (LTI)

0.57

per 100,000 hours

worked

Injury rate - passengers and members of

the public

0.70

per million pax

Recycled Waste (excluding Cat 3)60%

of total waste recycled

Air Quality tbc

Noise tbc

CO2 emissions reduction tbc

NOX emissions reduction tbc

Gross Opex £1,264M

Total terminal passengers 71.12M

Net retail income per passenger £6.36

Win support

for our airport vision

Succeed through

airline success

Supporting Benefit

Number of lost time injuries at

Heathrow

14.0 bags

per 1,000 pax

7.5 days

per FTE pa

Baggage misconnect rate

Staff absence rateMake every journey better

(Pulse)

Headline Benefit

Contribution to improved Passenger Experience

Th

e U

K’s

dir

ec

t c

on

ne

cti

on

to

th

e w

orl

d a

nd

Eu

rop

e’s

hu

b o

f c

ho

ice

by

ma

kin

g e

ve

ry jo

urn

ey

be

tte

r

Transform the airport

Focus people and teams

on service and results

Punctuality

(Departures)Improve airport operations

every day

Deliver the business plan

for this Strategic Intent the contribution is reflected through the other headline and supporting benefits

“Heathrow is important to the UK Economy” - contribution measured by public survey

Airline Satisfaction - contribution measured by airline survey

EBITDA

Regulatory requirement (license to operate)

Operational requirement

Other Non-Aeronautical Revenue

Run our airport responsibly,

safely and securely

Make Heathrow the preferred

choice for passengers

Passenger Experience

(ASQ)

Compliance

Resilience

Environmental Sustainability

What lies beneath?

Templates for:

• Benefit Profiles

• Benefits Maps

• Benefits Realisation Plans

Links to other Controls Aspects:

• Schedule Management – are the Benefit Realisation milestones defined?

• Risk Management – what are the risks to benefits realisation?

• Change Management – what is the impact of change on predicted benefits?

Benefit management embedded throughout the Lifecycle….

21

Benefits Management in the Heathrow Gateway Life-Cycle

Business Change activities run alongside these procedures in order to ensure benefits realisation.

Our journey continues…..

But we still need to:

• Provide training and support to our teams to embed the

language and skills

• Drive Business Change to the heart of our agenda

• Make benefits impact a central consideration of risk &

change management

• Tackle the tricky benefits categories – set measures &

baselines and make sure we capture them

• Engage with 3rd parties (e.g. airlines) where the benefits

are actually realised by them

23

Benefits management is now at the heart of our operating model

Closing Thoughts

• It’s a journey

• Adapting the text book language is fine as long as the

key messages are not lost

• Be in it for the long run – for Heathrow this is a

journey through Q6

• Learn, adapt or even change course as you go, but….

24

Do take that first step

25

Questions?