Consultancy opportunities

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Consultancy opportunities at
Snowham International Airport
OPERATIONS AND PROJECT MANAGEMENT
ASSIGNMENT
All the information based upon these organisations is purely fictitious and
has been prepared for the case study. Any resemblance of asset,
corporate entity, location or person included is purely coincidental.
Guidance
You are advised to read all the information through VERY CAREFULLY, makes notes and raise
any 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 has
one 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. Some
offer scheduled passenger services – mostly to short haul European destinations One (Mustang
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Airways) is considering the launch of a new daily service to New York. Other airlines use the
airport to offer charter flights to their customers, typically to popular holiday destinations in
Europe. 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 a
graduate trainee by an experienced firm of management consultants who specialise in
improving the operations of their clients.
The Sales Director of your consulting firm has recently spent a lot of time at the airport talking
to various companies working at the airport – collecting information and looking for new
business opportunities.
The Sales Director has provided you with all this information in this document. You are required
to analyse the information and make a series of recommendations as to how each potential
client could improve their operations performance, and in doing so generate increased
profitability.
The Sales Director wants to use your analysis to negotiate new consultancy contracts so the
accuracy and clarity of your arguments and calculations are essential. You are to submit
your 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 process
Each section is worth 10 marks.
The overall structure and presentation quality of the report will also be worth 10 marks.
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1 The Airport Transportation System (ATS)
Diagram 1 – ATS Project
Over the past three years, Snowham Airport was starting to suffer from its own success with
increasing passenger congestion. In response a project was planned to improve transportation
efficiency at the airport via an underground subway system. The new subway, called the Airport
Transportation System (ATS), was designed to improve the transit time and experience of
passengers travelling between the three passenger terminals.
The ATS project was conceived as a single one way loop serving five subway stations as outlined
in Diagram 1. Passengers would be transported on a fleet of automatic rail cars travelling swiftly
and 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 ten
hour 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, the
ATS link was intended as a free service to passengers, so no revenue streams would be
forthcoming once the ATS was in service.
After numerous revisions the airport authority decided that the project must be delivered for
no more than £12 million.
The project manager had given assurances that, as the major part of the project was being
carried out underground, disruption to the smooth running of the airport would be minimal.
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The Project Plan:

Table 1 – ATS Project Plan Version 1
The 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: £2,000,000
Project team: £200,000 per week while any part of the project is inprogress
TBM and equipment: £300,000 per week only while Task 6 is in progress
TBM crew: £100,000 per week only while Task 6 is in progress (£20,000 for each of
the 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 £16
million.
The airport procurement manager who was present at the meeting, asked a question. ’What
is 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 £12
million,’ 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 project
management. If the TBM and TBM crew are your most expensive resource then it makes
sense to minimise that cost.’
He continued: ’If you work weekends and night shifts I see no reason why you cannot work 14
shifts a week instead of five. So unless the TBM breaks down, you should be able to achieve
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about 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 £25,000
per night or weekend shift. Each week we would need an extra nine shifts costing £225,000
more – making a revised tunnel crew cost of £325,000 per week – only while Task 6 (TBM tunnel
work) is in progress.’
Consultancy guidance
Explain, with relevant workings, why the ATS project manager believed it was not possible to
carry out the project for less than £16 million.
Analyse all the available information and determine whether or not the project can be carried
out within the £12m budget. Explain all your workings very clearly.
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2 SverigeTech – Air Traffic Control system
At the end of a busy day, the Sales Director went to the Airport Bar for a quick drink before
returning 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 pregnant
again with our second kid.’
‘What exactly is the problem?’
The young man explained that SverigeTech, his Swedish employer was in the business of
designing and installing new air traffic control systems, and his employer had recently won a big
contract from Snowham Airport to upgrade their existing system.
The upgraded system had been designed and fabricated at the SverigeTech factory in
Gothenburg and an experienced project manager (Gustav Akesson) appointed to supervise the
installation and testing in the Snowham airport control tower. The young man had only been
with the company for three months and had been assigned to the project just to observe and
learn (as part of his probation period).
Quite unexpectedly Akesson the project manager had resigned, and the senior SverigeTech
executives in Sweden decided that the young man would have to manage the entire Snowham
project, 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 before
he left.
Akesson planning notes: All module work is flexible but Integration cannot start until the four module tasks are all
100% complete. Testing must follow Integration. Client flexible on completion timing but needs to plan ahead for
Testing and Go-Live.
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All the work would be carried out by engineers as shown against the tasks. For example, the
Flight 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 recruitment
agency in London. The young man knew this because he had been present at a meeting with
the agency two weeks ago.
‘And then I get another call from head office this morning,’ he moaned. ‘We just lost a big
contract 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 some
point.’
‘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 wants
us to commit to some definite dates for the Testing week and the Go-Live date because that
also involves their ATC staff. If I do not come up with this information by Thursday, they may
well cancel the entire contract, and then my company will get rid of me. We are supposed to
be starting the project on May 11.’
‘The company HR people are also on my back,’ he moaned. ‘They want the exact start and finish
dates 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 guidance
Analyse 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.
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3 Terminal Four refurbishment project – progress analysis
The departures area within the Terminal Four structure at the airport was dated and was in
urgent need of improvement. Currently the Terminal is closed for six months whilst a major
refurbishment project is in progress. The work scope for this project was designated into six
stages as follows:

A high level schedule was developed and authorised by the Airport management team. It was
critical that the project completed on time as flights were due to resume from Terminal Four in
early July.
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All 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 been
completed.
On 1st March, a full day meeting was convened to review progress. All the project
stakeholders were represented. In preparation for the meeting the senior planning engineer
supplied 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 start
Consultancy guidance
On behalf of the Airport General Manager, analyse the progress achieved (planned v. actual) on
stage task (on 1 March) and highlight any problems that are now arising. Assign a colour code
for each task, explaining clearly your choice of colour:
Red – Task in progress falling more than 5% behind plan
Amber – Task in progress (broadly in line with the plan) or not yet started
Green – Task completed or at least 5% ahead of plan
Secondly, using your progress analysis, determine an approximate expected completion date for
the entire project. Explain your analysis and state any assumptions very clearly.
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4 Harvey Talbot – coffee procurement
Harvey Talbot (HT) is a chain of American style restaurants throughout the UK which offers high

By chance the Sales Director met with the HT Finance Director who was visiting the airport
restaurant 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 that
their current purchasing policy was far from optimal. Margins are very tight and the HT Finance
Director wants to improve their overall performance by reducing purchasing spend on all
consumables. He plans to start with coffee.
Currently the unit cost of one standard coffee container is £14.50 and in total the company
generally 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 the
holding 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 is
shipped with other supplies to the 45 HT restaurants – at a yearly cost of £7,500. Occasionally
deliveries 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 a
haphazard 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 a
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time.
The HT restaurant manager at the Airport was also present at the informal meeting and
suggested that HT should abandon the centralised contract arrangement with KCS and the
company should let each restaurant manager order coffee individually from local suppliers as
they see fit.
Consultancy guidance
Explore whether either (or both) of the two suggestions from the HT Finance Director would
reduce the total annual cost of procuring coffee. Show all calculations clearly.
Separately, discuss the merits and demerits of the restaurant manager’s suggestion.
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5 The new Juicemasters outlet
Like many airports the concourse area where outgoing passengers wait before flying has a
number of food and retail outlets. One of the outlets has recently become vacant and has been
leased by an independent company called Juice-masters. This company specialise in a wide
range of healthy juice and smoothie options together with some cold vegetarian snacks such as
baguettes. Specialty teas and coffees would also be available to customers.
The company has opened successful outlets in three other airports and the Chief Executive is
very enthusiastic about a new outlet at Snowham. One of the senior members of staff from
another 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 basic
market research has provided the following information in terms of the number of customers
that could be expected to use the new outlet when it opens.

The person appointed to manage the new Juice-masters outlet is has several years of
experience in terms of creating and selling the products but has no experience in operations
management. She is extremely worried about how to deal with the challenge of getting the
new unit up and running and the rest of the company are just too busy to help.
Consultancy guidance
Using the plan in Appendix A, design a layout of the recommended floor layout – with clear
details 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 aspects
might change from shift to shift. Recommend appropriate opening hours.
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6 Staff planning for the Turista call centre
Turista Airways operates flights from a number of UK airports. Although the vast majority of
clients book flights through the Turista web site, it maintains a small call centre at Snowham
airport which handles calls from customers throughout the year. The calls are often quite
complex to deal with.
The call centre works a 250 working day year (50 weeks x 5 days a week). Last year the call
centre 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 0
and 100 there were 5200 calls. The peak holiday period is between day 100 and day 150 when a
total 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 calls
per 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 as
last year.
Consultancy guidance
If a temporary member of staff can handle 20 calls a day, determine how many extra temporary
staff Turista will need to recruit during each period next year. If temporary staff cost the
business an average of £60 per day worked, calculate the total annual budget required for
temporary staff only.
An IT company has developed a new web based call handling system which they claim will allow
experienced, permanent staff to increase their productivity to process at least 50 calls per day
and untrained temporary staff to 40 calls a day. If this claim is true and the system is priced at a
fixed cost of £24,000, calculate the cost savings of hiring temporary staff and advise the
company whether or not to proceed with the system.
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7 Sycamore Security Systems
The airport was having a new CCTV system installed and the Sales Director watched two
installation technicians complete an installation. There were wearing uniforms showing the
name 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 rare
that we have enough work to keep us fully occupied for an entire week. The company knows
this 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 next
week.”
After the meeting between the SSS Ops Manager and the technicians had finished, the Sales
Director had a chat with the Ops Manager who explained the way in which the SSS company
operated. SSS is an international company which designs and installs CCTV systems for a wide
variety of corporate clients – including airports. Each system is designed and constructed
specifically 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 each
surveyor can perform 1 survey every 16 hours.
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The average price charged for a complete integrated CCTV system is £160,000. The total unit
cost (including all materials and staff costs) is £128,000 per system. All other fixed overheads
cost the company £90,000 per week. Everyone in the company works a typical 8 hour day, 5
days 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 local
employment agency which can provide additional staff at the following inclusive rates:
Salesman – £300 p/day
Surveyor – £400 p/day
Manufacturing 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. However
over the next 12 months the company sales team was very confident that this would rise to at
least 10-11 systems a week.
Consultancy guidance
Firstly, determine the maximum production capacity of the company each week. Identify the
process bottleneck and explain your reasoning. Calculate the gross annual profit being
generated by the business (using the information provided).
Secondly, if the company decide to use the services of the employment agency, assess what staff
should be recruited and calculate much extra annual profit could be generated. Explain your
analysis and workings very clearly.
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8 Baggage handling problems at Snowham Airport
As part of the service provided to all airlines, the airport baggage staff handle all the outgoing
bags checked in by passengers. Every bag is tagged with a bar-coded label. Ted Jones is the
Airport Baggage Handling Manager. His team handle an average of 2000 bags a day, 365 days a
year.
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 demanding
compensation for their upset passengers.
A conveyor belt system delivers all the outgoing bags from the check-in zone to a central
baggage 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 bags
are sorted onto different flight trolleys by Internal Baggage Handlers.
These trolleys are then taken outside and loaded into the aircraft. Usually two Baggage
Handlers deal with each aircraft.
Incoming baggage is simpler to handle. Aircraft are unloaded onto trolleys and the baggage is
taken directly to the carousel system. No sorting is required.
When outgoing flights are being loaded the Baggage Handlers are expected to double-check
that every bag label is correct. If they find a mistake (i.e. find a bag that should not be loaded on
this aircraft) then the bag is taken off the loading trolley and delivered immediately to the
correct 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 this
happens 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 compensation
averages £125 per bag. But if the mistake is detected by Baggage Handlers just before loading
then the cost of relocating the bag to the correct aircraft is only about £40.
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Aware 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 to
improve the baggage handling technology environment. This should – he argued – cut handling
defects by 50% (i.e. to 0.25% not 0.5%).
Ted Jones asked for permission to recruit four new “Baggage Inspectors”. He argued this
would enable his staff to inspect the bags more carefully and detect more mistakes while
sorting and loading – increasing the chance of any mistake being found from 70% to 90%. The
total cost in employment costs would be about £58,000 per year.
Dougie McDonald, one of the senior baggage handlers, suggested that most problems were
caused by inexperienced, badly trained and low paid Baggage Handlers. If each handler was
trained 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) would
drop to 0.1% or less.
Consultancy guidance
Firstly determine the total quality costs (internal and external) of the baggage handling
operation 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 and
derive a coherent recommendation for the Airport.
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9 A new fire engine for the airport
The airport safety manager has been given authorised to add a new fire engine to its small fleet
of rescue and firefighting vehicles. This was an exciting prospect but the manager was less
pleased when the Board demanded that a structured procurement process be applied to
demonstrate clearly how the best vehicle was selected.
After some market research, three candidate vehicles were short-listed from specialist
manufacturers (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 each
option as follows:

At a management meeting after the visits, weightings were agreed as follows:

The purchase price of each vehicle was quoted in writing by each company as follows:
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Each vehicle was expected to last for at least 4 years at which point its resale value would be
approximately 25% of the original purchase price.
In addition, GVX offered a three year vehicle leasing option which involved a cost of £129,000
per year for three years. They would guarantee performance and carry out all servicing and
maintenance free of charge. At the end of three years the airport could either return the
vehicle 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 was
confused by all the information and had no idea how to formulate a structured response.
Consultancy guidance
Analyse all the information provided and use a weighted scoring system to derive a coherent
recommendation as to which vehicle option the airport should select.
Justify your recommendation with clear evidence, calculations and written arguments.
END OF CASE SCENARIO
Appendix A – New Juice-masters outlet

17m window door window
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Interior of airport concourse