M2N225585 Risk Management Strategy Assignment- Glassgow Caledonian University

A Critical Evaluation of the Failures of the Airbus A380 Project about the Triple Constraints Model.   

Table of Contents
1.    Executive Summary    3
2.    Introduction    3
3.    Understanding Project Failure    3
3.1    Definition    3
3.2    Limitations of the Triple Constraints    4
4.    Overview of the Airbus A380 Project    4
5.    Triple constraints - Scope    4
5.1    Overview    5
5.2    Analysis of the Scope    5
5.3    Success of the Scope    5
6.    Triple Constraints - Cost    6
6.1    Overview    6
6.2    Analysis of the Cost    6
6.3    Success of the Cost    7
7.    Triple Constraints– Time    7
7.1    Overview    7
7.2    Analysis of the Time.    7
7.3    Risk Analysis of Time    8
8.    Conclusion    8
9.    Recommendations    9
References    9
Appendices    12
Appendix 1    12
Appendix 2    12

1). Executive Summary 

This report will discuss and evaluate the failure of the Airbus A380 project in relation to the triple constraint theory. While acknowledging that the project could be considered a success in some aspects of the theory, the report overall concludes that it ultimately failed to meet the scope, cost, and time constraints, thus leading to the project's termination. The Report's findings highlight the critical importance of adhering to the triple constraints model in project management to avoid project failure. 

2). Introduction 

For several decades, the issue of project failure has remained a persistent problem (Hughes, Rana & Simintiras, 2017). This is shown in Flyvbjerg ‘s (2014) study which disclosed that the success rate of a project is remarkably low, with roughly only one in every one thousand projects achieving success. This report will critically discuss and evaluate the failure of the Airbus A380 in the context of the triple constraints model. The report will firstly look at defining project failure and then go on to provide an outline of the project, continued by an evaluation of its failure with respect to the project’s scope, cost and time. 

3). Understanding Project Failure

3.1). Definition 

Garland (2009) suggests that the most straightforward explanation of a successful project is one that produces the desired result inside the specified time, cost, and quality restrictions, if either of these limiting factors are severely surpassed or compromised, or if the intended results are not realised then it can therefore be seen that the project has at least partially or completely failed. This definition can be demonstrated by the triple constraints model (See Appendix 1) which is a visual illustration used to determine a project's success (Will, 2012). This widely accepted project management concept considers that scope, cost, and time are essential to establishing the calibre and overall success of a project (Van et al., 2012). These constraints are characterised as scope, which includes all of the qualitative and quantitative aspects necessary to meet a project's aim, cost, which includes completing the project within budget, and time, which indicates the projected period for completing the project (Mokoena et al., 2013).

3.2). Limitations of the Triple Constraints 

The triple constraints model is not without its limitations; some authors such as Van et al., (2012) suggest that the failure to meet each of the triple constraint variables does not always indicate project failure. However, it can be argued that this is not the case as despite research claiming that the triple constraints do not determine the success of a project as a whole, the standard of on time, within budget, and to a predetermined quality remain a permanent fixture in determining whether a project was successful. (Pollack et al., 2018). The triple constraints model is successful in determining the failure of the Airbus A380 project as the model successfully shows the interdependence between the criteria of scope, cost, and time and how a failure in one aspect can lead to failure in the full project (Pollack et al., 2018). The particular failures in this relationship are evaluated throughout the report in regard to the Airbus A380.  

4). Overview of the Airbus A380 Project 

The Airbus A380 was introduced in 2007 as the largest operating passenger aircraft with the ability to carry more passengers than any other commercial aeroplanes as well as boasting more than 500 square metres of usable floor space (Thomas,2019). The aircraft's development cost reached a staggering $25 billion, thereby becoming the most expensive aeroplane Airbus has ever constructed. The aircraft, which has an ultimate range of 8,200 nautical miles, is presently used for some of the world's longest journeys (Nelson, 2020). Although the A380 possessed outstanding features, the project deviated from its initial course and the aircraft came in far over budget and schedule (Castillo, 2018). Due to these inabilities the production of the aircraft was stopped in 2021 because of a lack in demand and an inability to turn a profit (Rains, 2022). 

5). Triple constraints - Scope 

5.1). Overview 

The Airbus A380 is one of the most intricate commercial aeroplanes to ever be constructed (Dörfler & Baumann, 2014). The Project scope was to create a superjumbo jet that had the capacity to transport up to 555 passengers between intercontinental travel with a reduced financial and environmental impact (Dörfler & Baumann, 2014). The scope of the A380 was complex and underestimation of the complexity can be seen to contribute to the project's failure (Musobia, 2017).

5.2). Analysis of the Scope 

The Airbus A380 project scope played a part in its failure overall due to the scope creep which was brought on by the need to modify the initial design. Scope creep results from inadequate scope definition, which can cause alterations to the scope that can have a detrimental effect on the project (Mian et al., 2020). The intricate wiring harnesses, which contain over 100,000 cables with numerous different functions, can be identified as one of the biggest contributors to scope creep in the project. The late decision to switch from copper to aluminium wires was taken due to weight concerns, but the bigger size of aluminium wires rendered the cables inflexible, and became particularly hard to install (Parth,2008). Scope creep can also affect a project's standard which can have a detrimental impact on the quality of the project (Moneke & Echeme,2016). In the case of the Airbus A380 it is apparent that the wiring complexity contributed to the quality of the aircraft as it allowed passengers to customise their own entertainment system, which in turn could be seen to enhance customer experience (Forbes, 2007). However, the company was forced to stop manufacturing and delay aircraft deliveries for two years because of the cabin wiring breakdown, incurring a six-billion-dollar repair expenditure in the process (Shore,2008). Therefore, the scope of the Airbus A380 led to the project's failure as the scope creep forced the company to alter its initial design. Although this was to improve the customer experience and enhance the scope of the project, it made it improbable to meet the triple constraints, due to this significant costs were incurred that had an adverse effect on the budget as well as the delivery of the aircraft being delayed. 
 
 5.3). Success of the Scope 

Although the A380 suffered from scope creep due to the complexity of the project the aeroplane could be considered successful in terms of scope as Airbus did create the world's largest passenger aircraft which featured cutting edge technology and is a pioneering marvel of engineering (Nelson, 2020). However, overall, the scope of the Airbus A380 can be considered a failure as due to shifting industry trends, demand for a very large aircraft like the A380 plummeted by about 92% between 2010 and 2020 (Geng & Bhattacharya, 2021). 

6). Triple Constraints - Cost 

6.1). Overview 

To guarantee that the spending allowed under the project's contract is not exceeded, each project should be monitored against specific cost budgets (Lock, 2007). The Airbus A380 had a significant development budget of around $13 billion, but this was not enough by 2016 the budget had exceeded $25 billion (Kumar, 2022). The Airbus A380s cost constraint can be viewed as a failure as the project surpassed its initial budget as well as Airbus falling short of its sales target (Thomas, 2019).

6.2). Analysis of the Cost 

The Airbus A380 development cost went massively over budget by $12 billion which resulted in several negative consequences for Airbus (Eduardo and Chagas, 2014). The increasing budget was due to a rise in manufacturing costs and a decline in sales (Lawrence & Scanlan, 2007). As well as the main problem being the lengthy delay in introducing the A380 to the market (Spaeth, 2021). Firstly, the cost overrun led to a significant reduction in profit margins for the A380 project (Kumar, 2022). It was predicted that selling 50 planes annually for $216 million would result in a profit of $2.2 billion, and it was also determined that they only needed to sell 250 planes to break even, however, this was not the case as Airbus only delivered 246 of their aircrafts (See Appendix 2) resulting in not breaking even or making a profit (Kumar, 2022). As a result, Airbus decided to stop manufacturing in 2021 because they could no longer recover their 25-billion-dollar investment (Nelson, 2020). Therefore, the Airbus A380 project was a failure in terms of the cost constraint, primarily due to the project's cost overruns which resulted in its inability to meet its targeted sales figures. Lock (2007) conveys this theory when he states that inability to accomplish the project within the agreed budget could significantly decrease profits and the return of investment, with a possibility of additional adverse financial consequences. 

6.3). Success of the Cost 

Despite Airbus' announcement that the A380 production facilities would close, the project may be regarded a success to a certain degree, as the aircraft is a passenger favourite which continues to fly even after manufacturing ended (Nelson, 2020). Despite this success, the A380 project can ultimately be considered a failure in terms of cost as development costs increased by several billion dollars over budget, making it challenging for Airbus to turn a profit (Dörfler & Baumann, 2014). 

7). Triple Constraints– Time 

7.1). Overview 

Pinto (2016) states that projects are limited by the time span in which they are required to be completed. The airbus A380 project could have been considered on time until the construction of the A380 came to a standstill when a fault with the complicated wiring system worsened, causing the whole production schedule to be delayed and the first aircraft to be delivered eighteen months later than originally intended (Leoncini, 2017). This resulted in a cost increase as consumers dropped out from purchasing the plane due to the lengthy delay (Dörfler & Baumann,2014).

7.2). Analysis of the Time. 

The Airbus A380 project can be seen as a failure in terms of time in the triple constraint model as the first 18-month delay had a rippling effect on the development of the A380, since only 23 of the scheduled 57 aircrafts had been transferred to their buyers even two years later (Dörfler & Baumann, 2014). Lock (2007) conveys the idea that the purchaser of a project will be dissatisfied if it is not completed on time. This proposition is apparent in the A380 project as in 2019 Emirates, the A380 largest client, dropped their initial order of 162 aeroplanes to 123 (Nelson, 2020). As a result in dropping orders airbus decided to prioritise on time delivery to their customers but due to this quality of the aircraft began to decline when the wing structures started cracking thus dissatisfying customers more (Dörfler & Baumann,2014). Therefore, the time constraint of the Airbus A380 project failed as the delivery of the aircraft to clients faced extensive delays which impacted the budget of the project as customers were unwilling to wait for the aircraft any longer. 

7.3). Risk Analysis of Time 

There is no amount of preparation or control that can eliminate risk in a project (Larson & Gray, 2018). A risk is an unforeseeable occurrence or situation that, if it occurs, can have an impact on a project’s objectives (Larson & Gray, 2018). In the case of the Airbus A380, the shortfall in the project’s timeline was not examined as an emergency buffer but was applied to the completion date of every development phase, so the buffers were exhausted even before a crisis arose (Dörfler & Baumann, 2014). Airbus should have analysed the risk associated with the time constraints of the project and considered a more conventional development process approach in which they finalise the fundamental design of the first aircraft, which subsequently acts as a manufacturing template for any future aircraft (Altfeld, 2011). Instead, Airbus disregarded the possibility of this risk occurring and began manufacturing before finalising the design, causing delays when changes were required in the assembly process. This could have been prevented if they had created a basic design first before beginning manufacturing instead it wasn’t until mid 2009 that airbus was able to move to a commercial series (Dörfler & Baumann, 2014)

8). Conclusion 

In conclusion, the Airbus A380 Project can be deemed a failure with regard to the triple constraints model. Although the scope of the project could be regarded as being achieved, the complexity inherent in the project made it improbable to meet the triple constraints. Additionally, the project cost significantly exceeded its budget, and although the aircraft was popular among passengers, its high cost resulted in Airbus being unable to generate a profit. Moreover, the project's delay had a negative impact on the aircraft's budget, leading customers to drop their orders and causing further cost increases. Therefore, while the Airbus A380 project can be considered a success in certain aspects, it is, overall, a failure when evaluated according to the triple constraints model.

9).Recommendations  

This report recommends that Airbus should have prioritised the triple constraints model when developing the A380 to be considered a success. Airbus should have used more appropriate risk migration strategies to have prepared for any unforeseen risk such as creating a template aircraft to have avoided such lengthy delays.