KLIA2 - Some Salient Facts

Source: Masters Thesis of Mr Sivabalan Naidu of IPE Management

School, Paris1st June 2014

The Regional Hub to be?

Is KLIA 2 sinking now?

• Why was a new master plan drawn up in 2008 for the expansion of the low-cost carrier airport (KLIA2), resulting in the airport being built on soft soil, when an earlier plan circumvented (avoided) this problem?

• This question lies at the heart of the current outcry over the ballooned cost of the airport from an estimated RM1.7 billion to up to over RM4 billion today and the question of safety.

• Refer to the International Airport Masterplan 1992

Why we continue to faulter in our projects?

Executive summary

• The purpose of this report was to undertake a thorough investigation into the various causative factors which may have contributed to the failure of KLIA 2 by Malaysia Airports Holdings Berhad (MAHB)

• The cost overrun was from RM 1.9 Billion to RM 4.0 Billion and with more than 2 years of delay in its completion.

• One of the major factors which may have contributed to the cost overrun and delayed completion is the inability to manage change.

• As we know, managing the changes in a project is a part of project management life cycle.

Executive summary

• Based on the report, given by CEO & Managing Director of Malaysia Airports Holdings Berhad (MAHB) Tan Sri Bashir Ahmad, the new terminal was delayed three times from its original completion date of September 2011

• It is because of the new requirements.

• If only the additional or new requirements had been managed with a scope which is a major factor in having a balanced project management these cost overruns and delays would not have occurred.

Executive summary

• After taking all the project success and failure factors into consideration, it is recommended that the Chairperson of the MAHB Board of Directors should use Statement of Work (SOW) as a yardstick of progress and success.

• Plan the purpose of the project by taking into consideration, the risk management and scope in this case is to finish the KLIA 2 as per the initial project planning without running away from the schedule and cost.….

Executive summary

•….and to clearly outline the possible risks, and management of the risk so that when a change or new requirements arises we could manage it without interrupting the iron triangle, where the main components are quality, scope, cost and schedule.• This is the key being the co-ordination between all the sectors working in building KLIA 2

Scope Variation

- Air Asia

Conclusion & Recommendations• We have discussed the various relevant factors which

may have contributed to the failure of KLIA 2 by Malaysia Airports Holdings Berhad (MAHB).

• The key factors being lack of anticipation to the project plan changes and a poor risk management.

• Thus, I would recommend to the chairperson of MAHB in the future projects have a change management team where they help execute and manage change to ensure, you not only meet your business objectives but new processes are adopted and sustained.

Conclusion& Recommendations • Other than that it’s crucial to follow the four

phases of project management life cycle and not skipping any of these phases will ensure the success of the project.

• It is also important to create statement of work (SOW) for the business case to identify the purpose, scope, project deliverables, goals and objectives and cost and schedule estimates. These ensure we do not run out of the planning we initially made thus preventing mishaps such as cost overrun or delays..

Conclusion & Recommendations

• Adding to that the risk management team should calculate the possible risks with the help of risk impact / probability chart. This gives a quick and clear view of the priority we need to give each, and help us to decide what resource to allocate in managing the particular risk

Conclusion & Recommendations

• Therefore as conclusion project management skills should be incorporated with the theories and models I have presented in my study above should be followed to attain project success, as these are the models proven by researches and trials. I hope these recommendations will help to elevate the project success in future business cases