Heathrow Airport is setting the foundations for benefits management in its sixth regulatory period (Q6) from 2014-2019. The document outlines Heathrow's approach to developing a portfolio management system and benefits framework to prioritize hundreds of proposed investment options and ensure the Q6 portfolio delivers its vision and strategic priorities. Key challenges include understanding and categorizing all concepts, producing a proposed portfolio, and establishing a baseline to measure success. The benefits framework links categories of benefits like passenger experience, operations and compliance to strategic goals and will be used to assess business cases and ensure benefits are realized.

1. 6th March 2014
Chris Beach and Helen Preston
APM Portfolio Management & Benefits Management SIG
Setting the Foundations for Benefits Management at Heathrow

2. 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. 3
Developing HAL’s Portfolio Management Approach

4. A Regulated Airport
CostsCosts IncomeIncome

5. Heathrow’s Vision & Strategic Intents
5

6. Priorities in Q6
6

7. 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.

8. Step 1: Passenger Gap Analysis
8

9. 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. 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

11. Tools: Portfolio Management System
11
• Enterprise System
• User Access Control
• Full Business Case
Capture
• Consistent Structure
• Version Control
• Configurable Analysis

12. The Journey to the Final Q6 Plan in January 2014
12
HAL Plans CAA Proposals
and Decision
2012
Jan 14

13. Developing HAL’s Benefits Management Approach
13

14. 14
Benefit = Physical Asset + Business
Change
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

15. 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

16. 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

17. Aligning Benefits
17
Q6 Strategic Priorities
Q6 Service Propositions
Passenger Satisfaction Drivers
Operational KPIs
Asset Management Objectives
Strategic Intents
Vision

18. A Pragmatic Approach
18
Q6 Strategic Priorities
Q6 Service Propositions
Passenger Satisfaction Drivers
Operational KPIs
Asset Management Objectives
Strategic Intents
Vision

19. TheHeathrowBenefitsFramework
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 rate
1.21
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
TheUK’sdirectconnectiontotheworldandEurope’shubofchoice
bymakingeveryjourneybetter
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

20. 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 rate
1.21
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
TheUK’sdirectconnectiontotheworldandEurope’shubofchoice
bymakingeveryjourneybetter
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 rate
1.21
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
TheUK’sdirectconnectiontotheworldandEurope’shubofchoice
bymakingeveryjourneybetter
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

21. 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

22. Benefits Management in the Heathrow Gateway Life-Cycle
Business Change activities run alongside these procedures in order to ensure benefits realisation.

23. 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

24. 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. 25
Questions?