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Project management example: The London Eye

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Introduction

Generally, the definitions of project management have diversities, but in commonly project management is used to accomplish business ambition, strategies and well-defined work tasks within a certain schedule and limit budget (Sabin, 2006). The project management required skill, experience, processes, methods and knowledge in order to complete the objectives of the project (Association for Project Management, 2014). Most strategists succeed in these days with high competitive and fusing global economy are mostly using the project management techniques to deliver substantial quality of business results within limited time and budget (Project Management Institute, 2014). Jamieson & Morris (2004) support that project management is a key factor in business process. Even in many definitions of project management, the fundamental is about attaining the jobs done.

The London Eye is the huge project that was designed by architectures David Marks and Julia Barfield, its purpose to represent modern architectural design and engineering of the first of the millennium century (Tim and Ian, 2000). The London eye was the tallest Ferris wheel in the world by height 135 meters, after success, with Star of Nanchang in 2006, Singapore Flyer in 2008 and High Roller in 2014 in order. The construction of London Eye used 16 months to finish in order to celebrated of the year 2000, London Eye also knows as the Millennium Wheel. In the first year of operation, number of visitors approximately was 3.2 millions, hence this becomes more popular of attracting visitors in the United Kingdom. The production cost of the London Eye is 75 million pounds and took 50 percent of time less than normal to finish the project (Marks Barfield, 2014). This makes London Eye is one of the most interested project to measure and examined in the process of project management.

A project must have three variables that can estimate certain time of the project, limited by budget and meet quality requirement (Lester, 2007). Characteristics in process of construction London Eye can be evaluated as the project, because of the constrains from budget and time, no repetition of construction, requirement of a variety of skill and experience expertise involve. From all of these characteristics summarize that the London Eye is classified as a project. The scope of this paper study is to investigate two aspects, which are stakeholders management, project planning and scheduling that make London Eye become a successful project. However, it is essentially that we have to understand the background of the project first, in order to understand the process.

London Eye’s Characteristics

Since 2000, the London Eye has become one of the iconic landmarks of London. The concept of London Eyes was introduced in 1993 by the architecture name Marks Barfield. His design of Ferris wheel submitted to the Architecture Foundation competition in order to build to celebrate the millennium year. In 1994, British Airways interest to become a sponsor of the project. In 1996, the permission of the project was successfully made by the agreement of shareholders as the result, Tussauds Group was joined as the last partner. The London Eye was constructed before the year 2000 only 16 months (The British Broadcasting Corporation, 2005). More that 5 different oversea companies worked to build London Eyes and it took 7 years till it was open. The formal opening ceremony on 31, December 1991 and follow by public open on 9, March 2000.

The Iron Triangle

Figure1: Iron triangle of London Eye project

The Iron Triangle is the traditional technique for evaluating project performance, which have three variables; time, cost and scope that try to balance each others (Atkinson, 1999; Gardiner and Stewart, 2000). If one of the three variables is changed, it will affect one of the others too. For example; if stakeholders want less time of construction, they need to increase the budget or reduce the scope (Gregory, 2006). In (Figure1) shows The Iron Triangle of London Eye project follow by time, cost and scope. The London Eye used only 16 months in order to finish the construction process, in order to celebrate millennium century, that is 50 percent less than normal process.

The cost of construction of London Eye was 75 million pounds higher than average cost of normal construction. But the cost of building was not issued to be a problem because the main purpose of this is to open on time and to be the biggest Ferris wheel in the world (London Eye, 2014). To understand the key elements of project management, such as stakeholders management, project planning and scheduling which are the factors to push the London Eye finished on time. The Author will illustrate and explain two of variables in further.

Stakeholders Management

According to, Freeman and Reed (1983) has given a definition of stakeholder is someone that “can affect the achievement of an organization's objectives or is affected by the achievement of an organization’s objectives”. Bourne and Walker (2004) suggest that even a project manager was able to deliver the project with the original scope, cost and time, but without the attention of stockholders, a project might probably not be able to success. The conflict in stakeholders must be managed, because it might lead to projects fail (Bourne and Walker, 2005). A stakeholder can be any individual, institution or organization that involves the interaction with the project or business. The stakeholder might effect from project, both direct and indirect, and can be occasional or ordinary contact with the project (Paul, 2013).

Identify who are the stakeholders and understand the role of them must be done. London Eye project have many stakeholders who are investing in the project. But the key stakeholders of the project, who have the potential to support and facilitate the project can clearly identify. David Marks and Julia Barfield, who invented the idea of the wheel in 1990 were a press campaign to support the concept. Bob Ayling, Chief Executive of British Airway in that period offered financial and corporate support to this project. In 1997, Tussauds Group was brought into the position of the operator. The London Eye Company Limited, were owned by three owner separate in equal shard. David Marks and Julia Barfield owned one third, The Tussauds Group also owned one third and lastly one third owned by British Airways, who was the leading support during the development phase. Government didn’t support the project, except the construction of new pier, in purpose to protect collision of the wheel. For financing purpose of the London Eye project was provided by Sumitomo Bank and Westdeutsche Landesbank (Tim and Ian, 2000).

Mace is the UK’s leading company on the project management, as appointed to be Project Managers in 1998. Seven groups of contractors were chosen to project, they were responsible for building and design as follows: Tilbury Douglas Construction Ltd for Foundations, Civil works and Pier structure, Hollandia BV for Wheel Structure, Pomagalski SA for Capsules and Controls, T Clarke PLC for Electrical Installations, Littlehampton Welding Limited for Boarding Platform and Pier Finishes, Waterers Landscape PLC for Landscaping and Alandale Construction Limited for County Hall Fit-Out (Tim and Ian, 2000).

From this we can identify stakeholder as two types; internal stakeholders and external stakeholders. Internal stakeholder can be people who involve in part of the business for example; shareholders, managers and employees. External stakeholders are the people who outside the business such as customers, local community, suppliers, press and government (The British Broadcasting Corporation, 2014).

Figure2: Stakeholders Web and Internal & External Stakeholder

From the figure2 above, researcher attempt to explain the understanding of the internal and external stakeholders of The London Eye by using The Stakeholder Web describe. From internal stakeholders, Shareholders can be British Airways, David Marks & Julia Barfield and Tussaudes Group that interested in dividends and growth of shares. Managers and employees are interested in salaries and job security. From external stakeholders, suppliers concerned in delivering services and finished project on time. Government, Tourists, Londoner and also including people around the South Bank area are impacted from the project such as the project might effects to new businesses that can take benefits from London Eye such as bars and restaurants. Traffic around the London Eye maybe influenced because increasing of tourists. All of these influencers can become stakeholders of the project.

Stakeholders have different of interests, to manage this conflict it’s necessary to understand the types of stakeholders and what can influence their behavior. By classifying the different groups of stakeholders, using stakeholder power and interest matrix, to organize based on the level of power and interest. Stakeholder classification of power and interest matrix map will make groups of stakeholders easier to understand. Stakeholders can be classified in two big dimensions, of power and interest (Newcombe, 2003; Johnson and Scholes, 1993). The basic concept is who have high power and high interest will be the key players and also need to manage it.

Figure3: London Eye stakeholder power and interest matrix

From the figure 3 shows that London Eye project stakeholders were classified by level of interest and power. The key players in this case can be British Airway who is supporting the financial and able to control the project. Bank and financial institutions such as Sumitomo Bank and Westdeutsche Landesbank, that provided financial loan. Press and local community didn’t have power, but the project directly effects to their living or career. Same as the government, they didn’t provide the financial support but able to collect taxes from the project. Customers and Londoner can be in the group of minimal effort.

The success of The London Eye project definitely involved with the stakeholder management. The well understanding in position and its roll are significant to make this project completed. However, it is not only stakeholder management, variable that leads to the success of the project. Many factors that involved included planning and scheduling of the project also are the important variables.

Project Planning and Scheduling

Project management planning is one of the important variables that required lists of time, quality and cost. Project management planning depends on types and sizes of project (Lester, 2007). The role of project management can separate into three main areas; 1) It can handle the operational requirement to meet the customer satisfaction, 2) The project must be completed on time and 3) Control and delivery the job on the previous set of constrains budget. Good project planning will lead to success according to these three goals. For more understanding of London Eye planning, researchers will apply Work Breakdown Structure (WBS) is the technique for controlling and planning project. Secondly Gantt chart technique will also use to explain in this project.

The Work Breakdown Structure (WBS)

To organize the structure of the project, Work Breaking Structure assists the work process. It is similar to the outline of the book or report. WBS is the brief version of work structure that help to perform and focus on plan, track and evaluate of the project (Gregory, 2006).

According to the diagram, it consists of three benefits of using WBS, First, WBS are easier to evaluate the cost and time of work. Second, it is easy to break down the work into the small tasks and makes it easier to measure the progress. Third, it eases the separation of the tasks into the team member. Moreover, WBS contains two kinds of tasks: the summary tasks and the work packages. Summer tasks will describe each of the processes in the project, for the work packages describe as the lowest level task that required details to complete.

From the figure4 shows The London Eye’s Work Breakdown Structure. WBS identifies the work that should be done, based on researcher’s understanding and assuming. The summary tasks can be divided up to four main tasks; safety, stakeholders (internal and external), physical and organizational. Moreover there are more subordinate level breakdown into each main tasks. For example, in physical tasks and the construction of wheel, capsules and foundation can be described as the lower level task of each level.

The Gantt chart

The Gantt chart was developed during the World War I invented by Henry Laurence Gantt. The Gantt chart uses to identify the necessary steps to obtain a result of work. The process of doing Gantt chart is worked by projecting schedule, follow step by step, from the final result, analyst activities, timing of process and sequence of tasks (Gregory, 2006). The chart can used to compare the estimated time of the project before, start with initial time on the actual time that really spent. Furthermore, Gantt chart can apply to every project, both in big project and small project. For example, building a factory, making a cup of glass or producing a musical.

Figure5: London Eye’s Gantt chart

From the figure5 shows The London Eye’s Gantt chart. The researcher is using information from the previous research and available documents to create this Gantt chart (The British Broadcasting Corporation, 2005; Tim and Ian, 2000). From this chart can see that London Eye project used approximately 7 years of planning, finding sponsors, get permits and construction. The London Eye can be estimated as the long project in-term of planning, but comparing to the time on construction is apparently very short compared to this kind of the project.

Conclusion of the project

The London Eye is one of the most successful projects in many aspects. It’s also one of the most successful in architect design of 21st century. The components of London Eye must be assembled above The Thames River that required high technology to handle the project.

The original plan of London Eye was planned to be completed the construction in 2 years, but in, finally it used only 16 months to finish the project. If according to, The Iron Triangle theory said that if one of the three variables was changed, it will affect one of the others too. London was used the budget around 75 million pounds to build, but the project’s time construction is faster than expected and the scope has not changed. Unfortunately, components of London Eyes have to ship up and assemble in the Thames River this made it harder to deliver projects on time (Tim and Ian, 2000).

The London Eye is not the ordinary project for both suppliers and project management team. To be able to finish on deadline, all around the prost have to be given to everyone who was a part in this project. Shareholders and investors of the project must spend huge money in order to justify risk of the project. For example, if poor quality and not finished on time happened, this implies that the cost of the project may not be the first priority of concern. Therefore, the time and scope or quality must be the first and second priority of the scope in the project.

Mace construction that was controlling the project management team of London Eye should be accredited for the achievement and deliver project before deadline. But if they can decrease time for searching operators and suppliers, it could save the cost of the production because time of construction can reduce cost of production.

From the stakeholder management perspectives, it illustrates the conflict of interest in shareholders, as the factor of “Time” had become a conflict among them. However, British Airway as a big shareholder that support financial fund during the construction had burden the high cost of production and risk. But in terms of marketing, British Airway can promote and impose the branding under the sponsorship deal. British Airway also improves brand image by using London Eye as the presenter of their brand.

Recommendation of the project

Researcher found that from this paper, it helps to understand theories and concept of project management, which make it easier to manage and deal with the project. The fundamentals of controlling cost, deliver on time and satisfaction in quality are significantly important. Not only the stakeholder management and project planning and scheduling will lead to the success of the project. But risk management, uncertainty management, resource management, scope management and other management aspects should be concerned as part of the success factors in project management. Other aspects of business should be considered as important as project management such as financial, human resource management and costumer relationship management.

The London Eye project was won over 25 awards for engineering & tourism, innovation and design including; 2003 Queen’s Award for Enterprise Innovation Furthermore, the project can make huge profits from the first few months of opening and had recovered the cost (London Eye, 2014). From this show that minimize cost is not always important for business but deliver customer expectation and requirement sometime is more important. The main problem of this project is about lack of managing for future that effects to cost which increases more that it should be. The project manager should concern this point because when one varies in cost, time and quality of project, it will always affect one the others as a whole.

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