The A380 project was launched in December 2000 as the world’s largest commercial aircraft the Airbus A380 is a feat of engineering. It was meant to open up a new segment by addressing the changing market needs, congestion at the hub airports being one. With the environment having gained a profile, the A380 was designed with low emissions and low noise. The project took five years of preparatory development and testing that cost over US$600 million. The development cost was projected at US$10 billion and a tax windfall of 3 billion euro in Europe alone and induced worldwide employment creation of about 200,000 jobs. It was also going to give Airbus a foothold in all commercial aircraft market segments meant to challenge and surpassing Boeing in the over 500 passenger carrier aircraft segment as well.
The innovative manufacturing processes and novel materials required for the aircraft meant that there were however, going to be little or no synergies between the manufacturing of the A380 and the other Airbus families of aircraft.
Other factors that promised success for the project included the growth in air traffic that was twice the industrial average, increasing revenue per passenger, ground and air congestion and the availability of new technology to improve the economics of operating large aircraft.
The aircraft had 50 firm orders immediately after it was launched. The market for the A380 was projected to be 1235 aircrafts, 8% of all commercial aircraft deliveries and worth around US$77.4 billion. An expert analysis of market demand was successfully carried out as it catered a specialized clientele and numerous tests involving thus potential customers around the world were carried out.
The A380 is the biggest civil aircraft in the world and is produced by Airbus with a capacity to carry between 555 and 850 passengers. The development of this aircraft was probably one of the most significant and expensive project in the history of Airbus. Before the development of this plane, it had been assumed that due to growing number of long-distance flights and corresponding increase in fees paid by airlines per landing, it was reasonable to construct a double-deck, large capacity aircraft. That type of plane would have been capable of minimizing the operating costs for airlines especially on long haul flights such as between Europe and the USA.
The average price for one A380 was estimated to be US$ 290 million, making it, by far, the most expensive aircraft in the world. The pricing was carefully done covering all expected costs incurred. The first orders for the plane were received in late 2001 from Emirates Airlines for seven aircrafts. Further orders followed soon and the company seemed to be very successful in attracting new customers. In 2006, the first test flight took place.
The Project was a Failure
The company failed to fulfill its delivery and manufacturing obligations to customers on the agreed dates. In June 2005, Airbus announced that due to technical problems, mainly problems attributed to internal wiring in aircrafts, there were going to be delays in the delivery of the A380 to customers. Initially, the delays were scheduled to last six months, but on 13 June 2006, Airbus announced another delay of further six to seven months. This caused major shifts in the delivery schedule. The company was not going to supply the promised quantity of aircrafts on time in the following years. As a result of delays the chief executive officers (CEO’s) of both EADS (European Aeronautic Defense and Space Company) and Airbus resigned. The failure of the project reflected in their personalities as bearing poor project managing skills. The EADS share price fell by 26% and it incurred $6.1 billion in additional costs due to project delays.
Existing customers began to express their discontent and some of them cancelled the contracts with Airbus and chose to place new orders with the rival, Boeing instead. Airbus set up a research group to analyze the problems and find a way out of the crisis. Upon completing its internal review, the Airbus crisis research group decided that further delays in manufacture were unavoidable and on 3 October 2006 the new delayed schedule for delivery was announced. This meant further delays to airlines. For instance, the first A380 aircraft to Singapore Airlines is now expected to be delivered in October 2007. In November 2006 and in March 2007 FEDEX and UPS opted to abandon Airbus and chose 747 and 777 aircrafts from Boeing. The 747 and 777 planes do not have similar specifications to the A380. EADS is currently trying hard to retain the existing customers and orders. It has also tried to maintain its market share by allowing substantial discounts to existing and new customers. Heavy losses and significant cash flow shortages are faced by EADS at present.
Issues ignored in assessing the technological feasibility of the project At the heart of the problems were difficulties integrating the complex wiring system needed to operate the aircraft with the metal airframe through which the wiring needed to thread. 530km of wires, cables and wiring harnesses weave their way throughout the airframe. With more than 100,000 wires and 40,300 connectors performing 1,150 separate functions, the Airbus A380 has the most complex electrical system Airbus had ever designed. As the first prototype (registration F-WWOW) was being built in Toulouse France, engineers began to realize that they had a problem. Wires and their harnesses had been manufactured to specification, but during installation the wires turned out to be too short. Even though the cables were at times just a few centimeters too short, in an aircraft you can’t simply tug a cable to make it fit.
As construction of the prototype continued Airbus management slowly came to the realization that the issue was not an isolated problem and that short wires were a pervasive issue throughout the design. Internal reviews identified that the heart of the problem was the fact that the different design groups working on the project had used different Computer Aided Design (CAD) software to create the engineering drawings. The development of the aircraft was collaboration between 16 sites spread across 4 different countries. German and Spanish designers had used one version of the software (CATIA version 4), while British and French teams had upgraded to version 5. In theory, the fact that the design centers were sharing their drawings meant that the electrical system designed in Germany would be compatible with the airframe components designed in France. Part way through the project the design centers also started integrating their diagrams into a single 3D Digital Mock-up Unit (DMU) that should further have validated compatibility. Unfortunately, the construction of prototype demonstrated that theory and practice is not always the same thing. In part the problem was the CATIA version 5 was not a simple evolution from version 4, it was a complete rewrite.
Reports indicate that the calculations used to establish bend radii for wires as they wove through the airframe were inconsistent across the different versions of the software and that inconsistency resulted in the problem. Stripping out the wiring from the prototype, redesigning the wiring, making new harnesses and then rethreading the wiring into the airframe became a monumental task. Taking months to complete the project was delayed multiple times as hundreds of engineers tried to overcome the problems. At one point more than 1,100 German engineers were camped out at the Toulouse production facility trying to rectify the problems. The root of the problem can be traced back to a single decision: the decision to proceed with the project despite the fact that two CAD systems were in use. That decision resulted in design inconsistencies, mismatched calculations and configuration management failures.
Complex organizational structure
As for many failed decisions there is a lot of context that lead up to that decision. Much of that context had to do with the history of Airbus. Prior to the 1960′s each European power had its own aerospace industry. As aircraft development projects became larger, more complex and more risky, these separate entities found it hard to compete. To overcome the problem European governments began cooperating with each to integrate their individual aerospace expertise into an organization that was large enough to compete with the US based Boeing Commercial Aircraft company. Originally set up as a consortium of separate organizations, Airbus’s first aircraft (the A300) became operational in 1974. Several highly successful aircraft designs followed and by the late 1980′s the consortium was able to compete directly with Boeing. Building on those successes Airbus took the next step and became a single corporate entity in 2001. Merging disparate entities into a single homogeneous whole is a rather difficult task.
This is due to their differing origins, different parts of the organization inherit, different corporate cultures, management styles and IT systems. Those differences can be both hard and expensive to overcome and at Airbus a number of such differences were still deeply entrenched when the A380 project began. Even at the very top of the organization there was an elaborate split between French and German control (co-CEO’s) and in 2001, when the A380 Program Manager attempted to move the German designers onto the same CAD system as the French, he met a wall of resistance. Personal rivalries and national pride are reported to have been issues that stood in the way and ultimately the pressure to keep the project moving forward meant that the CATIA version issue was never resolved. Five years later that issue was to cost him his job and he resigned as part of the house cleaning that resulted once the magnitude of the issue became clear. Eventually prototype did fly and the aircraft is indeed a marvel. However, that one small decision point became the seed from which a billion dollar delay matured. Interoperability of design tools is certainly not only an Airbus issue. In today’s complex integrated supply chains, stories of failed configuration management during the design process are a sadly all too common.
Summary of factors contributing to the failure of the project:
Configuration management failure as more focus was on completing and launching the prototype.
Highly complex organizational structure attempted to please different parts of the organization rather than focusing on how best to build the aircraft.
Failure to form a single project team across the multiple design centers in use due to the resistance by the project stakeholders i.e. the CEOs of EADS and Airbus.
Over reliance on a aggressive schedule leading to “schedule pressure’’, such that key issues were ignored early in the project lifecycle.
Failure to address issues when they were first identified resulted in snowballing costs and significantly higher costs once the problems were
finally faced up to.
Failure of the Project Manager to foresee the problems encountered prior project launch already experiencing complex organizational attributes and keep provision for thus problems.