Published by www.management-projet.

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Two Billion Euros of Hurt

A subjective look at the Airbus A380 Project by Ian Stokes

When an 11 billion euro project gets delayed by two years with a consequent loss of € 2
billion in profits, there is obviously going to be some soul-searching. Airbus is troubled.
Sections of the business press suggest re-sourcing parts at lower cost and concentrating the
assembly of the A380 aircraft in one place and the A320 in another, instead of sharing the
work between countries. Meanwhile, the governments of France and Germany are seeking to
exert stronger influence over EADS in order to safeguard their political and industrial
interests. Not surprisingly, voices are calling for an end to the hysteria.

Design Configuration Headaches

At the heart of these problems, is a failure to use the same versions of the design software.
Catia is produced by Dassault Systems and is used widely by both Boeing and Airbus, and
this includes sub-contractors, who have a contractual duty to use the same software as their
client. However, within EADS and the Airbus consortium itself Catia version 5 was being
used in Toulouse, whilst Catia version 4 was used in Hamburg. These two versions are
incompatible at file format level. Thus changes to the electrical wiring made in Hamburg
were not integrated automatically into the 3D digital models used in France.

The wiring in a jet is like a plane’s nervous system. There are impacts everywhere, on the
connections to the cockpit, to the moveable parts of the plane, as well as on the in-flight
entertainment system that is configured uniquely for each airline. The Airbus A380 contains
300 miles of wiring, compared to 170 in a Boeing 747. Some of the wiring in harnesses had
to be extended or replaced, because they were too short, while others were affected by
changes to the aircraft structure. As a result, several design versions were evolving
simultaneously, and in two different locations.

When variants are introduced into a production process, such as colour or different materials,
a small increase in the number of design versions can create exponential levels of complexity
due to the many slight incompatibilities, and soon this becomes a configuration management
headache. Furthermore, complications always arise on an aircraft from the need to reduce
weight, and in this instance one of the critical cuts is due to the replacement of copper wiring
by lightweight aluminium power cables. But this makes bends in the wiring much more bulky
and engineers were resolving the snags plane by plane. The problems snowballed.

Stakeholders
In September 2006 Airbus had 159 orders from 16 customers. These customers will have to
negotiate penalties and compensation to cover the shortfall in their capacity. For Emirates,
the largest customer, the delays will mean receiving delivery of a first jet when they already
should have had eighteen in service. Emirates have sent an audit team to Toulouse. Leading

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customers such as Singapore Airlines and Qantas have already constructed infrastructure and
based their development plans on the jet which offers savings of around 15-20% per seat.

With Airbus also forced to delay its A350 long-haul aircraft, EADS shares have slid by 30%
this year. EADS hopes to save significant sums by cuts in overheads and improvements in
productivity. Meanwhile, staff of the company and its hundreds of suppliers will fear closures
and job losses.

History
Airbus was established in 1970 when the leading aerospace companies of France, Germany,
the UK and Spain combined to create a European rival to Boeing, MacDonnell Douglas and
Lockheed. Today the company is part of EADS, whose biggest shareholders are Stuttgart
based DaimlerChrysler AG, the French state and Paris-based media company Lagardere SCA.

Until the 1990s, Airbus was structured as a risk-sharing entity responsible for marketing
planes made jointly by the four partners, who acted as subcontractors. In that way, the
partners were able to operate independently without sharing assets or information about costs.

In 1995 Airbus set out to streamline aircraft construction. The goal was to cut costs, reduce
the amount of time between the conception of a new plane and its entry into service and better
manage increasingly complex designs.

The software tools incompatibility was left unresolved when the French, German, British and
Spanish partners merged their plane-making assets in 2001 to form Airbus SAS. The separate
companies didn’t merge their processes. Although Airbus has used a common working
language (English) since its creation, in 2001 they had not fully integrated their computer-
aided design and modelling tools.

High Stakes
The move to a single company was driven by the need to adapt Airbus's design and
manufacturing processes to handle the complexity of the A380, a two-storey aircraft with an
80-meter (261-foot) wingspan that would cost at least €11 billion to develop. The EADS
board gave the green light to proceed with production in December 2000.

The decision to develop the A380 by the company that builds the very successful A320 and
the A340 was a bold move in a market too small to absorb a large-carrier from more than one
supplier. (The number 8 resembles the double-deck cross section, and symbolizes good luck
in some Asian cultures.) Boeing and Airbus had played stand-off on the construction of such
an aircraft for several years. The ambition that launched the A380 has echoes of Boeing’s
heydays in the 1970s when they built the 747.

For several years Airbus was flying upwards with Boeing struggling to keep up. The A320
which introduced innovations in fly-by-wire technology and a two crew member cockpit
offered substantial economies to airlines. Boeing had to retrofit the 767 to switch to a two-
crew member cockpit. In 1997, in an effort to cut costs, Boeing lost control of their
production system, forcing the shutdown of two assembly lines for 30 days. Hundreds of
aircraft deliveries were missed, costing the company more than $2 billion.

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In 2004, Travel Insider wrote that “Boeing became the hugely success company that it was by
a series of risky but successful gambles on new airplane technology. But then it changed
from being a pioneering innovative company, and instead became one more concerned with
perpetuating the status quo. In March 2001 Boeing cancelled its 747x project, and in
December 2002 stopped the Sonic Cruiser. Boeing's new 7E7 (renamed the 787) was touted
as “too little too late”.

Even the Boeing 777, considered by many to be one of the best examples of a commercial
aircraft project brought home on time and on budget, had endured significant setbacks. It was
the first aircraft to be 100% designed with computer-aided design tools and pre-assembled.
The teams included personnel from design, manufacturing, customer and suppliers working
together right from the start of the project.

The project manager at the time Alan Mullaly, now CEO at Ford, compared the modular
design concept to Fisher Price toys. The plane was supposed to be delivered and then
snapped together. However, at one point, cracks were detected in the composite material used
in the plane’s structure. Reengineering put the project schedule under considerable pressure
and specifications were constantly revised until quite late in the project. The 777 project, with
over 10,000 people and four million parts involved from start to finish, took five years.

Training Heartaches
Designing and building a new commercial jet airliner is a five to ten year project. Airbus
employs a total of 57,000 people around the globe and occupies more than 500 sub-
contractors in France alone. Therefore, it is reasonable to estimate that more than 20,000
people are employed on the Airbus project. Whilst the commercial-off-the-shelf (COTS)
design cuts the number of avionics parts and increases flexibility, the A380 avionics are
highly networked. Amongst other innovations, the A380 includes an improved cockpit
layout, enhanced engines, advanced composite material such as thermoplastics, flight control
backups and higher pressure hydraulics, not to mention a colossal logistics program.

The goal of EADS was to deliver the first A380s to customers after six years in 2006. You
might well wonder whether people actually believed that this could be achieved! Certainly,
on such a tight schedule, there was little time to overhaul design tools and methods. The
EADS initial public offering in July 2000 also increased the pressure to cut costs.
Productivity gains on transport projects are well-documented. They involve the kind of
approach used on the 777: new tools or processes, cooperative multi-disciplinary teams, and
an early emphasis on integrated design.

One of the golden rules of project management is not to change tools in the middle of a
project. As the A380’s ex-project manager pointed out, “changing tools is an enormous
investment”. A manager of computer-aided design and manufacturing technologies at
Boeing, who retired in 1992, remembers that “The biggest problem you have with any of this
is training. If you get people who have done things one way and it worked, they really don't
want to change. You have to spend thousands of hours on training to get the guys equally
comfortable on a new system.” He reckons that it could now take another year to get
engineers up to speed.

Others estimate the training backlog to be eighteen months, which is almost as great as the
two year delay. Meanwhile, each one year delay in production will cost Airbus about one

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billion euros in penalties to airline customers and postponed revenue. Thus the training delay
is worth one billion euros to Airbus – at the heart of the A380 trauma is the problem of
training in computer-aided design tools, configuration management, product life cycle
management, as well as cross-cultural project management and project sponsorship.

Airbus has now begun to put into place “electrical engineering IT tools”' common to the
French and German teams and training the Hamburg engineers on them. “Together, as one
team we will overcome these challenges”, wrote the ex-head of Airbus.

Intercultural Puzzles and Solutions

Dassault Systems produces innovative software that makes its users more effective by
automating the visualisation, simulation and synchronisation of design and engineering
choices. New versions of Catia and Enovia (the product life-cycle management front-end)
offer the potential to massively increase productivity. In July 2006 Airbus selected Enovia
VPLM as their 3D collaborative virtual product lifecycle management solution, combined
with Catia, to standardize product development processes. “The Airbus teams on each
program will access a standardized configured Digital Mock-Up, and capitalize on the
developments of previous and current projects. This will facilitate design and knowledge re-
use, enabling innovation and accelerated product development.” Airbus is extending its
Enovia VPLM user base to several thousand users.

Time and time again engineering managers and computer-aided design directors say the most
difficult part of implementing new software is down to so-called cultural issues. This justifies
a high level of support and service from the software supplier as well as a special training
investment from the client. In fact, this has been long appreciated by Dassault product
managers. Unfortunately, between 2000 and 2004 Human Resource and training managers
were far too busy responding to new legislation – such as those concerning working hours and
the recent French directive on the rights of individuals to choose their own training – than to
have time to waste on the abstract issues of cultural differences.

These decisions to standardise have come late in the day. Why was there previously no
impulse from senior management to insist upon shared design tools? Why were suppliers not
involved in a collaborative effort to anticipate problems and to develop some kind of cross-
functional translator program between different versions of the software? Why was no
effective and cooperative intercultural exchange of expertise introduced?

Top managers have been distracted by jostling for position in the consortium and lobbying for
influence. Critical functions, such as human resources, were diverted by convoluted aspects
of legislation and the requirement to produce an equitable distribution of roles and rules.
Inevitably, political goals get in the way of project goals, but this did not have to be quite so
aggravated, if only the critical success factors of aircraft design had been recognised in time.

Indeed, intercultural teambuilding sessions were set up to kindle a warm feeling of mutual
understanding, but they failed to adequately address the fundamentals of co-operating and
exchanging know-how on specific tasks related to the job. Instead of being valued for
spreading ‘connaissances’, ‘savoir-faire’, ‘kenntnis’ and ‘know-how’, an increased familiarity
with respective intercultural traits left only a feeling of guilt and confusion, fudge and haze.

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An Autumn 2006 report highlights an internal intercultural survey at EADs which portrays the
different perceptions that each culture at Airbus has for the others:
- The French are perceived as being very attached to their networks, respectful of hierarchy,
paternalist and showing a preference for a centralised executive. At the same time, they
are less formal in their communication and decision-making.
- The Germans are characterised as being extremely precise and organised, with a respect
for hierarchy and formality. At the same time, they prefer collective decision-making and
focus on short-term efficiency.
- The British are seen as being totally focused on financial priorities and are goal oriented.
Their communication comes across as being rather indirect, informal, imprecise, unclear,
and too subtle to be easily understood. On the other hand they are pragmatic, down-to-
earth and prefer straight-forward and practical solutions.
- The Spanish, who are considered to be strongly patriotic and proud, are appreciated for
being considerate, relaxed, flexible, open, creative and cooperative, good team workers,
but suffering from an inferiority complex and a tendency to be vague and unreliable.

The remarkable thing about these perceptions is that they are highly stereotyped. However,
the scores were not nearly as accentuated as they were a few years ago. In fact, most EADS
managers prefer to draw attention to the areas of common ground and the similarities, rather
than the differences, and point to a common ambition to transcend national barriers.

Intentions may be good, but in a crisis, each culture tends to look for the obvious solution.
The French want a strong man at the top, who is contested by Germans seeking a greater
degree of consensus, whilst the British lament about the absence of an economic solution.

The cultural reasons that cause people to react in a particular way are so deep-rooted that they
are reflexive and probably impossible to change. Nevertheless, given that Airbus is Europe’s
premier flagship programme, it seems a pity not to invest in a better understanding of one’s
own skills in relation to the strengths of colleagues.

In any case, it is unhealthy to judge people until you fully understand them and, contrary to
received wisdom, this is an area where a little knowledge goes a long way.

Most training professionals would propose a mix of learning techniques: interactive process
mapping, thought-provoking theoretical presentation, enlightening business game, probing
discussion, revealing case study, much filtering and structuring down to the bare essentials,
focused practical example, personal development roadmap, buddy program and practice,
practice, practice.

Training in the new tools and processes ought to be highly task-focused. Technical and
relational aspects in training are too often split apart, because they require different teaching
methods, as well as different trainers who use different skills and modes of operation.
Unfortunately, this is another example of silos and barriers embedding cracks that are very
costly to remove later on.

During the training, the intercultural dimension when woven into the technical framework
creates a backdrop that keeps the subject matter more realistic, relevant and interesting.
Instead of rarefying the setting in a manner that is unrepresentative of the work environment,
intercultural training lends itself to an intensification of the day to day issues and a focused
sharing about what to do, when to do it, how and why.

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For many companies installing a Product-Life-Cycle Management solution looks a bit like
jumping over clouds. This is about innovation and change, whilst every project is unique.
This is not a conventional process improvement challenge. But, with the right mix of
approach, you could probably cut the learning timeline on a major international project to
about a third and save €600 million on an €11 billion project, or about 0.5 % of the total cost
of the project. Cross-disciplinary training requires a concurrent blend of technical and team-
working skills, learning about tools, learning about each other, accentuating one’s own skills,
recognising the strengths of colleagues, and being able to understand how one’s own
particular contribution fits in to the big picture.

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