Dynamic Capabilities in Complex Projects: The Case of London Heathrow Terminal 5

Abstract

Whereas existing approaches and empirical studies of dynamic capabilities focus on the strategic innovation activities of firms (i.e., permanent organizations executing multiple projects and programs), this article identifies how certain types of dynamic capabilities are required to deliver large, complex, and risky projects. Our longitudinal study of the design and construction of Heathrow Airport Terminal 5 by the British Airports Authority ( BAA ) makes three main contributions to the literature: (1) It contributes to the project management literature by identifying how specific dynamic capabilities ( BAA ’s “ T5 Agreement,” strategic behaviors, and collaborative processes) are developed through a three-phase process (learning, codifying, and mobilizing) to support the strategic management of complex projects. (2) While emphasizing their importance for the successful management of complex projects, our findings also underline the continuing fragility of dynamic capabilities. (3) The case study reveals their fluidity and balancing role with respect to demands for stability and change in complex, uncertain, and volatile project environments.

Keywords: dynamic capabilities, complex projects, risk and uncertainty, owner operator