Thomas Schaeffler

The best practices of engineering regionalization

Software and hardware engineering in international project business has been subject to regionalization efforts for several years. We describe how such a regionalization is basically organized and performed in a multi-national company, mainly active in project business in various technical domains such as electrical substations, trains or power plants. Main accent is put on experience gathered from engineering regionalization. Special focus of this contribution is on the regionalization process chosen and on the many challenges involved. It turns out that the regionalization of engineering is a process lasting for a longer time and requiring balance between all participating parties. Best practices gathered so far are presented and further envisioned research steps are shown.

Standardization programs in the industrial plant business: Best practices and lessons learned

Organizations in the industrial plant business are facing an increasing competition and a rising complexity of the plants. Common approaches to increase the profitability of engineering organizations in this business are standardization programs. The underlying methodology of modularization and standardization is already successfully used the product business. In the industrial plant business however standardization programs are only slowly gaining ground, mainly due to the high customer specificity and small number of plants produced in this business. Nevertheless researchers agree that standardization programs have great potential. In this contribution, six standardization programs of a German engineering organization were analyzed in case studies. Based on these programs best practices and lessons learned are identified. The knowledge of these success factors as well as examples how these factors can be practically implemented will support engineering organizations to conduct their standardization programs more efficiently.

Regionalization of engineering: A structured process including risk considerations

The companies active in international project business are faced with the optimization task how the different phases in the technical value chain can most efficiently be shared between headquarter and local country organizations. Many regionalization cases the authors have examined have critical issues in domains such as internal setup, strategy, risk assessment, or know-how transfer. Therefore, in this paper, a process detailing how regionalization efforts in engineering can be effectively organized is explained, especially taking into account how typical risks inherent to regionalization can be identified. The process starts by defining regionalization goals in relation to the business strategy and identifying possible risks. After analyzing the preconditions, a regionalization concept is established by careful evaluation of different scenarios. Upon decision for a certain scenario, detailed planning of regionalization is started, including e.g., preparation of change management and ramp-up of engineering manpower. Setting up the local organization includes training of employees, preparation of suitable environments and adaption of engineering processes. In this phase, the first regionalized projects can be performed. A carefully chosen lessons learned process helps to augment the performance of the organization in its environment; a phase-out step may conclude the work in a regionalized environment. Practical information gained from expert interviews and taken from real regionalization cases in a multi-national company is presented in appropriate detail to illustrate the principles. They verify the approach and show the direction of further research.

System integration in modularization and standardization programs

The Engineer-To-Order business, which encompasses companies producing a broad range of capital goods, is becoming increasingly complex. In order to improve their profitability, engineering organizations in this business use standardization programs. While decomposition aspects in such programs are already in an advanced state, the integration of components, modules or subsystems into a customer-specific solution as well as integration of engineering disciplines, life cycle phases and stakeholders are critical but yet neglected aspects. Therefore, the focus of this contribution lies on the role of system integration in standardization programs. It identifies various objects for integration from which seven types of integration with regard to modularization and standardization programs are derived. The analyses of this contribution are based on a literature review and case studies of six standardization programs.

Assessment of engineering performance in industrial plant business: Challenges for economic considerations in engineering

The plant manufacturing business is characterized by intensifying competition and increasing market requirements. Manufacturers try to increase their competitiveness through the improvement of engineering performance. In order to have a reliable basis for management decisions, engineering performance must be assessed comprehensively. The meaningfulness of such holistic considerations is undisputed, but in industrial practice such holistic considerations are rare. In search for causes for this phenomenon the authors identified 13 challenges which oppose the conduction of comprehensive assessments based on an empirical study and expert interviews. These challenges have their origin in structural conditions of the plant business as well as the complex role of engineering, which is connected in multiple ways to other trades, stages in the value chain and phases of the plant life cycle. In this regard, the prediction of cost developments, the quantification of engineering impact and a lack of common understanding of engineering performance turned out to be the main hurdles for performance assessments in an engineering environment. By considering these challenges in future assessments, engineering can be improved more effectively and its potential to increase the profitability along the complete value-add chain can be seized more efficiently.

Economic considerations of engineering in the industrial plant business

When it comes to improve the competitive advantage of plant EPC (Engineering, Procurement, Construction) companies, the increase of engineering performance is a permanent challenge. However, economic considerations such as “What is efficient engineering”, “What is engineering performance” or “When is engineering profitable” remain unanswered both in academic discussion and in industrial practice alike, since engineering is connected in multiple ways to other trades, stages in the value chain and phases of the plant life cycle. For this reason it is difficult to achieve a common understanding of engineering performance. Performance rather lies in the eye of the beholder and these individual interpretations can differ substantially. Based on best-practice sharing and various analyses, the authors develop a model to systematize these subjective interpretations of engineering performance. It consists of three dimensions - “position of the beholder”, “observation horizon of the beholder” and “performance metrics”. The dimensions contain general performance criteria. To consider the specific background of each beholder, there are two additional perspectives on these dimensions - “role” and “controlling concept”. This model enables plant EPC companies to gain a holistic view on engineering performance along the complete plant life cycle. Furthermore it provides a clear structure for economic considerations and investments in engineering - enabling plant EPC companies to increase the performance of their engineering.

A readiness check for regionalization of engineering

Regionalization of software and hardware engineering in international project business is a key driver for the success of multinational companies. These companies usually act as prime contractors and therefore have to execute large engineering projects across several countries. This requires a shift of the whole or at least a portion of their engineering value chain to a foreign country (regionalization). Since a shift of the value chain means a major change in the project execution process, a regionalization initiative is of high risk for the company. For that reason, we describe an approach to effectively check the extent to which a given company is ready for regionalization. The goal of this readiness check is to identify areas with need for action and preparatory work before starting a regionalization initiative. The check is structured alongside the fundamental questions as to why regionalization should be performed, what should be regionalized, who should do it, where regionalization should take place and which conditions apply. It provides management with a cockpit-like overview of the current state and addresses required action fields. By measuring the extent of regionalization readiness, important insight into the regionalization effort can be gained, such as the need for investment into the early phases and the required balance between all participating parties (stakeholders). Examples of practical use of the readiness check are presented and directions for further research are shown.

Challenges of performance assessments for engineering departments: Empirical study and further results

This contribution extends the results of an empirical study in the German plant manufacturing industry by a root cause analysis. Engineering plays a central role in the industrial value chain. Current assessments however do not consider its multiple impact in an adequate way. Since there is little literature about this topic - existing publications analyze performance from a technical-functional perspective or focus on design aspects - this study aims to evaluate performance criteria and challenges for performance assessments. 36 experts in the domain of plant engineering have been asked in a survey and personal interviews. Totally 13 challenges could be identified which oppose comprehensive assessments of engineering performance. A subsequent root cause analysis of these challenges - based on nine expert interviews - identified management practices, friction between technical and commercial functions in organizations and an unclear value proposition of engineering as underlying problems.

Framework and rationale for economic considerations in industrial plant business

To remain competitive, industrial plant manufacturers need to increase their engineering performance. This requires an assessment of engineering performance first. Since engineering is connected in multiple ways to other disciplines, stages in the value-add chain and phases of the plant life cycle such an assessment proved to be difficult. This contribution presents a pragmatic model to systematize subjective interpretations of engineering performance in order to support plant manufacturers to achieve a holistic and comprehensive picture of engineering performance. It further aims to increase the awareness of plant manufacturers for weaknesses of current performance assessment approaches. The contribution is based on a literature review and qualitative indepth expert interviews, which results have been validated and prioritized in a web-based quantitative survey. Current economic considerations turned out to be not suitable to assess engineering performance, since they have been developed for physical goods or have a strong focus on costs. Based on best-practice sharing, case studies and expert interviews a model was developed which supports plant manufacturers to structure performance and to illustrate challenges and weaknesses of current assessments. The presented model breaks engineering performance down into three dimensions. The subjective interpretations of performance were considered by two perspectives.