Firms never have enough engineering resources to meet business demands yet projects often overrun in cost and schedule. Today’s engineering work environment is a complex and chaotic mix of market change, multiple projects, and development risk/uncertainty.
Development projects, the bread and butter of most engineering organizations, require robust project and risk management protocols to achieve cost, schedule, and quality goals. Engineering resources are often pulled in different directions with discretionary requests for their time contrary to what business leaders set as priorities and their strategic intent. The gap between reality and perception can be large leading to misunderstanding, misdirected blame, reduced morale, and degraded business performance.
To understand engineering delivery throughput it is essential that business leaders understand the total demand that the firm is placing on their engineers beyond project commitments caused by six hidden demands on engineer’s time.
Total Engineering Workload
A non-supervisory engineer’s normal available work time for direct engineering project work is about 82-86% of total possible work hours or approximately 47 weeks when holidays, vacation, and normal business demanded time (performance reviews, town halls, functional group meetings, training) are taken into account. There are slight differences for country, role, company situation, and their level (determining vacation) but this baseline range is fairly consistent world wide. Overtime and weekends are normally held in reserve for short term capacity surges to address unforeseen issues and is over and above this total possible work time.
The reality for most engineering organizations is a total engineering workload for a non-supervisory engineer is comprised of eight types of activities:
- Multi-Project Direct Work Tasks & Activities;
- Development Project Risk / Uncertainty Mitigation & Treatment;
- Discretionary Business Activities;
- Multi-Project Inefficiencies;
- Un-Forecast Back-Door / Walk-In Activities;
- Process Inefficiencies (Business & Engineering);
- Rework; and
- Daily Distractions.
Project schedules are often based on the first two types of activities or the work that one would expect would make-up the majority an engineer’s productive time. This approach can lead to under resourced engineering organizations. The problem is that the six hidden demands can create 15-25% additional work. Only 60-70% of engineering capacity may be going to project work as a result causing schedule and cost overruns as well as excessive overtime to keep up. This work volume disconnect drives the engineering capacity perception / reality gap. To address the gap business leaders and engineering management/staff need to determine the extent to which the six hidden demands are impacting their engineering capacity plan.
Discretionary Business Activities
Discretionary business activities are undertaken for good reasons because they lead to growth or improvement in business performance. Engineers often must support business sustaining activities because of their product/technical knowledge, experience, customer knowledge, and academic credentials. Bids and proposal support alone can on average demand 3-5% engineering productive capacity. Other discretionary business activities aimed at improving business performance may include enhanced training, continuous improvement, or reorganizations which can also consume several percent engineering productive capacity.
The firm’s industry environment, market cycle, and the degree of market force driven change can also have a significant short or medium term impact on the volume of this discretionary engineering workload. Assumptions about discretionary business activity volumes based on years with little change leads to significant engineering capacity demand under estimation.
Capacity availability problems also often arise from discretionary business activities if they are not timed or integrated well with direct project schedule commitments. Discretionary business activities should be synchronized during project demand valleys avoiding seasonal project demand peaks if present in annual work cycle.
Most businesses today are multi-project environments because the extremes of dedicated functional or dedicated project teams are inefficient or impossible to implement with scarce specialist expertise. The number, size mix, complexity mix, and novelty mix all combine dynamically to create a constantly shifting work plan with winning / losing project managers. Multi-project inefficiencies are always bad.
Priority conflicts are a leading source of project schedule delays in multi-project environments. Organizations that operate lean or with labour shortages are particularly susceptible to priority conflict. Furthermore a misalignment between project priority and project manager assertiveness can often put individual engineers into difficult situations that impacts morale and job satisfaction that if left unchecked can degrade the operational effectiveness of the engineering organization and impact overall business performance.
Inefficiencies can also be caused simply by the sheer number of individual projects. The more projects that individual engineers support the more project related overhead activities they are required to keep up with. Project related overhead activities include stand-up or status meetings, project email information, email responses from them, schedule updates/EACs/ETCs, and customer meetings. This activity can require several hours of work per week to sustain multiplied by the number of projects and depending on the stage of the project can be quite intense. This workload is often budgeted under project management as opposed to engineering so is drain on engineering capacity even though project budgets are fine and the net result is a schedule overrun.
To solve this issue business leadership need to implement engineering WIP constraints by limiting the number and mix of projects in process and establish a company wide priority system. Leadership must resist the temptation to load engineering staff up to 82-86% which causes schedule overruns, cost overruns, and near constant overtime leading to fatigue and increased error rate.
Un-Forecast Back Door / Walk-In Requests
Often business leaders and even engineering managers are unaware of many requests coming through the back door to their staff. Individual engineers want to do their best, satisfy external/internal customers but are left confused and unclear of priorities. Back door and walk-in requests can lead to project schedule delays. Typical examples of back door and walk-in requests for engineering advice include engineering support to supply chain, engineering support to production, and customer support requests. Another type of back door and walk-in requests on engineers are management questions or management emergencies. Although good intentioned engineers are compelled to respond or they fear being labelled as non-team players, non-responsive, or difficult employees.
Leadership should test whether these back door and walk-in requests are essential for the business and if so should budget to meet this demand. A separate support group could be established if the volume is large enough to separate support work from project work potentially rotating junior staff through the group for experience. Often engineering support groups are completely overhead but when times are difficult the groups are down-sized and the work load moves back to the project support engineers leading to a re-emergence of schedule and cost overruns.
Waste and inefficient processes add to total engineering workload. Process inefficiencies can relate to either business or engineering process waste. Focusing on engineering process inefficiencies, forms of engineering waste include:
- Over production of information;
- Over processing of information (over design);
- Miscommunication of information;
- Stockpiling of information;
- Generating defective information;
- Waiting for information; and
- Unnecessary movement in working to the process.
An excellent discussion on engineering waste can be found in Waste in Lean Product Development by Josef Oehmen and Eric Rebentisch. Lean engineering methods provide solutions to eliminating waste in engineering processes. Simply redesigning business or engineering processes can free up enough engineering capacity to mitigate the other hidden workload – sometimes in the 10-15% range. Leadership should ensure that a volume of engineering capacity is budgeted for continuous improvement on an annual basis.
Engineering rework can also be a large drain on engineering resource capacity sometimes exceeding 5%. Engineering rework is difficult to see in the same way that engineering work in process is difficult to see because engineering work involves information rather than physical parts. Engineering rework is any effort spent in correcting information resulting from engineering mistakes, errors, or change required to manufacture, build, or support a product. Often though the actual presence or need for engineering rework can be subjective where right or wrong are not clear cut but accountability for solving engineering rework rests with engineering staff and engineering management. The degree of product novelty and complexity can drive higher rates of rework. Common defect categories include:
- Technical accuracy;
- Technical argument structure & soundness;
- Engineering approach;
- Deliverable completeness;
- Regulatory compliance;
- Deliverable format, typos, or grammatical errors (least important)
Rework is a form of waste and must be eliminated. Organizations should establish engineering error tracking systems as part of an engineering quality management system to determine trends, volumes, and support root-cause analysis continuous improvement activities to reduce rework. Rework should be measured and addressed in conjunction with engineering process improvement.
Finally, the daily distractions that impact everyone in a work environment go largely unnoticed in most firms also drain valuable engineering resource capacity. Daily distractions include: phone calls; emails; office noise; excessive meetings; and social walk-in interruptions. Even just 15min/day of distractions can add up to 60 hours per person. A good method to address daily distractions is to have quiet times, often in the morning when staff are most productive, where emailing and phone calls are not permitted.
Annual Engineering Capacity Forecasting
In today’s complex work environment business leaders and engineering managers need to understand the total engineering workload, how it behaves dynamically, and how it can degrade the operating efficiency of their finite and constrained engineering capacity to correctly forecast the needed capacity. The six hidden demands on engineer’s time can have a significant impact on engineering delivery throughput.
Problem areas are opportunities to free up capacity to use on more productive work and reduce project schedule and cost overruns. The annual business operating plan is the time to take a deep look at total engineering workload, underlying work volume assumptions, and plan improvement work to prepare a realistic engineering workload forecast. Periodic time studies may be worthwhile to uncover the degree to which the six hidden demands on engineer’s time are causing project schedule and cost overruns.