Classical verses Industrial
The classical setting
A very large percentage of all the money spent on engineering and construction is spent on civil projects. Because of the general familiarity of civil projects, we'll use our interpretation of a major highway project as an example. Please note there are multiple ways of executing a project. We have selected one way and greatly simplified and compressed our example for brevity and discussion.
- A public need is identified. Maybe a lot of people travel from point A to point B on an old narrow road.
- A benefit is identified. The benefits might be increased speed of commerce, commercial development, maybe an increase in tourist traffic and revenue generated, maybe an increase in the tax base, and maybe enhanced highway safety.
- The costs are identified. There are usually records of construction costs per mile of highway, and records of current maintenance costs. Any available cost offsets are also identified.
Then if the cost-to-benefit ratio reaches some criteria, whoever is backing the project campaigns for public funding until public funding is approved.
The classical way of managing this type of project loosely follows a path similar to:
- A responsible administrator is assigned. Let's call him or her the RA.
- The RA puts out a public notice of the job and calls for qualifications from interested architectural/engineering companies (the A/E).
- The RA determines the most qualified A/E.
- The RA then goes through the task of negotiating the best rate for the engineering. If all goes well, a contract for the engineering is achieved.
Now the RA has access to the public funding and has the A/E on contract. Some real work can begin.
- The RA instructs the A/E to rough out a highway from point A to point B, which the A/E does.
- Now the RA (or someone in the public administration) has to determine and resolve all the land ownership and land use issues. These issues can be quite complex and time consuming. Resolving the issues may require changes to the highway plan. Resolving the issues may require an act of Congress.
- Next, the RA will usually instruct the A/E to prepare an engineering estimate, a construction estimate, and a plan to do the work. Typically the A/E would section the highway (and the estimates) into logical project phases. At the same time the RA would select a construction contractor in a way similar to the way used to select the A/E.
- The RA would then authorize the A/E to perform the detailed design of phase one.
- After the detailed design for phase one is complete, The RA would authorize the A/E to proceed on to the detailed engineering for phase two. The RA would now authorize the construction of phase one.
And so the project goes with the A/E proceeding the construction down the road.
Not all projects go this way. We note that there are highly qualified and effective design-build firms worldwide that, given the funding, will build public or private infrastructure as well as and usually much faster than a public administrator.
There are really good reasons to use this project management method on this type of project.
- The road has to be designed "right" and it has to be built "right". It is just not acceptable to risk public safety because of unforeseen problems.
- If the money runs out with 80% of the road built, 100% of what is built is usable. The public might criticize the delay in completion, but it is not acceptable to build 100% of a road with 80% of the required materials, or 100% of a bridge with 70% of the required reinforcing steel.
- There is no real loss associated with a late finish for a project like this although delay may cause further cost over-runs and cause delay seeing the full benefit predicted.
Stepping back a bit, the majority of all money spent on projects today is spent on projects that need to be defect free. We can see that very large engineering or design/build firms are in business today successfully doing this kind of work. We can cite projects for roads, bridges, stadiums, high-rise buildings, hospitals, railways, and emergency shelters just to name a few. We also note that major civil projects have been performed (and managed) for centuries. Traditional project management on major civil projects does work, and has stood the test of time.
The industrial setting
In this setting the task is to design and build a facility that makes a product that we plan to sell. Some of the differences between the classical civil works setting and the industrial setting should be obvious already.
- Design/build is not the objective. A facility that will last a century is not the objective. Designing and building a safe facility is one of the steps we take to get to the objective, delivering a product or class of products to market on time.
- If there is market there is competition or there will be competition. Cost is certainly a factor, but time is as important if not more important than cost.
- We want our facility and the product it produces to satisfy the market as the market changes. Perhaps a sugar producer could argue that people will consume sugar until the end of time, but a cosmetic producer might argue that the market will last only until the next generation of cosmetics is developed.
- Flexibility is expected. When the next generation of cosmetics technology is available, every factory wants to be the one to convert and deliver to market first.
- Even when the market for a product does hold out, the product will undergo continual improvement, and the plant will undergo continual manufacturing cost reduction, safety improvement, and emission reduction.
We have our expertise here, in the industrial setting. We are going to explain the industrial setting and present our expertise for consideration. But can't tell it all on one web page. In the following project management pages, the section on chemical engineering, the section about us, and in the linked information, we will try to give an example overall venture and explain how we would approach managing a project through:
- Developing a product
- Developing a process to produce that product
- Bringing that product to market
- Designing and building a manufacturing facility
- Starting up and optimizing operation
We hope you'll read on.