We constantly seem to have trouble maintaining budgets with regard to engineering costs. Part of the problem could be due to a lack of buy-in.

Just for arguments sake, let's say that we involve engineering in the proposal portion of the project. We allow them to give us a budget or proposal for the engineering portion of the project as a percentage or lump sum number.

If we are lucky enough to capture the project, we can set it up as a joint venture across divisions. We are currently doing just this type of arrangement with Maximum Fire Protection. Each JV partner division submits a contract data sheet for their respective portion of the revenue. Each JV partner division is then responsible/accountable for it's own performance.

-- Anonymous, February 04, 2000

Answers

Because engineering is not a profit center, my guess is the JV idea would be a difficult sell both to engineering and to the divisions. (true, enginering does not pay for our overruns but similarly we do not keep the money that we dont spend either - the divisions want that). It also moves away from the idea of integration across all departments.

I believe this issue will be corrected with the recent implementation of the mandatory engineering plan and kick meeting (with the Contractr Execs), active cost and schedule control by engineering, increased communication with the division throughout design (to id scope changes and schedule impacts) and the development of historical fees for use during the proposal stage (all currently being implemented).

-- Anonymous, February 04, 2000

Questions: Is it standard procedure for CEs to work with engineering to develop engineering budgets, and what percentage of the time does this actually happen?

-- Anonymous, February 07, 2000

Development of Engineering Budgets

I have no idea if it is standard procedure to review engineering budgets before submitting a proposal. I believe there has been ongoing discussion of what the appropriate percentage should be. This is a big part of my point, there is no buy-in because they are not involved in the creation of the budget.

-- Anonymous, February 07, 2000

Development of Engineering Budgets

It seems odd to me that someone wouldn't involve engineering when budgeting engineering work. I think if this is this case it should be changed immediately. That will give engineering the opportunity not only to sanity check the numbers, but also to explain to the contract exec what is included, and what sorts of things will result in additional costs. It may not be a guaranteed price, but it will certainly further our understanding of engineering costs.

-- Anonymous, February 07, 2000

Because engineering is not a profit center, my guess is the JV idea would be a difficult sell both to engineering and to the divisions. (true, enginering does not pay for our overruns but similarly we do not keep the money that we dont spend either - the divisions want that). It also moves away from the idea of integration across all departments.

I believe this issue will be corrected with the recent implementation of the mandatory engineering plan and kick meeting (with the Contractr Execs), active cost and schedule control by engineering, increased communication with the division throughout design (to id scope changes and schedule impacts) and the development of historical fees for use during the proposal stage (all currently being implemented)..

-- Anonymous, February 04, 2000