With the world getting back to normalcy and companies cautiously reopening, we’re seeing employees either coming back to office or continuing with WFH, or hybrid option. But how are engineering organizations dealing with the WFH and remote working situation? Has there been any side-effect?
According to a study I read, while many industries had a manpower capacity utilization of almost 85 percent during peak pandemic times, engineering and architect businesses hovered at only 60 percent – significantly below par. And since many of my clients are engineering organizations, I started thinking about what could be the reasons for this and how they could be overcome.
Why are engineering organizations faring so much worse when it comes to manpower capacity utilization?
Here are my thoughts.
Not using WFH to maximize ROI
Here’s what I say to the engineering consultancy firms and architects: your biggest cost is your manpower and that was true even before COVID because if you were able to improve your utilization of human resources you could have got more work done with the same amount of people. Right?
And some clients would agree but for most, it was still not a major issue because they were content to just capture the work vs time spent via a timesheet.
This is the major problem, in my view. Since the beginning of the pandemic, I had been trying to convince Engineering organizations that digitally-driven resource management is the key and the lack of it is a real bottleneck and that if you want to see the utilization of people you need to change the approach and bring in a plan for measuring budgeted manhour spend against actual spend. I find it is still true at the end of 2021. Companies need to be able to see how much work is getting done by their people during the time they have spent (and the time you’re paying for). Which is not possible with just timesheets. So this problem predates the pandemic, it’s just that now the problem has become more visible.
Consider how, as an engineering company, you look at all the details – the budget, the actuals, the output – and you measure these three things. And then you will be able to see the true capacity utilization of your current team. You could then extend this further and look at the current number of jobs you have on hand and whether you have enough people for future projects, based on which you can plan which jobs to take and which jobs not to take. Or, if you find that in the future you will likely have fewer jobs and therefore your people are going to sit idle, you can think about taking projects at cheaper rates and so keep them busy – which has a direct impact on your profitability.
What about the lack of schedule-drivenness in many engineering organizations? Is that not one of the culprits for this low capacity utilization?
Well, I would have to say no, it is not. My view is that the company does not have a proper definition of the budgets and because of this, they are not able to monitor their resources against that budget. And also they don’t have clear benchmarks ie standard times for various activities, which means you can’t measure and assess resource utilization accurately.
Not using a mix of low and high-cost people
In recent times there seems to be a trend towards fixed price or lump sum project contracts.
As with any other contract, this can be seen as both a risk and an opportunity, but the risk here is somewhat heightened if your team is working remotely because when it comes to tangibles in
project planning, namely time and materials, a company has to have a means of measuring both, and that is a little more difficult in a remote working model.
That’s probably the reason the fixed-price trend has suddenly shot up in the last couple of years – it is an attempt to de-risk projects on the project owners’ part, while however adding risk to the engineering consultancy firm. But there is also a hidden opportunity for the engineering firm if they are able to distribute work effectively. By that I mean they should be able to divide the work into two categories – work which requires interfacing with client and can be considered high value and high work cost which requires high-cost people resources and low value/cost work like detail engineering which requires lower-cost resources. And since high-cost people are usually internal to the organization because they need to have a lot of knowledge to get the work done, while Low-cost people can be outsourced resources like freelancers or ‘gig teams’ or outsourced to another organization, mixing the two is an optimum solution.
For this model to work obviously requires a reliable technology platform that can bring both these people together to work together smoothly and make sure workflows seamlessly from the internal team to the external team. That is where we, Wrench, come in. We help engineering organizations see these real-world risks and changes as a real opportunity and a real means of increasing profitability. I try to show the company that having a mix of people at different costs working on the project is actually an advantage and will help deliver the project faster because he can have a larger team (without needing to grow his internal team) and get his billing in that way.
One way to sum it up is the surgical team concept. In this model, the surgeon is the most expensive and everybody else knows they give the right thing to the surgeon at the appropriate time. So the surgeon will belong to your organization, whereas all the complementary functions can be outsourced or good workers and can be very good a cost advantage and same time that becomes highly scalable.
Not embracing wholeheartedly the WFH culture
I think it’s safe to say that the WFH phenomenon is more than a stop-gap solution. it has become a new style of working in itself and I don’t see us reverting completely to the pre-pandemic culture any time soon or at all. And now that EPC companies have no choice but to open up to new ideas in people management, we are seeing a corresponding rise in the need for new policies and practices.
Companies are now feeling the need for specialized processes to deal with the new remote teams, not to mention the need for new processes to manage all the project data.
I wholeheartedly agree with this. Companies absolutely must rethink and re-tool not only their processes but their attitudes to WFH and remote working. It is not something to be tolerated but welcomed and not just for the cultural aspects, for cold hard profitability reasons.
In all my years of working with clients to digitize their process, one of the most common things I heard was the concern about ‘monitoring’.
This is understandable. When you’re working remotely with people, the basic assumption is that everyone has very clear definitions of what is to be done and who has to do it. First, you have to connect everybody through some kind of digital or virtual platform, so that everybody works on the same objective in the same workspace. Great. But the technology is only the first piece of the puzzle, you also have to define processes and responsibilities inside that. That is the complex part because a digital system leaves no room for error or manipulation, and that affects the work culture which has been in place for decades. People need time to grasp and accept this very new style of ‘transparent’ working culture.
Not ‘tweaking’ processes quickly enough
Here’s the reality: when you set up a technology platform to enable remote works you have to immediately define work procedures and workflows that go into that platform because these will get passed on to each person in the ‘assembly line’ automatically. This means you don’t have any kind of safety margin in managing that process in real-time, day after day. Rather, once defined in the system, the workflows automatically to the next person and he gets notified, and so on and so forth. It is a vastly different system because there is no room for human error and is very transparent, which takes some getting used to if people are not used to it.
Also, while the work is getting done, you can even capture the data that is produced as the output by the various people, which again takes some getting used to because it is very different from how work is done in non-digital environments.
So that’s the three-fold change in work culture – the process is 100% defined, the data gets captured in the backend automatically, and data is stored and instantly accessible. And all this with hardly any human intervention. All these changes, while hugely beneficial on paper, are still changes and take a period of adjustment because they directly impact the day-to-day working routines of the people.
I believe we are in the middle of this period of re-adjustment. Companies and employees alike are still coming to terms with the many changes the WFH model has brought in and I think the easiest way to do this is to simply embrace the new methods and models without overthinking.