It’s a new part. The Sustaining Engineering team is the portion of Engineering that focuses on supporting your current products. Companies spend gobs of money collecting numbers and data they will never see! In this particular case, the new design is still an improvement. R&D is often considered discretionary spending because, in fact, a company could decide not to innovate and live off its current product line. Velocity 2. Listed below are 5 areas of metrics you should consider for your engineering department. We have a couple shows coming up that will be great for manufacturing professionals to attend. In this case, the metric would be R&D cost/ kilowatt (kW) output of the motor or motors being developed; if you make a compressor it would be R&D cost/CFM*Pressure rating of the compressor being developed. Watch turnover rate as well, a lot of dollars in training and knowledge is lost when an engineer decides to go elsewhere. You can compare this to your Sales growth plan for that product, note when X number of units are expected to be sold and compare that to prior R&D projects to see if the payback period is better or worse. Labor utilization: This metric evaluates how efficiently your employees are being applied to direct, or … We help companies improve their processes through automation. Although not all-encompassing, a sub-set of these six metrics can be used in most industries and across most products to give you the visibility you need to drive your engineering organization to peak performance. For example, you are designing the turbine section for a turbo charger intended for a 1.4 littler engine. If you haven’t seen a skills matrix, google will help, just list every skill you could possibly like that engineer to have and then make the chart public. In this case, your new design is NOT as cost effective as your current design and perhaps there is more design work to be done. Changing metrics keeps employees on their toes. Choosing the right metrics that incentivize good habits and provide meaningful insight can be challenging. A field like engineering revolves around technical software and scientific information, there are always new things to learn. For example, it is easy to say “we are eliminating all outside training.” This will reduce cost indeed, but it will not increase your team’s productivity. Some examples of process style metrics to measure: Quality metrics are pretty easy to discern, anything that relates to the quality of the product coming out of Engineering or the quality of information going in. Example KPIs. The good news is that you're not the first organization to do this. I have known companies that have done this for several years in a row. The best-known metric is subjective appraisal by the direct manager.1. if you have some time check out the rest of our website. Manhours per 1,000 software lines of code (KSLOC) Manhours per function point; Software problem reports (SPR’s) before release per 1,000 software lines of code (KSLOC) SPR’s after release per KSLOC; Design review errors per KSLOC; Code review errors per KSLOC; Number of software defects per week; SPR fix response time; Product Assurance External metrics:External metrics are the metrics used for measuring properties that are viewed to be of greater importance to the user, e.g., portability, reliability, functionality, usability, etc. Release burndown 4. On top of that, you may invent your own ones that match your project best. The engineering team may argue that they have no control over revenues or what gets sold but, they do impact the success of the product in the market place. The first three metrics listed below are what I call “general metrics”, these are elements that you should measure but how you measure and what you measure will vary depending on your company and the role engineering plays. That’s why I recommend the following two principle metrics, which can be used in conjunction, to measure the cost effectiveness of your R&D (NPI) designs. We've identified the following metrics to help you come up with ways you can quantify your accomplishments. Leaders want teams to stretch and achieve more than what is individually perceived as possible. Now I’d like to discuss two metrics for measuring the cost effectiveness of R&D (NPI) designs. Financial Metrics I recommend the “per unique project method” if you are offering mostly custom equipment and the per item method if you are making more standard or off-the shelf equipment or components. Performance management starts with figuring out what to measure. NOTE: This is not a real payback period because for that, you would need to know your profit margin, but, at the time you are taking this measurement, predicting the margin is difficult at best. Hold your IT to the same level as your Industrial Maintenance person and use metrics to determine if computer downtime is costing you money or causing a bottleneck. Learn more. Discretionary spending is subtracted because if you don’t get it out of the measurement from the start, it will be eliminated by management with the intent to reduce cost and make the metric look better. You don’t have a “similar” cost for comparison to see if you are in a reasonable cost vicinity. However, we will describe the most common KPIs used across multiple software development aspects: 1. A stale metric becomes one no one looks at and wasted time spent collecting…keep them fresh! In this case, you get several compressors with just a little more effort than if you developed just one, hence your R&D productivity goes up. Simple designs are rewarded by this metric. We will identify R&D/NPI productivity metrics next. Reduce overtime 5. Engineering productivity is defined as a ratio of input to output. For example, if you are developing compressors and you expect each compressor will sell for $500,000 and your R&D team spent $20 million developing that compressor line, you have an R&D price productivity of 40. What you do in the instance where you want to get rid of weight and are willing to pay more for a lighter component is measure the cost of your new component relative to the value that it brings to the market and compare that to older designs you’ve done before. While master is red, it creates a bottleneck for commits, increasing recovery time and delaying development. Special thanks to the Claremore Industrial & Economic Development authority and Dream it Do it Oklahoma for this award!! Measure of Deliverables = Number of unique projects or Quantity of items sold. This metric works for both components and entire products. increase quality). If you do a skills chart and find that your employees are highly qualified in each skill…then you probably don’t have the right skills listed. Test automation agains… On a more granular level, software development managers are trying to: 1. This metric measures the amount of clients a consulting firm is actively serving … The inputs of engineering may be clearly defined, but measuring the outputs is elusive (Sacks, & Barak 2008). Reply. It's important that you use numbers and metrics to demonstrate the significance of your accomplishments on your resume. Why 5 metrics? These are metrics that pertain to Process Quality. Engineering budget is an example of a metric that can be applied at the level of the organization. Remember, no matter what your operation is you are shooting for 100% First time success. For example, if you develop electric motors, your customers most likely value your product by the number of kilowatts your motor puts out. One principle of continuous delivery is an emphasis on always keeping software “green”: in a deployable state. This gives you an average of $13/kW for your existing designs, therefore your new design at $10/kW, is an improvement. Code coverage by automated tests 8. What’s worse is those that don’t leave, but instead become a cancer upon your organization, until you take action. In this article, we aren’t going to explore all possible agile development metrics and KPIs. If you design aircrafts for example, you are constantly lowering weight and you may want to pay more for less weight, which then turns this metric on its head and in which case you should use the next metric. By contrast, if the same sub-assembly weighs 8 lbs. One is the Wichita Industrial Tool Show held in Wichita, KS. Regardless of whether you call them KPIs, metrics, or measures, deciding what you want to track is one of the hardest parts of performance management. For Engineering, think of an engineer as a continually developing employee who will take years, if not decades, to become fully trained and proficient in a field of study. For engineering teams, these metrics will empower you to measure effectiveness with the intent of improving productivity and driving peak performance. effectiveness of your physical product designs. Hybrid metrics:Hybrid metrics are the metrics that combine product, process, and resource metrics. There’s not a right answer here, but the metrics you measure should say something about your business and what stage your company is in. Manage workloads 4. Number of Clients. Think about developing a compressor family, same basic frame, similar rotating components, but it provides different behavior at different rotating speed, so you design with a falter peak efficiency curve. for the 2.0 liter engine and when you estimate the cost of turbine section for the 2.0 liter engine turbo, using the same cost estimating tool, it turns out to be $120, then the cost to weight ratio is 15 (Cost effectiveness = (15-20)/15 = – 33%). Turnover rate and Absenteeism will tell you all you need to know. I hope you this information helps you and your organization become engaged with metrics, it’s a great place to go when you have a problem that you’re not sure how to solve. Your company has never had a turbo this small. Various engineering productivity measurements have been used in previous research. You can also use this metric for components. Sign up with your email address to receive news and updates. Why not 3, or 2, or 20? Thank you for your interest. - Andy. NOTE: The next two metrics use R&D/NPI costs as the basis for the metric. Work quality metrics say something about the quality of the employee’s performance. Look into developing a skills matrix and training budget, as well as training days that engineers use to sharpen their skills. A benefit of this is if you happen to choose the wrong metric. The last two are more specific, but I consider them fundamentally important (engineering or other). Why do we subtract discretionary spending? If you like what you see, sign up for our newsletter! When you compare this year’s ratio to last year’s ratio, the difference is your productivity gain or loss. Management by objectives is a management model aimed at improving the performance of an organization by translating organizational goals into specific individu… An intensive research effort focuses on the synergistic combination of stochastic process modeling, … Once you have this estimate, divide by the weight of the part or sub-assembly. As you make these investments in process, quality, and technical improvements you need to keep your Engineers/Designers engaged and employed at YOUR company. Computers and software are just as critical to Engineering as a CNC machine is to your production capability. The seconds is Oklahoma Oil & Gas Expo held in Oklahoma City, OK. I want to make this point because companies usually are not designing a whole new product. The first two metrics measure the productivity of your Sustaining Engineering team; the next two metrics measure your R&D (NPI) team’s effectiveness. Engineering cost = (Budget or Expenditures for the year) minus discretionary spending, (such as R&D and continuing education), Revenue = Company or Division revenue for the applicable year. This indicator should be measured by a ratio (generally represented by a number) which portrays the progress of the process as a whole or in part. Sources: 1)“A few words about Metrics” by John Stark; http://www.johnstark.com/wmet.html 2)“Cost of Employee Turnover”; http://www.isquare.com/turnover.cfm, 5 Key Metrics for Engineering Departments, Rye Design llc, 802 West Blue Starr Drive, Claremore, OK, 74017, United States, "Hey!, real quick, i'm glad you're here! Common system engineering metrics include timeliness, efficiency and effectiveness, performance requirements, quality attributes, conformance to standards, and parsimonious use … We will be in touch shortly. These engineers typically deal with design tasks driven by warrantee issues, cost reduction activities, manufacturing support, and engineering custom applications based on your standard product. If the ratio is higher, then, your design is less effective. Christian Knutson, P.E., PMP is a leadership coach and strategy consultant who works with engineers and A/E/C organizations to incorporate leadership into everything they do in order to generate excellence. Thanks to MoreClaremore.com for doing a very nice article on our business! Added value Number of revisions (Depending on your business, revisions could be a bad thing), Customer satisfaction (Engineering’s customer, not end user), Supplier defect rate (often the supplier is whoever is supplying specs and info to Engineering). No doubt, there’s often more variables in Engineering’s success that clouds that “perfect” result, but we should strive for it none the less. You then calculate your existing 90 kW unit and 45 kW unit support frame cost per kW are $11/kW and $15/kW respectively. Additionally, you want to give your engineers the freedom to generate green field designs, in which case a new part may look nothing like the old part. I’m also a strong believer in ever changing metrics. Cycle time 5. So, these general links to revenue/sales should not be so easily dismissed. Say you measure quality but that has a negative effect on your on time delivery, then you can change it. For those not involved with “Lean” this would be any task that contributes towards the bottom line, or for an engineer, if you bill for a task then it could be considered Value Added. “At the same time, engineering leaders know they can’t accurately measure productivity, their teams know it, and even if they could, they know it’s largely unrelated to the contribution engineering is making to the business.” “One of the main challenges I see is around what I would call activity-based metrics – which, at the end of the d… They are used to measure the efficiency and effectiveness of various processes. Rye Design offers Engineer training and organizational help, if we could be of assistance in these areas, let us know. Sarah and Andy picked as Emerging manufacturing leaders! Systems Engineering Metrics: Organizational Complexity and Product Quality Modeling Innovative organizational complexity and product quality models applicable to performance metrics for NASA-MSFC's Systems Analysis and Integration Laboratory (SAIL) missions and objectives are presented. Think of Engineering as another equipment operator on your production floor (albeit a highly paid one) and any minute that he or she has to wait for a computer to load, an analysis to run, or a model to refresh is costing the company money. Reply. Following a decision log process, I’ll try to define some and then come back to verify if they’re adding value or not. For example, Thomas (1999) measured engineering productivity using hours per drawing, and Song, Allouche and Abourizk, (2003) used hours per designed element (a column or beam) to measure engineering productivity. However, for companies that have a robust R&D/NPI practice this expense, even if discretionary, can be significant and companies struggle to figure out if they are truly productive in their NPI organizations. If the ratio was 6% last year your engineering productivity gain was 16.66% [(last year ratio)-(this year ratio)]/(last year ratio) = (6-5)/6. Then take that ratio and compare it to the ratio of prior APU designs to see whether or not you are improving. This of course breaks down if you are designing products with a particular emphasis on weight. CEOs often ask their engineering leaders to report productivity metrics in order to assess Engineering’s contribution to the business. Examples of the Four Metrics in Action. This will be more of a post R&D metric based on hitting cost-targets and the subject of a future blog post, stay tuned. Paresh Mahajan. In the case of companies that do not have two separate engineering teams, you have to estimate the portion of expenditures dedicated to NPI and subtract that from the total. There are literally hundreds of metrics that business leaders can use to run their business today. Some examples of quality style metrics: Number of Engineering changes Number of revisions (Depending on your business, revisions could be a bad thing) First pass yield … The reason I’m focusing on R&D designs is because measuring potential savings due to redesigns of an existing product is easy. If your Engineering budget was $39 million, your engineering cost per “engineered” project is $13 million OR your engineering cost per valve delivered is $3 million. They are used to quantify defects, cost, schedule, productivity and estimation of various project resources and del… Most common KPIs used across multiple software development managers are trying to 1. 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