Engineering without profit is a hobby
“Engineering without profit is a hobby!” – so said a senior engineering manager attending one of our commercial training workshops.
It’s a given – all commercial enterprises, including engineering services providers, need to make profits, otherwise, ultimately, the business fails. That, in my view, is not the issue.
The real consideration is – does the level of profit correspond with the value added generated by the engineering? And that question leads to – what is value and how is it assessed?
From earliest civilisations engineering has provided humanity with inventions and developments that have improved human life and well-being. In this context, consider only engineering ingenuity over the last 125 years in terms of communications, transportation, energy, agriculture and fishing, medical, sport, entertainment, manufacturing, warfare, construction, environment, infrastructure and buildings, marine, space … every form of human endeavour has been and continues to be influenced significantly by engineering.
Engineering invariably precedes desired or expected outcomes by some considerable time, and yet decisions made and actions taken in early engineering phases may influence significantly outcomes – meeting set goals, exceeding or falling short.
In today’s global engineering construction world, we are experiencing change at an unprecedented rate driven by technological developments, geopolitical uncertainty, the growing evolution of carbon-free environments coupled with a significant shift in investor profiles, expertise and interests, governments’ shifting focus and policies, as well as complex and developing project funding arrangements, to mention but a few.
As a consequence, well-established engineering processes and practices are evolving to meet the new normal – as engineering has done throughout history. Industry can only embrace change, not fight it because if it doesn’t, it will not survive.
Today, the need for engineering ingenuity has probably never been higher. Commercial and financial risks involved in project delivery demand it. And here we revert to ‘value’. The reward for engineering as a significant contributor to successful project outcomes must be compatible with the value generated by it. Engineers must therefore add commercial and contractual expertise to their professional portfolio, so that they can discuss with their customers not only engineering solutions but also the added value these create.
To procure engineering services in today’s business environment at a competitive lowest price which does not take account of the value added by engineering, is false economy; it is likely to endanger project outcomes and jeopardise employers’ and contractors’ profitability alike.
The price of engineering is relatively small compared with the overall investment of an engineering construction project and is unlikely to be a deterrent to investor commitment. Conversely, the value added by engineering is considerable and creates opportunities for employer and contractor to prosper.
After all, profitability is essential for all businesses and engineering is not a hobby.
John Fotherby – Partner – Kingsfield Academy / Steering Group Constructing Excellence