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by Woodrow W. Winchester, III, PhD, CPEM
“Racism does not usually take an obvious form that we can see and prevent; rather it masquerades as the most ordinary of daily actions: as unnoticed and ever-present as the air we breathe.”
—Anne Warfield Rawls and Waverly Duck, Tacit Racism
The disproportionate impact of the COVID-19 pandemic on Blacks coupled with the ongoing Black Lives Matter (BLM) protests sparked, initially, by the killing of George Floyd are forcing a spotlight on structural racism in America. As with all aspects of American society, the discipline and profession of engineering management (EM) are not immune to interrogation. From Black technologists calling for more systemic action in advancing racial equality within the tech industry to recent studies highlighting the challenges speech recognition systems (personal voice assistants) have in understanding Black voices, it is truly time for EM to get real about anti-Black racism.
In getting real, as Rob Girling and Emilia Palaveeva state in their Fast Company article, Beyond the Cult of Human-Centered Design, “we need to be clear-eyed about what we are striving to do and minimize the chances of creating more problems than we are trying to solve”. And, in EM contexts, becoming more “clear-eyed” particularly around issues of race and racism requires greater intentionality to notions of exclusion & oppression that can cloud EM actions and decision making (see Figure 1).
Figure 1: The Big 10 (+1) Ideas that Fuel Oppression
Exclusionary practices, patterns, behaviors, and norms have and are being ingrained within the culture of EM that, while “unintentional”, are leading to both EM practices and outcomes that are doing more harm than good. EM can and must do better.
As a part of the Great Radical Race Read Circle, I am reading Tacit Racism. As detailed in the book, “many people think that if they are not conscious of racism and do not ‘hate,’ they are not doing racist things.” This is problematic. “The problem is that White people see racism as conscious hate, when racism is bigger than that,” states Ola Caracola in the Medium article, A Quick Read for White People Who Don’t Consider Themselves Racist. “Racism is a complex system of social and political levers and pulleys set up generations ago to continue working on the behalf of Whites at other people’s expense, whether Whites know/like it or not.” Thus, the bigger challenge is not racists, per se, but dealing with the racism that we can’t see - tacit racism.
Tacit racism is woven into the fabric of American life, shaping the thoughts and actions of all Americans in racist ways. Consequently, there are EM implications. Leveraging the three groupings offered in Figure 1.3 of the Engineering Management Handbook (2nd Edition) that define the challenges associated with EM as a framing, exemplar racist EM interactions that can occur without intent or even conscious awareness include:
Fractured relations with Black colleagues (Business Environment Trends & Challenges)
Technological development and/or deployment decisions made with a “White racial framing” as the default or the norm (Organizational Trends & Challenges)
Managerial actions influenced by racial stereotypes and standards (Engineering Management/Manager Trends & Challenges)
It is the engineering manager acting on racist biases and assumptions that can foster and drive EM actions and decisions that can both perpetuate and exacerbate anti-Black racist ideologies and outcomes.
As a countermeasure, the onus is on the engineering manager to be racially self-aware. Critical self-examination is core to becoming racially self-aware and should underpin the engagement of any anti-racist effort or initiative. As highlighted by Ibram X. Kendi in a NPR piece about his book How To Be An Antiracist, “critical self-reflection is, in fact, the responsibility of the antiracist…like fighting an addiction, being an antiracist requires persistent self-awareness, constant self-criticism, and regular self-examination."
All is truly not lost in dismantling anti-Black racism within the discipline and profession of EM. Personally, I am very hopeful. Conversations are finally being had that I feel will catalyze the needed actions to bring change. Underscored by current events, the time is both ripe and right for a reformation in EM. As Black lives and futures are at stake, so too is the relevancy and future of engineering management.
Woodrow W. Winchester, III, PhD, CPEM is a Professor of the Practice and the Graduate Program Director, Professional Graduate Engineering Programs in the College of Engineering and Information Technology (COEIT) at the University of Maryland, Baltimore County (UMBC). He is also the Professional Development & Continuing Education Director for ASEM. Selected as a member of the second cohort of the IAspire Leadership Academy, Dr. Woodrow W. Winchester, III is an advocate for more equitable, inclusive, and consequential approaches to technological design and deployment. He is currently under contract with CRC Press to write Inclusion by Design: Future Thinking Approaches to New Product Development.
I would like to welcome you to the monthly newsletter for August. I hope that you have managed to have at least a small break from work and studies over the summer time (or winter time for those in the Southern Hemisphere) and that you are rested for the coming period. I would like to remind everyone of the virtual ASEM International Annual Conference (IAC) that we have coming up in October – please consider attending if you have not yet registered. The conference has been organized to have several parallel technical sessions across the field of engineering management alongside many of the other usual parts of the IAC, such as expert panel sessions, keynotes and the awards ceremony. Therefore, the virtual conference should hopefully provide lots of opportunities for interacting with other attendees as well as watching technical sessions related to your areas of interest. More details on the program will be released as we become closer to the date of the conference but I am sure we will have a packed conference agenda with many highlights that will be of interest to participants.
In this introduction I wanted to reflect on how engineers can become more innovative and entrepreneurial – and why do engineers need to be enterprising. Engineers of course receive an education across a number of core academic areas, such as engineering mathematics, design, materials, thermodynamics and cycles, fluid mechanics and engineering processes. While there will be some differences associated with the particular branch of engineering that is being studied, such as mechanical, electrical, chemical and civil engineering, there will also be many common areas – especially in the numerical aspects. There is also an increasing recognition that an engineering education should include development of the necessary professional or enabling skills, including project management, team working as well as communications skills. Such competencies can, for example, be developed via a group design project. As part of this wider set of skills and knowledge, there is also a recognition that engineers can benefit from receiving an education in innovation and entrepreneurship.
The ability to translate an idea or invention into a new product or service as part of the NPD (new product development) process is a useful skill to have across a range of industrial sectors, including manufacturing (such as automotive and aerospace) as well as other sectors such as FMCG (fast-moving consumer goods). There are other cases where an engineer may need to head up a new business area within an existing company – the development of the business area will require a robust business plan in order to secure the backing of senior management. Furthermore, an engineer may want to branch out and develop a new startup offering – again there is a need for a compelling business plan in order to attract investment capital. In these cases, engineers can benefit from having a solid awareness and grounding in the skills and knowledge associated with innovation and entrepreneurship (as well as intrapreneurship).
Engineering management (EM), as a complement to other engineering disciplines (such as mechanical, electrical, etc.) and indeed other STEM disciplines, is the ideal vehicle to deliver these enabling skills related to innovation and entrepreneurship. A quick look over the domains of the EMBoK 5th Edition and we can readily see there are several areas that directly underpin innovation and entrepreneurship, namely Leadership & Organizational Management; Strategic Planning and Management; Financial Resource Management; Project Management; Management of Technology, Research, and Development; and Legal Issues in Engineering
Management domains. Consequently, EM is well suited to help all engineers, including students as well as practitioners and educators, become more innovative and entrepreneurial.
Dr. Simon Philbin
by Don Kennedy, Ph.D., P.Eng., IntPE, CPEM, FASEM
When I wrote my first book, I asked for advice from the printer on size. The answer given was “it is personal preference.” I picked things like font size, page size, etc. on a whim more or less. After getting what turned out to be a lifetime supply of the printed books, I could see the lasting impact of these decisions. For example, shipping costs depend on weight and dimensions. My book just fits snuggly into a standard size 0 envelope. A few more words, bigger font, etc and I would need a larger envelope with a loose fit and higher shipping fees. I wished experienced people could more often suggest these kinds of impacts ahead of me learning by experience and too late to do anything about it.
Things that are happening today will impact our decisions with more weight than they objectively should. At work, we are all subject to grouping our costs into various accounting categories. Here is an example of how one company let current situations impact their future.
It is best practice to keep your accounting structure consistent to help learn from the data. If the categories change, it is next to impossible to compare current operations from the typical. I was once in charge of creating the budget breakdown for a project of about $100 million. The possible codes included filters for diesel engines and crossover piping. I had to get guidance from others on why these were categories and what exactly “crossover” piping was. In the past, the company had diesel engines instead of electric motors as their prime drivers. The year the accounting system was set up, they bought a large supply of fuel filters for these engines. In addition, a capital project was in the works to modify many connections and the term used for the project was to install “crossover” piping. The accountants saw the one time expenditure on fuel filters and heard the word “crossover” piping, and these became cost categories they would track. As it turned out, few filters were purchased before the diesel engines were replaced with remotely controlled electric motors.
On my $100 million project, there was approximately $20 million budgeted for substations, switchgear, motor controls, and all the associated cabling. The only cost category set up from the days when lights and fans were the main expenditures was “miscellaneous electrical equipment.” The company struggled to determine why some types of projects cost so much more than other seemingly similar ones. Perhaps at one site the electrical infrastructure was sufficient to handle an expansion and in other cases, a new high voltage transformer was required. Since everything electrical got coded to “miscellaneous,” it was difficult to tell without a detailed analysis.
Despite my best efforts, I was unable to persuade a change to the coding structure. To this day, reports continue to be generated tracking the zero values for filters and crossover piping, while a large portion of expenditures remains lumped under miscellaneous.
Be aware of how the present may not necessarily reflect future needs and spend an appropriate effort up front preparing structures that may have a lengthy time of use.
Dr. Don Kennedy, a fellow of ASEM, has been a regular attendee of the ASEM conference since 1999, with particularly good participation at the informal late evening "discussions" (sometimes making it difficult to get to the morning plenaries). “Improving Your Life at Work” is Don Kennedy's ebook which includes a lengthy bibliography for people looking for references on management theory.
by Teresa Jurgens-Kowal, PE, NPDP, PMP®, and CPEM
What images does the word “innovation” conjure for you? For many people, innovation means a lone genius or mad scientist inventing something new on his own. Many people believe innovation is spontaneous and relies on the creativity skills of a few. These characteristics lead you to the conclusion that innovation is easy.
Of course, innovation is not the work of a lone genius, it requires diligence, and it is not easy. In fact, innovation is a managed process with at least three important steps to build individual or corporate success. Let’s take a look at these arenas.
It’s rare when I have absolutely nothing scheduled on my calendar, even for weekends. With completely open time and a blank sheet of paper, I often don’t know how to fill that time and I end up wasting precious hours staring at the television. I certainly am not creative or innovative during unplanned time.
However, when I have a good problem facing me and I know how to tackle it, I can be extremely productive and creative. This represents strategy. Successful innovation requires a strategic approach to challenges, whether they are personal, professional, or corporate. Strategy gives us a sense of direction and sets targets for achievement.
The three core elements of strategy are vision, mission, and values. Vision describes where we hope to be in the long run. For a business seeking to improve its innovation capability, a vision statement describes what the future will look like, how the business will participate within its chosen industry, and where the business will operate.
On the other hand, a mission statement describes how the company will get to the desired future state. What are the tools, resources, and talent necessary to achieve goals? The mission lays out a plan of attack, sometimes in bite-sized pieces, so that the company can reach its vision.
As an example, at its founding, Microsoft had a vision of a computer on every desk and in every home. This vision framed the company’s mission, including how it would innovate and compete. Building desktop computers became the goal as compared to improving the processing of giant, mainframe computers. Having a vision statement clarifies the mission – a mainframe computer is a ridiculous idea for every desk or in every home.
Finally, the values statement explains the expected behaviors of employees and the priorities of the company. As a chemical engineer, I spent my early career in the petrochemical industry. Every conference room at my employer and every customer’s conference room posted a shared value – SAFETY is our number one priority. Safety, as a value, tells operators how to behave and teaches engineers how to design equipment. Our behavior in a petrochemical plant was focused on ensuring that workers and the environment were protected from potential harm. Values drive actions, and actions are how the mission is accomplished.
In conjunction with the strategy, successful innovation requires understanding customer needs. Even if the lone genius were to invent an incredibly awesome technology in her basement, the technology is only useful if someone buys it. As engineers and engineering managers, we are at the forefront of transforming peoples’ lives. But we must first understand the problems and challenges that consumers face.
Understanding customers’ needs informs the technologies we develop. One innovation I love is heated seats in the car. Automobile manufacturers could only develop this feature if they understood the needs of customers. In the winter, cars are cold and thus, drivers are cold – whether the car was parked outside or in a garage. It takes a while for the engine to warm up and thus, the interior of the car is often cold until the engine warms fully. Electric heat is not sustainable for the whole car for an entire trip, but focused electric heat on just the seats (and steering wheel in luxury vehicles) can bridge the gap until the engine warms.
The only way that we can find a match between interesting technologies and business growth is to understand market needs. Engineers and engineering managers must jump at the opportunity to visit customers (B2B or B2C). We can learn what problems our end-users face and we can identify better ways for consumers to accomplish their day-to-day tasks. Get in the field and discover your customer needs!
I once heard a phrase that has stuck with me over the years: “Not making a decision is making a decision.” This means that if we punt a decision or get mired in analysis paralysis, we really are making a decision to stick with the status quo. Innovation can get stuck in the ideation stage, especially if you have a lot of creators on your team (see the ASEM post on Managing Innovation Teams). Ideas are great, but action is necessary to reach the visionary goals articulated in the strategy.
There are many useful tools in decision-making: simple pro/con analysis, SWOT analysis, and portfolio management. For innovation and product development, I recommend a portfolio analysis approach. This will include a cross-functional team, financial valuations of projects, and verifying that the new product aligns with your strategy and customer needs. Contact me at email@example.com if you’d like to learn more about product portfolio management.
Innovation might seem intimidating, relying on extraordinarily creative individuals with wild flashes of genius striking them as lightning. Yet, successful innovation is a process. We manage innovation by describing the organization’s strategy: what are the vision, mission, and values that drive growth? Next, we align market and technology opportunities with customer needs to design and develop new products. Finally, because we often have more ideas than resources, we deploy robust decision-making tools.
Learn more about Innovation Management in this recorded webinar, courtesy of the German-American Chamber of Commerce (https://globalnpsolutions.com/events/). I’d love to connect with you on LinkedIn to continue a discussion on innovation.
I am passionate about innovation and inspired by writing, teaching, and coaching. I tackle life with an infusion of rigor, zeal, and faith. It brings me great joy to help you build innovation leadership. I am an experienced innovation professional with a thirst for lifelong learning. My degrees are in Chemical Engineering (BS and PhD) and in Computer and Information Decision Making (MBA). My credentials include PE (State of Louisiana), NPDP, PMP®, and CPEM, and I am a DiSC® certified facilitator. Contact Teresa Jurgens-Kowal at firstname.lastname@example.org or connect with me on LinkedIn.
by Oliver Hedgepeth, PhD
Engineering management has been hijacked by COVID-19 and not just the few months remaining in 2020. For the EM teacher, the student, and the practical practitioner, some of the rules of the game are gone. The learning objectives from the teacher’s courses need modification. The engineering economic analysis methods from such authors as Ted Eschenbach, Don Newman, and Jerome Lavelle are still the foundation of our ability to make sense of data. But, a few more new problems need to be added. Plus, one new chapter. The practical practitioner already knows what is missing from their set of tools for project management, Six Sigma analysis, every tool in their EM toolbox.
What is suspect is the data is awry; all that primary and secondary data that was so easy to collect, and so much fun to watch being made by faulty machines and faulty people. This new social distancing and wearing of coronavirus PPE impacts data collection. Workers are not at work or, if they are, the number is sparse, maybe only 25%. Cameras are recording manufacturing processes. Artificial intelligence and robotics are replacing humans in 2020 and planning for 2021 faster than ever. Humans are dying and the living ones are teaching and meeting by Zoom or other virtual reality systems. Live streaming social media communications has become common to include our very own ASEM meetings, still under way for viability.
Many businesses because of this 2020 pandemic, such as restaurants, are broken, according to Danny Meyer, one of New York City's restaurateurs. In mid-March, he closed all 20 of his restaurants and laid off nearly 2,100 employees. He stands by his belief that the restaurant business as we know it is gone. He is asking all of us to rethink what the term “restaurant” means for 2021 and beyond. What kinds of data are important and how do you collect such data? How can you, as an EM, as an analyst, help him define that term? What other businesses are undergoing redefinition and in need of our assistance?
Robots are becoming cooks in restaurants from colleges to hamburger joints. Colleges have programs and courses and apprentices for students to understand how robots will be working with them in the future.
For you– teachers, students and practical practitioners –ask how you know you can collect good data, or visualize process behavior, or avoid the man-made chaos. Identify those new assumptions needed to solve our current economic analysis problems, and redefine what deseasonalizing data means in this pandemic and economic crisis.
We need to be discussing these emerging issues at our online ASEM 2020 International Webinar Series and the upcoming ASEM 2020 International Annual Conference and 41st Annual Meeting.
A new normal in teaching has become weaponized by a different kind of social media and human factors experience. We need to be wary of what students need. Practitioners, help!
Are you listening? See this short video for more: https://youtu.be/rbETVpBy_38
Dr. Oliver Hedgepeth is a full-time professor at American Public University (APU). He was program director of three academic programs: Reverse Logistics Management, Transportation and Logistics Management, and Government Contracting. He was Chair of the Logistics Department at the University of Alaska, Anchorage. Dr. Hedgepeth was the founding Director of the Army’s Artificial Intelligence Center for Logistics from 1985 to 1990, Fort Lee, Virginia. His PhD in Engineering Management is from Old Dominion University.
I would like to welcome you to the July newsletter. As reported previously, we are currently preparing for the ASEM International Annual Conference to be held virtually this year. As such there is a significant amount of planning work being carried out by various people to ensure the event runs smoothly. The ASEM Town Hall Meeting held last Friday allowed initial details around the conference to be discussed and I am delighted we had so many engaged members attending the meeting. More details associated with the conference will be released over the coming weeks and months. Over the last month the new ASEM 2020 International Webinar Series commenced and I would like to thank Dr. Yesim Sireli (International Director) for coordinating the webinar series.
In this introduction I would also like to reflect on developments in the energy sector and how they relate to engineering management. The COVID-19 pandemic is clearly impacting almost every part of our lives. Indeed, the social distancing measures and working from home arrangements have recently led to a dramatic reduction in burning of hydrocarbons and it was reported in April that daily global CO2 emissions have decreased by around 15-20% when compared to corresponding figures from 2019. Unfortunately, the reduction in CO2 emissions is probably going to be a temporary situation and as economic activity will inevitably pick up at some point, CO2 emissions will likely return to previously unsustainable levels. But what are the options going forward if we are to limit CO2 emissions and address the situation of global warming caused by greenhouse gases?
Adopting renewable forms of energy have an important role to play, including harnessing solar, wind, hydro and tidal energy as well as biomass. All these forms of energy have the capacity to generate clean and sustainable power. In cases where such clean forms of energy are used to generate electricity that is used in electric vehicles, the overall life cycle emissions are potentially very low. Conversely, where an electric vehicle is charged with electricity generated from a coal fired power station, the overall emissions picture is not as good. Another option to move towards environmental sustainability is to adopt hydrogen as a fuel source (e.g. in hydrogen fuel cell powered vehicles), although there is still a need to generate the hydrogen in the first place – this can be done either via natural gas reforming or via electrolysis of water (where the electricity can be provided via a further renewable source). The move to a so called ‘hydrogen economy’ offers much promise for supporting environmental sustainability and the implementation of supporting infrastructure and industrial supply chains to service the economy will also generate many challenges and opportunities.
Other developments to reduce CO2 emissions include a need for greater levels of energy efficiency – simply burning fuel in a more efficient manner reduces CO2 emissions. Also, moving from coal to natural gas fired power stations as an interim measure – eliminating coal burning and then in time eliminating natural gas burning through other alternatives. Moreover, nuclear power can have a role to play. Nuclear energy via the fission process is an option in regard to low levels of CO2 emissions as well as generating reliable base load power – however, there are the obvious undesirable outputs in terms of highly radioactive fission products. Looking ahead, nuclear fusion may have much to offer – it is after all the process that powers our own sun. Here there are different options, including magnetic confinement (including tokamak reactors), inertial confinement (e.g. laser-driven) as well as other approaches, such as via an electrically driven z-pinch. Many laboratories around the world are working on the physics associated with these different modes of fusion-driven nuclear power generation, but the engineering challenges remain immense and we are likely to have to wait for some time until the technology can be proven at a reliable and commercial industrial scale.
There are many different approaches for moving in the direction of environmental sustainability and reducing our dependence on the burning of fossil fuels. With such a dynamic and complex environment along with the need to steer scientific developments towards viable technologies and industrial application, the energy sector represents an ideal industrial application for the discipline of engineering management – where there are many opportunities to display the skills and knowledge associated with the management of people and projects in a technological or engineering systems context.
by Alexis Devenin, PMP
In engineering projects, not all the requirements are based in scientific or technical knowledge. Much of the technical constraints are just beliefs or opinions. An engineering manager could limit his task to recollect technical requirements, accepting all of them and then design a solution that satisfies all technical constraints. Nevertheless, the additional “false constraints” usually enforce to design complicated and over-sophisticated solutions, expensive and difficult to implement.
Ancient Greek philosophers identify several levels of knowledge. Doxa means belief or opinion. Episteme in contrast, means real knowledge, based on reasoning and scientific thinking. During the technical requirements elicitation of an engineering project, usually there are many doxa requirements, constraints or boundary conditions based on opinions instead of engineering analysis. It is important to investigate the validity of these constraints in order to arrive at simple and robust solutions for the system to be designed and to avoid complicated and dysfunctional designs.
Then the question is: How do you identify the 'doxa' requirements, disclose their nature, and convince the stakeholders?
The philosopher Socrates used to say that he did not have any specific knowledge, as he declares in his famous phrase, “I only know that I know nothing.” However, he believed to possess the ability to give birth to the truth, dialoguing with those who did have knowledge. He calls his method of inquiry maieutic. He said that he inherited this skill from his mother who was a midwife. Through inquiry, he was able to bring a person’s latent ideas into explicit insights. The “5 Whys” widely used in quality management could be considered a very simplistic version of the Socratic method.
The Socratic method of inquiry applied to engineering management demands certain soft skills. To question stakeholders or experts’ requirements can produce defensive responses. In the case of Socrates, his dialogues were done in public sites in Athens, under the watchful eye of the public. Once it becomes obvious that the supposed “expert” has no real knowledge about the topic, ego and prestige of the expert become damaged. Over time, this generated hatred towards Socrates, and finally he was accused of false crimes and condemned to death.
Socrates’ maieutic gives us an important insight: the engineering manager or the system engineer, is not necessarily the expert in the technology related to the system under design. However, they must be a person who has the skill to meet the experts, and through a methodic and disciplined approach, to arrive at appropriate technical solutions via the experts’ “know-how”.
Alexis Devenin is a Mechanical Engineer with his MBA and PMP certification. He is an Engineering Project Manager with 20 years of experience in the Steel, Mining and Renewable Energy industries. Connect with Alexis on LinkedIn.
An important development over the last month has been the decision to move the 2020 ASEM International Annual Conference (IAC) to a virtual format. This action has been taken in response to the current and anticipated conditions prevalent in Denver and across the globe related to the COVID-19 pandemic. Our plan is to have a comprehensive technical conference and we hope that the virtual event will still provide an excellent opportunity for sharing knowledge and learning on engineering management as well as staying updated on developments with ASEM. Further details on the conference will be released in due course.
I would also like to discuss how engineering management has the potential to help technical specialists to broaden their skills and knowledge base, thereby supporting career development in engineering and technology- based industries. In this regard, the term ‘T-shaped skills’ has its origins in the article by David Guest called “The Hunt is on for the Renaissance Man of Computing”, which appeared in The Independent (London) back in 1991. The term has been adopted by different organizations and it is basically a metaphor for the depth and breadth of a person’s skills. The vertical part of the T signifies the depth of skills along with the corresponding knowledge and proficiency in a single disciplinary area – including analytical thinking and problem solving associated with being deep in a given technical area. Whereas the horizontal bar of the T relates to a broader set of skills and knowledge and a corresponding ability to engage and work with people across different disciplines. We can further consider these skills as so called boundary crossing competencies, including teamwork, communication, decision-making, project working, managing complex situations and sense making. But how does this relate to engineering management? In order to answer this question, it is useful to apply the T-shaped skills model to an industrial sector and we can do this by considering the oil and gas industry and the case for a geological engineer.
In this illustrative example, the engineer benefits from having a deep specialism in geological engineering, including areas such as engineering mathematics, strength of materials, rock mechanics and geochemistry. Competence in these and related areas provides the engineer with an ability to solve technical problems as well as analytical thinking in geological engineering. However, to be effective in the oil and gas industry, there is also a need to work in project teams with other technical specialists (such as materials and mechanical engineers) as well as with colleagues from other functional areas (such as finance and commercial managers).
Consequently, it is important to have a good grasp of a wider set of skills and knowledge related to management but with a clear technological relevance. For example, the engineer may need to understand various areas, such as project management, team leadership, organizational management, technology management, economic development and planning, and systems modelling and analysis. Here the discipline of engineering management can support the geological engineer to be effective in multifunctional project teams as part of working in the oil and gas industry.
This simple case highlights the benefits of building on a solid technical education in a core engineering or scientific discipline, which is further enhanced with an education and understanding of engineering management – helping to prepare for a career in not just the oil and gas sector but in many other knowledge- based industries. The new 5th Edition of the Engineering Management Body of Knowledge Guide (EMBOK Guide) is an excellent source for such underpinning knowledge across the discipline of engineering management and should serve as the ideal resource to help us all maintain our T-shaped skills.
The concept I am talking about today is sometimes called the “more is better” fallacy, and I will pick accruals as an example of this.
You may have been in meetings discussing alternatives to address some hazard. One is simple and cheap - the other is complex and expensive. The top manager might say “you cannot put a price on safety.” The fallacy here is that the more expensive alternative is the better one. We know this is not necessarily true. Many times things are cheaper because they are better and the option most often chosen. The expensive option is expensive because it is unique and requires more custom labor.
Accruals, for those that do not know, are accounting entries used to cover expenses that are incurred but will not be paid for before the end of the current fiscal period. Accountants typically ask the managers for their estimates for these accruals. I call accruals “imaginary numbers that we make up and they go away at the first day of the next period.” I give them effort warranted by that view. I have provided accruals totaling more than $50 million for which I spent around 4 hours compiling. The company audited my numbers and found no irregularities.
Another manager spent a whole week (40 hours) on his numbers that totaled around $10 million. He was very thorough trying to identify every potential cost that could be incurred before the end of the year. He was very happy with his result and the effort expended to come up with those accruals.
Now for the difference between the two approaches. I knew how much my department was spending every month. Christmas and New Years Eve fall before the end of the year and spending is typically lower in December than other months as a result. Construction companies often take 2 weeks off at the end of the year in my area. I identified all activities I knew would happen and assumed things that might happen would not. Invoices often come in more than a month after the expense was incurred so there is a lag, especially at year end. I made sure my $50 million was not going to be more than the realized amount.
By trying to include as much as possible, the other manager produced a number higher than the normal monthly rate of spending of $6 million. Managers might be optimistic about all the work that might get done, especially if there is pressure to get things finished by the year end deadline. But things happen.
As I flippantly alluded to, accruals are reversed on the first day of the new accounting period. So my department had a -$50 million entry and the other had a -$10 million entry on January 1. My true numbers were $55 million in December but only $45 million in January, so the $50 million in January looked very normal. The other department had only $4 million actuals in December and $5 million in January. The total expenses in January for that department after the reversal entry was minus $1 million. This raised a lot of red flags for that manager to explain how there could be negative expenses. Trying to be very thorough and list every possible event, created a problematic number. Doing less was a better approach.
Less is often more.
I would like to welcome you to the monthly newsletter for May. I hope that you and your families are all well in these difficult times caused by the COVID-19 pandemic. Like many others I have been working from home and trying my best to practice social distancing when outside. This somewhat unfortunate term seems like it will be with us for some time – or at least until a vaccine is discovered and found to be effective through passing clinical trials.
The COVID-19 situation is rapidly evolving and is causing not just a health crisis in many countries but also leading to potential major economic difficulties. This may result in many changes across different industries, including the university sector. The higher level of indebtedness combined with lower revenues is unfortunately a difficult combination for any organization to deal with – and this includes not just industrial companies and academic institutions, but also governments, and is something that will also be faced at the personal level by many people.
The pressure caused by the COVID-19 crisis is forcing organizations to work different – this of course includes virtual working (i.e. more videoconferences, teleconferences, etc.) but it also could potentially lead to an increased pace in the adoption of digital technologies, such as virtual reality and augmented reality. An example of a recent business-driven innovation is the rise of a new form of e-commerce, so called livestream e-commerce, which has become popular in China as a way for sellers and consumers to interact virtually during the pandemic. This has the potential to grow significantly and effectively combines a user experience of commerce with social media and entertainment. It seems that even during pandemics, new disruptive technologies and business models will continue to emerge.
As we look ahead it will be important for ASEM to remain relevant and competitive in such a changing landscape and therefore adopting new working practices alongside updating and enhancing the current products and services is important. An example of a new approach was in the last month where ASEM held a virtual Town Hall Meeting. This event was hosted by ASEM Headquarters and led by Gene Dixon (ASEM Executive Director Elect) and provided an excellent opportunity for the Society’s membership to be briefed on key developments being pursued by ASEM and also receive feedback directly from members. I was pleased to see that the meeting enabled interaction with a number of members and was clearly a success – I look forward to further meetings being held in the future.
I would also like to acknowledge the fantastic ASEM Practice Periodical issued this last month, which had the very timely theme of “This Crisis Will Not Go to Waste: Engineering Management’s Response to COVID-19”. Many thanks to Annmarie Uliano (ASEM Communications Director) for coordinating this issue of the Periodical as well as the excellent contributions by the authors: Woodrow Winchester III, Jesse Kamm, Teresa Jurgens-Kowal, Alexis Devenin, Harry Moser, Tanveer Naseer, Larry Mallak, and our former President, Frances Alston. Clearly engineering management has much to offer in response to the COVID-19 pandemic.
Finally, I wanted to update you all that in the last month we held the ASEM Spring Board of Directors Meeting. The meeting was held virtually and not face-to-face due to the COVID-19 situation. But this did not stop us from having a whole day’s worth of excellent discussions. Indeed, I was delighted to lead the meeting and with the other members of the Board we discussed a number of important matters related to the operations and strategic development of ASEM. This included areas such as development of the Society’s portfolio of publications, strategies to support our certification program, preparations for the annual conference, international development of the society, marketing and development initiatives as well as other strategic projects. The meeting provided an excellent opportunity to discuss key issues to be addressed and for the Board of Directors to consider the priorities for the Society moving forward. In this regard, I look forward to working alongside members of the Board and others on these and other exciting initiatives for ASEM over the coming months.
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