Economic considerations of engineering in the industrial plant business

Abstract

When it comes to improve the competitive advantage of plant EPC (Engineering, Procurement, Construction) companies, the increase of engineering performance is a permanent challenge. However, economic considerations such as “What is efficient engineering”, “What is engineering performance” or “When is engineering profitable” remain unanswered both in academic discussion and in industrial practice alike, since engineering is connected in multiple ways to other trades, stages in the value chain and phases of the plant life cycle. For this reason it is difficult to achieve a common understanding of engineering performance. Performance rather lies in the eye of the beholder and these individual interpretations can differ substantially. Based on best-practice sharing and various analyses, the authors develop a model to systematize these subjective interpretations of engineering performance. It consists of three dimensions - “position of the beholder”, “observation horizon of the beholder” and “performance metrics”. The dimensions contain general performance criteria. To consider the specific background of each beholder, there are two additional perspectives on these dimensions - “role” and “controlling concept”. This model enables plant EPC companies to gain a holistic view on engineering performance along the complete plant life cycle. Furthermore it provides a clear structure for economic considerations and investments in engineering - enabling plant EPC companies to increase the performance of their engineering.