Project management in the systems business of an international manufacturer of electrotechnical equipment – a business case

The company is a manufacturer of electrotechnical equipment for the process industry, selling not only devices but also system solutions via globally active sales companies. With over 1,000 employees, the company is one of the world’s leading providers in its field.

Initial situation:
Major projects in the systems business have repeatedly made considerable value contributions to the company’s risk portfolio. For example, the following risks have materialized over the years:

  • A national company offered and delivered a low-priced third-party product in a project order, which led to quality problems for the customer. The third-party products supplied had to be completely replaced by our own, higher-quality products.
  • A national company had not prepared a cash plan for a project offer. The cash requirements exceeded the possibilities of the national company and Group Finance had to provide liquidity at short notice through unplanned transfers.
  • A national company accepted a project order but did not have the necessary engineering skills, so a local engineering service provider was brought in. In the course of equipping the customer’s plant, serious engineering errors were discovered which led to considerable reworking and damage costs.

Goals and tasks:
The clear focus is on professionalizing project management skills within the company for handling orders in the international systems business (engineering-to-order). Systematic measures should prevent the repetition of mistakes and ensure a high level of reliability in the planning and implementation of customer orders.

Work program:
The work program was designed for several years, with the following measures being prioritized:

  • Introduction of a project approval process in which bids for larger projects are subjected to a review for approval by a competent specialist committee of the holding company before submission.
  • Introduction of a standardized set of project planning documents to be attached to the project approval application. This includes, among other things: Risk analysis, assessment and definition of risk avoidance measures, imputed consideration of residual risks, cash plan. Financing costs.
  • Clarification of key roles and responsibilities in the project business, particularly with regard to cooperation between the central business units and sales in the national companies.
  • Establishment of a small team of project managers with international experience in the systems business in the holding company, who support the national companies in the planning and implementation of projects.

The aforementioned work program was implemented within 18 months and predominantly with company personnel. The holding company’s core team comprised three project managers with international experience in the systems business who had already been with the company for several years. These were initially partially, and later completely, assigned to central tasks. The management of the work program and control of the resources of the core team and the accompanying measures in the business units and in sales was initially the responsibility of the appointed consultant, who reported directly to the CEO. Over the course of the project, the core team was gradually made independent.

In conclusion, the following results emerged:

  • Since the implementation of the prioritized measures, there have been no more unexpected disruptions in the system business.

  • In some cases, approvals for project applications were refused because the approval of technical experts was withheld during the approval process. Overall, the quality of project applications has improved significantly.
  • The functional management of engineering capacities in sales was transferred to the business divisions, where globally responsible engineering managers were appointed.
  • Some managing directors of the national sales companies felt that their powers were being curtailed by the stricter guidelines and control bodies and left the company.
  • The company is showing stable organic growth in terms of turnover and earnings.

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