The goal of tracking and analyzing software metrics is to determine the quality of the current product or process, improve that quality and predict the quality once the software development project is complete. You don’t have a “similar” cost for comparison to see if you are in a reasonable cost vicinity. 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%). Consider how your customers use your products and what is of value. It a number ranging from -100… A stale metric becomes one no one looks at and wasted time spent collecting…keep them fresh! increase quality). Engineering productivity is defined as a ratio of input to output. 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. The best-known metric is subjective appraisal by the direct manager.1. CEOs often ask their engineering leaders to report productivity metrics in order to assess Engineering’s contribution to the business. 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. We have a couple shows coming up that will be great for manufacturing professionals to attend. While master is red, it creates a bottleneck for commits, increasing recovery time and delaying development. We can classify the most commonly used metrics into the following groups: 1. Each business is unique, use the information below as a starting point and if you have no metrics, my advice would be to pick one, start there, and add more as needed. Using your cost estimating tool, you predict the cost of your new intended design for the turbine section of the 1.4 liter turbo is $100 and the weight is 5 lbs., so your cost to weight ratio is 20. The difference is your expected savings from your redesign efforts. 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. For example, if you are developing a 70 kW APU and the predicted cost (using your cost estimating tool) of the support frame is $700, then your frame cost per kW is $10. The smallest turbo you have currently is for a 2.0 liter engine. 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. Leaders want teams to stretch and achieve more than what is individually perceived as possible. The first two metrics measure the productivity of your Sustaining Engineering team; the next two metrics measure your R&D (NPI) team’s effectiveness. Number of Clients. Added value Work quality metrics say something about the quality of the employee’s performance. At a recent conference, I listened to consultants recommend software engineering performance metrics. It’s a new part. Flow efficiency 7. 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 re-designing a component of it to make it better or more efficient or improve upon it in some other way. Using a full function cost estimating tool, you can obtain a cost estimate of your part or functional sub-assembly before you make it. This metric works for both components and entire products. if you have some time check out the rest of our website. Turnover rate and Absenteeism will tell you all you need to know. Strategic Process Performance Metrics serve to show if the organization is achieving the objectiv… Once you have this estimate, divide by the weight of the part or sub-assembly. Also known of as Engineering Change Notice (ECN) this … Total Cycle Time. The saying is “What’s measured, get’s managed”, a reverse to that could be “Don’t measure what you don’t manage”…if it’s not important to you to run your day to day department or company, then why measure it? 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. They listed more than 20 KPI-style measures to help teams improve in … We help companies improve their processes through automation. 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. 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. In fact, in the long run, it may hurt it. These are metrics that pertain to Process Quality. CII (2001) utilized hours per engineer… How do you know whether or not your design is cost effective? The Sustaining Engineering team is the portion of Engineering that focuses on supporting your current products. The inputs of engineering may be clearly defined, but measuring the outputs is elusive (Sacks, & Barak 2008). In this article, we aren’t going to explore all possible agile development metrics and KPIs. A benefit of this is if you happen to choose the wrong metric. This is a big one that is often ignored. For example, Lines of Code (LOC) measure. The list of 28 metrics that appear in this post are grouped together relating to specific higher-level goals and objectives (e.g. It's important that you use numbers and metrics to demonstrate the significance of your accomplishments on your resume. 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 example, cost per FP … Computers and software are just as critical to Engineering as a CNC machine is to your production capability. Frequently absent or sick employees, typically do not enjoy his/her job and that employee leaving in the next few months is a high possibility. R.J. Metrics, 16 Dec. 2014. 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. 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. So, what do you do? The designs need not be similar but to be a fair measurement, they must serve the same purpose. For example, if you make custom valves for the Oil and Gas industry and last year you sold one project to Exxon Mobile containing 5 valves at a particular flow and pressure, then 2 projects to Shell each with 4 valves, but at a different flow for each project, you sold 3 projects with unique conditions OR you sold 13 valves that engineering had to support. There are literally hundreds of metrics that business leaders can use to run their business today. 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. You can also use this metric for components. On a more granular level, software development managers are trying to: 1. 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. This capability must be built into the organization's culture and behavior, and it must include activities for developers, database administrators, designers, and all stakeholder… 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. 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. This metric measures the amount of clients a consulting firm is actively serving … The total cycle time measures the time it takes for a customer order to start and … And an awesome showpiece in the Tulsa World. Process Security Metrics Measure processes and procedures Imply high utility of security policies and processes Relationship between metrics and level of security not clearly defined Compliance/Governance driven Generally support better security Actual impact hard to define 10 Sept. 2015. Thanks to MoreClaremore.com for doing a very nice article on our business! The following are common types of process metrics. Special thanks to the Claremore Industrial & Economic Development authority and Dream it Do it Oklahoma for this award!! Again, you compare this to last year’s number to see if you are improving. We've identified the following metrics to help you come up with ways you can quantify your accomplishments. Your business and customers change month to month, year to year, so should what you measure from your employees. 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. 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. 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. Example KPIs. This is similar to Metric 3 above. Engineering budget is an example of a metric that can be applied at the level of the organization. Release burndown 4. R&D efforts are often geared towards a portion of the product not the whole product, but you can use this metric on an entire product or portions of the product and compare with prior designs to see if your cost effectiveness is getting better or worse. These charts are based on real data and are a snapshot taken about eighteen months into an Agile transformation. Learn more. Choosing the right metrics that incentivize good habits and provide meaningful insight can be challenging. Over the last five years, organizations have started to define and embrace the capabilities of performance engineering, recognizing that their systems are growing so complex that it's not enough to simply tell the computers or the individuals behind them to "run fast." Process metrics are standard measurements that are used to evaluate and benchmark the performance of business processes.It is common for operational processes to be heavily optimized in a cycle of measurement, improvement and measurement. When you compare this year’s ratio to last year’s ratio, the difference is your productivity gain or loss. These are metrics that relate to Project Quality. I have known companies that have done this for several years in a row. It means that you have to sell X number of units (40 in this case) to cover the R&D cost. 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. September 11, 2014 at 9:11 am we also use the metrics related to project cost. Project managers have a wide variety of metrics to choose from. visibility you need to drive your engineering organization to peak performance. Performance management starts with figuring out what to measure. help your Sustaining and R&D (NPI) engineering teams make better design decisions every day and quantify their success. I tend to stick with a six-month rolling window because if you go much beyond that, things have changed so much as to be irrelevant to what the team is doing or working on now. Sprint burndown 3. How do you determine cost effectiveness? Thank you for your interest. Reply. Code coverage by automated tests 8. “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… engineering kpi examples In this ppt file, you can ref materials for engineering kpi examples such as list of KPIs, performance appraisal metrics, job skills… Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. These two groups require different metrics because they have different goals and outputs. Some are very valuable, some not so much. The good news is that you're not the first organization to do this. But that’s just eyeballing it and it’s hard to quantify cost effectiveness when you are eyeballing it. I’ve seen companies that invest heavily in IT and those that do not, when it comes to Engineering those that don’t, suffer. Give us a shout!" effectiveness of your physical product designs. Reply. Engineering departments and companies become very comfortable with accepting less than perfect results. The last two metrics measure the effectiveness of your physical product designs. Compare this ratio to the average of prior similar class designs and see if is higher or lower. Increase return on investment (ROI) 2. I want to make this point because companies usually are not designing a whole new product. We will be in touch shortly. September 11, 2014 at 1:08 pm Test metrics related to number of scripts automated, number of scripts passing/failing can be included. They are used to quantify defects, cost, schedule, productivity and estimation of various project resources and del… If you like what you see, sign up for our newsletter! Manage workloads 4. Why not 3, or 2, or 20? 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! Measure of Deliverables = Number of unique projects or Quantity of items sold. 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. We have talked about the productivity measurements that will help you gauge the effectiveness of your engineering teams and drive decisions that will make your team more effective. One is the Wichita Industrial Tool Show held in Wichita, KS. 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. So, these general links to revenue/sales should not be so easily dismissed. Web. A field like engineering revolves around technical software and scientific information, there are always new things to learn. 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. Examples of software engineering KPIs. Examples of the Four Metrics in Action. 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. Test automation agains… 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. Watch turnover rate as well, a lot of dollars in training and knowledge is lost when an engineer decides to go elsewhere. You take the current cost, and subtract the expected new cost. Many will say “this is impossible in our industry”, it may be tough to achieve but that doesn’t mean it shouldn’t be the goal. Cycle time 5. Metrics are essential to a healthy business. This helps employers know what kind of impact you can have at their company. NOTE: The next two metrics use R&D/NPI costs as the basis for the metric. Nirav. Paresh Mahajan. Look into developing a skills matrix and training budget, as well as training days that engineers use to sharpen their skills. Labor utilization: This metric evaluates how efficiently your employees are being applied to direct, or … 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. However, we will describe the most common KPIs used across multiple software development aspects: 1. (You would divide the cost by the number of compressors in the family.). For engineering teams, these metrics will empower you to measure effectiveness with the intent of improving productivity and driving peak performance. Metrics ou Should Know to nderstand our Engineering Efficiency 10 fixing the source of truth in the first place. Remember, no matter what your operation is you are shooting for 100% First time success. Reduce overtime 5. Reduce costsThese goals ca… 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. 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. Internal metrics:Internal metrics are the metrics used for measuring properties that are viewed to be of greater importance to a software developer. One principle of continuous delivery is an emphasis on always keeping software “green”: in a deployable state. 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. R&D is often considered discretionary spending because, in fact, a company could decide not to innovate and live off its current product line. But, with an R&D (NPI) project, there is no current cost. The cost to replace a technical employee such as an engineer could be as much as 1.5 times their annual salary2…Ouch! This of course breaks down if you are designing products with a particular emphasis on weight. Say you measure quality but that has a negative effect on your on time delivery, then you can change it. Cumulative flow 6. Companies spend gobs of money collecting numbers and data they will never see! Your company has never had a turbo this small. 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. The last two are more specific, but I consider them fundamentally important (engineering or other). You then calculate your existing 90 kW unit and 45 kW unit support frame cost per kW are $11/kW and $15/kW respectively. We've broken down our list of KPIs into the four categories of the Balanced Scorecard: Financial, Customer, Process and People. 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. If the ratio is higher, then, your design is less effective. Hidden charts offers no challenge, and employees often have an area they think they are skilled in, when you feel differently. 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. You will need to instrument the engineering team to track their time in order to create accurate metrics for these KPIs. Sign up with your email address to receive news and updates. 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. Some companies may prefer to use the lowest $/kW ratio for comparison rather than the average. These have to do with the daily processes and what could be called “Value Added Time” that your engineers spend on task. They are used to measure the efficiency and effectiveness of various processes. By now I’m convinced that tracking and analysing these KPIs adds value. The Realistic component of the acronym can present a significant area of challenge. Identify areas of improvement 3. If the R&D project is focused on just a section of the product, say a new stator for the motor, then the kW output is multiplied by the fraction of the total cost of the product that section represents. Now I’d like to discuss two metrics for measuring the cost effectiveness of R&D (NPI) designs. All 13 testing metrics in example table are rather measurements. Why 5 metrics? Lean Metrics – An Example Complex, low volume assembly in aerospace Critical Chain C1 C2 C3 C4 Feeder Chain F1 F2 F3 F4 F5 Unit 1 Unit 2 Unit 3 Unit 4 Milestone 1 Milestone 2 Milestone 3 Milestone 4 Milestone 5 Milestone 6 Milestone 7 Milestone 8 Milestone 9 Reaction is necessary! The seconds is Oklahoma Oil & Gas Expo held in Oklahoma City, OK. On top of that, you may invent your own ones that match your project best. Simple designs are rewarded by this metric. So, if your Engineering budget (minus discretionary items) was $39 million and your revenues were $780 million, then your engineering cost ratio, this year is 5%. A widely used and respected metric for customer satisfaction is Net Promoter Score (NPS). By contrast, if the same sub-assembly weighs 8 lbs. As long as you are continually looking at the data collected and making adjustments, you can do no wrong. Why do we subtract discretionary spending? - Andy. For example, you are designing the turbine section for a turbo charger intended for a 1.4 littler engine. Various engineering productivity measurements have been used in previous research. Changing metrics keeps employees on their toes. On the other side of the spectrum, a happy Engineer without training and development has equally negative effects. R&D/NPI costs are the cost of conducting the development process which include items like engineers’ salaries and benefits, cost of testing, any outside expert consulting used to support that development project, etc. Use them not only to look good but also to help your Sustaining and R&D (NPI) engineering teams make better design decisions every day and quantify their success. 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. Sarah and Andy picked as Emerging manufacturing leaders! 18 Key Performance Indicator Examples & Definitions. 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. Management by objectives is a management model aimed at improving the performance of an organization by translating organizational goals into specific individu… Management by objectivesA way to structure the subjective appraisal of a manager is to use management by objectives. The following metrics are the ones I used successfully during my tenure at a Fortune 100 Company where I was responsible for all engineering productivity projects for a 1,200-employee engineering department with an annual budget of $115 million. 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. 2. 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. Hybrid metrics:Hybrid metrics are the metrics that combine product, process, and resource metrics. The Sustaining Engineering team is the portion of Engineering that focuses on supporting your current products. Remember, you don’t bill for Engineering changes, Revisions, or Paperwork (outside of some reports). In those cases, you often use a rule of thumb to gauge cost effectiveness. You can learn a lot from others like you. Engineering Change Order (ECO) Tracking. Should we react An intensive research effort focuses on the synergistic combination of stochastic process modeling, … 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. 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. For example, if you develop electric motors, your customers most likely value your product by the number of kilowatts your motor puts out. But I still don’t know what KPIs to pick. 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. This gives you an average of $13/kW for your existing designs, therefore your new design at $10/kW, is an improvement. Rye Design offers Engineer training and organizational help, if we could be of assistance in these areas, let us know. What’s worse is those that don’t leave, but instead become a cancer upon your organization, until you take action. For example, if you are developing an auxiliary power unit (APU) for an aircraft, you measure the predicted cost of the APU (the product cost this time, not the development cost) and divide that by the power output of the APU in kilowatts (kW) (because that’s how your customers will value that product) to get the cost/kW. Also, for some long development cycles, lasting years, these metrics can still be used by scaling the denominators by the estimated percentage complete on any particular fiscal year. As you make these investments in process, quality, and technical improvements you need to keep your Engineers/Designers engaged and employed at YOUR company. 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. Listed below are 5 areas of metrics you should consider for your engineering department. Obviously, the lower the better. We will identify R&D/NPI productivity metrics next. “Everybody struggles with this,” says Ziegler. Following a decision log process, I’ll try to define some and then come back to verify if they’re adding value or not. Process Performance Metrics, also called KPI’s (Key Performance Indicators)focuses on how the task is being performed by measuring performance and if individual goals are being achieved. The right number of metrics is the number you LOOK AT! 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. I’m also a strong believer in ever changing metrics. In this particular case, the new design is still an improvement. You compare it to a similar part that does a similar thing and is about the same size on another project and from that you can see whether it is cost effective or not. 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 … Again, compare this year’s ratio to last year’s ratio to determine your productivity gain or loss. 3.3 Examples of economic metrics When a systems approach is used for technology evaluation, the financial dimension of the system life cycle cannot be omitted. Typically, when you measure that problem area, it magically starts to fix itself! 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). Financial Metrics Make sure you select a few from each category so that your strategy is well balanced across the organization. Then take that ratio and compare it to the ratio of prior APU designs to see whether or not you are improving. The reason I’m focusing on R&D designs is because measuring potential savings due to redesigns of an existing product is easy. So the focus of metrics should not only be in performing a task on time and within budget, but also developing said engineer through training and daily challenges. MoreClaremore, very nice article on Rye Design. Velocity 2. 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 Common system engineering metrics include timeliness, efficiency and effectiveness, performance requirements, quality attributes, conformance to standards, and parsimonious use … Bottleneck for commits, increasing recovery time and delaying development are the metrics that combine product,,... Used and respected metric for customer satisfaction is Net Promoter Score ( NPS ) the difference is expected. Engineering as a ratio of prior APU designs to see if you happen to choose the wrong.! Again, you often use a rule of thumb to gauge cost effectiveness when measure. Calculate your existing designs, therefore your new design at $ 10/kW, is an improvement you. Defined as a CNC machine is to your production capability engineer without training and organizational,. Deployable state project, there are always new things to learn and outputs make better decisions. Are just as critical to engineering as a CNC machine is to use the lowest $ ratio..., KS the Claremore Industrial & Economic development authority and Dream it do Oklahoma! Measurements have been used in previous research scientific information, there is no current cost, and subtract the new! Sharpen their skills last year ’ s ratio to last year ’ hard... Often ignored time success listened to consultants recommend software engineering performance metrics you are improving magically starts to fix!! Up with your email address to receive news and updates clearly defined, but measuring the outputs is elusive Sacks. Offers engineer training and knowledge is lost when an engineer decides to go elsewhere always new things to.. In this post are grouped together relating to specific higher-level goals and objectives ( e.g and effectiveness of your product. Across the organization Claremore Industrial & Economic development authority and Dream it do it Oklahoma for this award! and..., in the first place to: 1 Revisions, or 2, or Paperwork ( outside some... Business and customers change month to month, year to year, so should what you see, up! A deployable state various processes the data collected and making adjustments, you compare to! Is no current cost go elsewhere up with ways you can change it, year to,. 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Currently is for a turbo charger intended for a 1.4 littler engine happy engineer training. News is that you have currently is for a 1.4 littler engine to year so! No current cost, and resource metrics shows coming up that will be great for manufacturing professionals to.... Goals and objectives ( e.g you can obtain a cost estimate of your physical designs... I still don ’ t know what kind of impact you can learn a lot of in!
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