the critical need for quality engineering advice in the ...

Professional engineering governance: the critical need for quality engineeringadvice in the boardroom

48796 RAEng A5 Engineering Report_Layout 1 01/05/2012 09:31 Page 2


Professional engineering governance: the critical need for quality engineeringadvice in the boardroomA briefing paper by The Royal Academy of Engineering

© The Royal Academy of Engineering

ISBN 1-903496-87-X

Published byThe Royal Academy of Engineering3 Carlton House TerraceLondon SW1Y 5DG

Tel: 020 7766 0600 Fax: 020 7930 1549www.raeng.org.ukRegistered Charity Number: 293074

All photos courtesy of www.chpv.co.uk unless otherwise stated

A copy of this report is available online at www.raeng.org.uk/governence


March 2012

4 The Royal Academy of Engineering

ContentsForeword 5

1 Introduction - why is engineering advice important? 7

2 How is engineering advice sourced and used? 10

3 Problems caused by failures in procuring and using engineering advice 13

4 What external sources of engineering advice are available? 16

5 How can professional engineers work to give relevant, good quality advice? 17

References 18


Professional engineering governance: the critical need for quality engineering inthe boardroom

A briefing paper by the Royal Academy of Engineering

Foreword

Engineering impacts on almost every aspect of our livesand has a critical, enabling role in underpinning theactivities, products, cost-effectiveness and success of awide range of businesses, large and small, national andmultinational.

Engineering also impacts on virtually every aspect ofpublic life from national infrastructure such as roads, waterand telecommunications to the National Health Serviceand national IT systems.

In designing and operating such a wide and complexvariety of systems, engineers develop a unique set of skills.They are goal-orientated, always having a successfulsolution to a need or problem in mind. They must take awhole system approach, combining multiple skill sets totackle interdependent issues. And they must functioneffectively in well-organised teams.

As a result, engineers have a great deal to offer thebusinesses they work for and society in general. This reportgives a succinct summary of the importance ofengineering advice, how it can be best obtained andapplied by decision-makers and the some of the issues thatarise when it is lacking. Given the current financialsituation, this is vital and timely if the UK is to successfullyrebalance its economy and re-establish itself on a soundfinancial footing.

Foreword

Sir John Parker FREng

Professional engineering governance: the critical need for quality engineering advice in the boardroom

5




Introduction – why is engineeringadvice important?

The influence of engineering extends well beyond thetraditional areas of heavy industry and manufacturing suchas energy provision, automotive products and aerospace toalmost any company involved with creating and deliveringproducts and services in fields including electronics, IT,pharmaceuticals, health care, transport systems, watersupply, banking and insurance. All such businesses needtimely, expert- and experience-based engineeringadvice in areas such as identifying opportunities forimproving cost-effectiveness, productivity and reliability orexploring new profitable businesses based on emergenttechnologies.

There are few areas of government policy that do not havean engineering dimension to delivery. As well as the criticalareas of innovation and growth, low-carbon energy andinfrastructure, engineering underpins and delivers policieson health, defence and international development. Forgovernment, therefore, engineering advice is vital early inthe policy planning stage, not just at the point of delivery.

Engineers are increasingly being trained in ‘systems’ and‘whole lifetime’ thinking; that is, viewing the wholeproduct or service through conception, design,manufacture, cost, installation, operation, associated risksand disposal as part of the same project. Senior engineersincreasingly have experience in managing complexprojects and integrating people with physical systems(such as the modern car, MRI scanners or security systems).This gives engineers the capacity to developoverarching, strategic perspectives that can be ofsignificant benefit to businesses and government alike.


“Good engineeringadvice is a majorcontributor toenabling us tooptimise businessdecisions and getthe best balance ofcost, risk andperformance.”


7


The identification and management of risk isincreasingly part of the modern engineer’s skill set and,since risk management is a major concern of anyorganisation’s board, this makes engineering advice criticalto key decision-making. Such risks include ensuring thatlegal or regulatory standards are met, that novel risks withnew technologies are identified and ameliorated well inadvance of their uptake, and that health, safety andenvironmental impacts are not overlooked. This will helpbusinesses avoid future reputation-damaging failuresas well as minimising the likelihood of personal injury orloss of life accidents involving either employees ormembers of the public.

Given the rate of advance and change in ourtechnologically-enabled society, the provision of adequate,timely and informed engineering advice to those makingdecisions in pursuance of either business success or publicpolicy is an increasingly relevant and urgent functionwhich we define as ‘engineering governance’. This paperhighlights this important yet often unrecognised rolefor professional engineers in our society, distinguishinga role that goes beyond the provision of technical supportto also helping make long-term decisions that will set theagenda and direction of a company in the globalmarketplace.

Thus, boards and governing bodies must develop anunderstanding of when to seek engineering advice, whereto obtain it and how to act on that advice. Conversely, theeducation of our engineers must also change to ensurethat they are equipped to deliver advice in the mostsuitable strategic, legal and economic context for the bodyfrom which advice was sought.



Professional engineers must be made aware of their fullvalue to the organisation they work for and must learn tocommunicate effectively with others in their organisationregardless of their technological background.

The following paper is based on replies to questions posedto members of the Academy’s Fellowship chosen torepresent as wide a spectrum of decision-makers aspossible – large and small companies, national andinternational businesses, new and established companies,major service providers, and government agencies, acrossthe full spectrum of engineering disciplines. The quotationsin the margins are taken directly from responses received.

Main conclusions

• Company boards bear the responsibility of ensuringthat they are well-informed about their engineeringneeds, limitations, opportunities and challenges.

• Government and industry alike need sufficient scienceand engineering knowledge to properly frame thedetailed questions they need to ask within theirparticular context and to properly assess the responsesthey get.

• Engineers need to communicate effectively withcolleagues from all disciplines and understand thebroader commercial context in which their advice isbeing given.

• In government and private companies alike, problemsare compounded when those who take decisions are then the same groups who regulate actions and assess outcomes. Independent advice should besought to ratify board decisions or programmes forimplementing policy



"In my experience,company strategy isa question ofspotting the mostpromising marketsthat you can addresswith the skills andresources that youhave or can develop.It is essential that theboard understandsthe engineeringissues, they don'tneed to be engineersbut they must bewell informed on theengineering aspects."

9


How is engineering advice sourced and used?

Private sector

In the case of the private sector, the following generalprinciples can be drawn:

• Company boards bear the responsibility of ensuringthat they are well-informed about their engineeringneeds, limitations, opportunities and challenges, if notfrom within their direct membership, then fromtechnical advisory boards and experts both within andbeyond the company.

• Boards of successful businesses tend to know where toseek the best advice, to understand what questionsneed to be asked and to know how to use the advicethey are offered.

Large companies

Large companies normally have the resources to acquiretheir own professional engineering advice. In the case oftechnology-based companies, this will be in-house orthrough specialist consultancies. It may not be necessaryfor an engineer to sit on the board but most largeengineering firms will normally have a senior engineer whoreports directly to the board, or, in larger organisations,there may even be separate Technology Advisory Boards(or equivalents) with a similar remit and responsibility.

A well-functioning company board will establish theprocesses and the advice it needs to conduct itsactivities effectively and responsibly. It is vital thatboard members recognise where a business is dependenton high-quality products, processes and systemsengineering and, in technology-based companies inparticular, this will generally happen as a matter of course.An effective CEO with any background should be able to


"Whether finance orengineeringdominates at Boardsoften depends onthe company'srecent financialperformance....deterioratingfinancialperformance candrive a replacementof engineeringcontrol at Boardlevel with financialcontrol....with amarked reduction inthe role of engineersin governance.Where financedominates, high-level engineeringadvice must comefrom the seniorexecutive levelmanagement."


grasp the essentials of the advice they are being given inorder to make successful, and sometimes risky, decisions.

Many private sector companies have safety and businessrisk committees and risk registers that document potentialproblems, although in some cases these can focus tooheavily on financial and legal issues while the product-driving technological base of the company is given a lower priority.

Small and medium sized companies

When an SME is technology-based, there is a good chancethat the owners, CEO or senior employees will have anengineering background, and in these cases engineeringadvice is naturally and easily accessible.

However, for those SMEs that do not have access toengineers in this way, the situation is more difficult.Limited time and financial resources mean that manySMEs are already stretched and engineering advice isonly sought when absolutely needed rather than in astrategic or systemic manner. Given the significantpercentage of both jobs and wealth creation that SMEsaccount for in the UK this is a potentially serious situation.Solutions are difficult and only possible when seniorexecutives in SMEs are made aware of the importance ofengineering advice to the success of their companies.

Public sector

Engineering infrastructure is vital to the economic successof the UK. As a result, government is engaged in a largenumber of complex and interdependent engineeringprojects. This requires internal strategic capacity to actas an intelligent customer and impartial, professionalengineering advice.

How is engineering advicesourced and used?


11


Some government departments have a reasonableamount of in-house professional engineering expertise.While this has reduced significantly with the closure ofmost government laboratories, these sometimes remain asprivate research companies that maintain close links withgovernment. Departmental Chief Scientific Advisors(CSAs)1 often provide both scientific and engineeringguidance and a number of CSAs have had engineeringbackgrounds. However, it should be remembered thatengineering issues are often materially different fromscientific issues and there are relatively few individualscapable of providing expert advice across both disciplines.

The current Government Chief Scientific Advisor hasestablished a community of Government Scientists andEngineers (GSE) to develop a science and engineeringprofessional identity within the civil service and, amongother things, to consolidate engineering advice available togovernment. Nonetheless, government still has onlylimited access to in-house engineering advice andtherefore often largely relies on external consultants. Again,there are instances of important and critical decisionsbeing made without the ‘in-house’ CSA’s advice beingsought.

The Royal Academy of Engineering and its partners in theprofessional engineering community have created twoalliances designed to improve the government’s access toengineering advice. Education for Engineering (E4E)2

develops policy positions and presses government foraction on key priorities to ensure an adequate supply offuture engineers and engineering technicians. Engineeringthe Future (EtF)3 supports engineering policy and hascarried out studies for and with government departmentson global water security, new nuclear construction, thesmart grid and the potential impact of climate change onnational infrastructure.


“Company boardsand governmentagencies must beable to recogniseand translatetechnical issuesinto businessimplications.Technical failure intoday’s instantcommunicationenvironmentcarries hugereputational risk.”


Problems caused by failures inprocuring and using engineeringadvice

Private sector

Even in large organisations with access to engineeringadvice, short-term financial considerations canoverride high-level engineering concerns, the effects ofwhich are only likely to emerge at a later date. Low-probability, low-cost but high-reputational impacts can beoverlooked. Companies producing established engineeringproducts tend to have boards focused more on legal,financial and short-term issues that may make themvulnerable to either takeover or losing their marketposition to imports or innovative products in the field. Inthis case, engineering advice can often mistakenly be seenas being limited to ‘keeping the plant running’.

Sometimes the structure of boards in the UK can stand inthe way of their ready access to sound engineering advice.The requirement on boards is for there to be a majority ofnon-executives over executives – normally counted as theChair, Chief Executive Officer (CEO) and Chief FinancialOfficer. Thus, in order to maintain board numbers atmanageable levels, engineers can beunderrepresented at senior level. However, developingsuitably trained and experienced individuals, able toundertake senior management and executive roles – andthen properly involving them in providing relevant adviceas a critical part of the decision-making landscape - willhelp to keep engineering issues at the forefront of acompany’s agenda.

Depending on the company involved, there may be boardmembers who are engineers and able to provide advice,but this tends to be in companies that have a technicalbackground and are well aware of the need for such input.

Problems caused by failures in procuringand using engineering advice


13

“In my experience,those makingdecisions rarelyknow whether theyare receiving good,bad or insufficientengineering adviceand so do notperceive there to bea risk (and hence donot manage it).”


Overall, there is a tendency for more boards to recognisethe value of people with financial, business or legalbackgrounds than people with professional engineeringbackgrounds.

In organisations where there is insufficient engineeringadvice, there is a danger that serious technical risks willsimply never be identified or properly managed,leading, in the worst cases, to large projects, or evencompanies, failing. They can lead to boards becomingoverly risk-averse, thereby missing out on potentiallylucrative opportunities or becoming less competitive in thefuture. Conversely, because of a lack of real engagementand informed dialogues with their advisors, many boardsmay still view their engineers as ‘overly conservative’.

The key needs for boards and senior management in theprivate sector are:

• being sufficiently knowledgeable to identify whenadvice is required;

• being able to identify who is best able to provide theadvice;

• being sufficiently knowledgeable of the subject matter to understand and act appropriately on theadvice given.

Public sector

In large public projects the lack of engineering adviceearly in the process can lead to major issues furtherdown the track. Recent examples of this have beennational IT project failures where problems arise due topoorly-defined initial requirements leading to specificationchange (or “specification drift”), cost escalation and,possibly, poor execution4. Similarly, it is sometimes difficultto assess who owns the risk of large public projectsresulting in a failure to assign accountability andresponsibility.


“Generally speakingsuch risks are notproperly managed.Consultants aresometimes used(usually at greatexpense) but theiradvice is not alwaysunderstood by thenon-engineers whorequested it.”


Problems arise because, even in government departmentswith engineers on the staff, the engineering advice maynot always be asked for, or indeed, listened to. Governmentmust distinguish between scientific and engineeringadvice: they can often be regarded as equivalent withingovernment when, in fact, they are quite distinct and thereare few individuals capable of providing quality advice inboth spheres. Generally, scientific advice is concerned withanalysing the potential impacts or utility of new discoveriesin specific scientific domains, whereas engineering adviceconcerns the problems, synergies, cost-effectiveness andrisks involved with prospective policies and theirimplementation.

Government often focuses more on the formulation ofpolicy than on how or whether this will be deliveredeffectively. Having high level engineering input early inthe policy making process would help to avoidexpensive mistakes and sub-optimal outcomes. Theuse of externally sourced advice by government can alsocause a number of issues. It is expensive and commercialinterests can compromise the independence of the advicegiven. Government departments should ensure they havesufficient in-house scientific and engineering capability toact as an intelligent customer of research, developmentand technological advance and not rely wholly on external advice.

Problems caused by failures in procuringand using engineering advice


15



What external sources of engineeringadvice are available?Engineering advice can be obtained from a number ofsources: professional organisations, universities orregulatory authorities. The professional engineeringcommunity’s recently formed alliance Engineering theFuture (see above) provides a direct portal for governmentinto professional engineering advice. This provides accessto a wide range of engineering expertise and can provideguidance and advice in key areas of policy. Options rangefrom producing expert reports to guide policy-making orserving on advisory boards to critically assess policydevelopment and implementation.

Both large and small companies can access advice from anumber of valuable resources available such as KnowledgeTransfer Networks (KTNs)5, trade associations andprofessional institutions. In the UK, our KTNs are admiredby other countries and can be of particular value to SMEs.

“The UK has anexcellent network ofworld-classResearch andTechnologyorganisations whichoffer advice, eitherthroughmembershiparrangements or bydirect consultancy.These Centres ofExcellence togetherwith our UKknowledge transfernetworks (KTNs) areadmired in manyother countries andmust be fosteredand maintained.”


How can professional engineers work to give relevant, good quality advice?

How can professional engineers workto give relevant, good quality advice?Engineers must be aware that they have a great deal tocontribute across all aspects of the organisation they workfor. To achieve their full potential they must learn toengage effectively with others in their organisationregardless of their technological or sectoral background.

To fulfil this potential it is important that engineers becomemore commercially literate and understand the variety ofissues that influence the running of a business. They needto communicate the technical issues that they areconcerned with in such a way that they can be understoodby colleagues with different responsibilities, such asfinance or marketing. There is also an onus on theengineering managers within an organisation to ensurethat complex engineering issues can be communicated ina concise and understandable way.

When advice is sought, engineers need to understandthe need to frame their responses within the economicand legal needs of the company and recognise thatoften the task is to identify the ‘least bad’ solutionbecause the ideal is not obtainable.

Education is the key to producing engineers with fullyrounded understanding of commerce and business. Thisshould begin at undergraduate level with the inclusion ofsuitable modules in all engineering degree courses.Engineering institutions also need to add the necessarybusiness awareness to the professional training ofengineers and scientists, and should also aim to foster thecommunication skills of engineers.


17


References1 http://www.bis.gov.uk/go-science/science-in-government/chief-scientific-advisers

2 http://www.educationforengineering.org.uk/

3 http://www.engineeringthefuture.co.uk/

4 For examples see:http://www.raeng.org.uk/news/publications/list/reports/Engineering_values_in_IT.pdf

5 https://connect.innovateuk.org/web/guest/home

References




The Royal Academyof Engineering

As the UK’s national academy for engineering, we bring together the mostsuccessful and talented engineers from across the engineering sectors for a sharedpurpose: to advance and promote excellence in engineering. We provide analysis andpolicy support to promote the UK’s role as a great place from which to do business.We take a lead on engineering education and we invest in the UK’s world classresearch base to underpin innovation. We work to improve public awareness andunderstanding of engineering. We are a national academy with a global outlookand use our international partnerships to ensure that the UK benefits frominternational networks, expertise and investment.

The Academy’s work programmes are driven by four strategic challenges, each ofwhich provides a key contribution to a strong and vibrant engineering sector andto the health and wealth of society.

Drive faster and more balancedeconomic growthThe strategic challenge is to improve thecapacity of UK entrepreneurs and enterprisesto create innovative products and services,increase wealth and employment andrebalance the economy in favour ofproductive industry.

Lead the professionThe strategic challenge is to harness thecollective expertise, energy and capacity ofthe engineering profession to enhance theUK’s economic and social development.

Foster better education and skillsThe strategic challenge is to create a systemof engineering education and training thatsatisfies the aspirations of young peoplewhile delivering the high calibre engineersand technicians that businesses need.

Promote engineering at theheart of societyThe strategic challenge is to improvepublic understanding of engineering,increase awareness of how engineeringimpacts on lives and increase publicrecognition for our most talented engineers.

The Royal Academy of Engineeringpromotes excellence in the science,art and practice of engineering.

Registered charity number 293074

The Royal Academy of Engineering3 Carlton House Terrace, London SW1Y 5DG

Tel: 020 7766 0600 Fax: 020 7930 1549 www.raeng.org.uk


Date post:	16-Jan-2022
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

the critical need for quality engineering advice in the ...

Documents