Global solutions for precast

Neilsoft is an engineering services company based in Pune, India. The company specialises in providing the advantages of the global delivery model to international companies interested in establishing resource centres to reduce costs and improve productivity levels. Neilsoft's experience in construction

The need for competitiveness

Precast companies are now embracing the global delivery model. The growing use of precast concrete, coupled with intense competition and the huge investment required to establish a precast plant, is placing increased pressure on precast manufacturers to adopt new ways of reducing costs and improving operational efficiency. To remain competitive, precasters need to minimise the number of direct employees and maximise returns from manufacturing facilities. This enables them to more effectively manage demand fluctuations, delivering on time and efficiently.

It is not uncommon for the precast manufacturer to lose to the competition in the final stages of negotiation with general contractors and architects over a meagre differential of 30,000 or so. Added to this is another key factor that impacts the productivity of manufacturers today, namely their ability to manage their workload peaks and troughs. In the past, the construction industry has leveraged automation tools and economies of scale competitive advantages. Automation, computer-aided design (CAD) systems and other specialised computer software programs have provided significant advantages in maintaining cost-competitiveness; however, sustaining this advantage has been difficult.

Advantages of outsourcing

Precast manufacturers have identified a need for globalisation to reduce costs and increase productivity. This trend has been fuelled by advances in technology in terms of communication links, robust CAD systems, etc. The cost of outsourcing engineering work has become considerably less than undertaking such projects in-house. Typical destinations chosen for the outsourcing initiative are India, China, and some Eastern European countries. Outsourcing may result in enhanced productivity and the ability to handle workload variations.

The time-zone differences effectively extend the working day to around 12-15 hours, significantly increasing productivity. In addition, the availability of well-qualified engineers at reduced labour cost is a significant factor in achieving cost-competitiveness while maintaining, or improving, margins. Initial problems with language, technical understanding and familiarity with Standards can be overcome by following structured and process-driven migration planning exercises. Engineering outsourcing is very different from other business and IT outsourcing, since it requires detailed understanding of the engineering processes, practices, and Standards to be adopted. It also depends on the key success factors of technical understanding, accuracy, and flexibility.

The globalisation choices

The two main globalisation approaches adopted by precast manufacturers are either to establish their own offshore engineering design divisions, or to work with an offshore partner. Developing and building an offshore partnership requires significant effort and attention from senior management to avoid problems caused by misinterpreted expectations. Outsourcing needs to be a strategic initiative with a qualified partner, rather than based on short-term assignments. Large companies like Hanson and Tarmac have started reaping significant benefits from globalisation.

One manufacturer of precast multi-storey car parks - High Concrete Structures, Pennsylvania, USA - has evolved a strategy to derive maximum advantage from outsourcing by establishing an engineering resource centre in India (see Figure 2). It can be a complex procedure to establish a separate division overseas, so most companies choose to work with a capable partner with a strong technical background and proven ability to overcome the barriers of distance.

Successful relationships deliver globalisation

Achieving globalisation requires more than just technical competency (see Figure 3). Some of the key factors that ensure a successful outsourcing relationship include:

* well-defined migration planning exercise, immediately after the inception of collaboration, to achieve equivalent or increased productivity within six months

* robust project and account management processes and methodologies, including communications, reporting, risk planning, etc.

* collaborative resource planning between the precast manufacturer and the offshore partner

* productivity and quality metrics measurement and reporting

* seamless integration with the systems, standards, and practices of the manufacturer.

Concluding remarks

Typically, precast offshore relationships begin with a pilot phase to test the expertise of the partner. During this phase, the precast manufacturer requests low-key core design work or construction drawings; then, if the quality of the work is satisfactory, the collaboration further develops. Once the relationship becomes stabilised, the manufacturer has a dedicated offshore production facility to supply engineering drawings and design work more cost-effectively than using in-house expertise.