Balanced Scorecard for Engineering Services

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Guillermo Hasing
Business Consultant, Ecuador

BSC for Manufacturing Projects

I built a BSC structure in a manufacturing company used as a strategic tool. Now I am in a new project planning to use the same BSC idea, but the BSC structure is based on a tree form with perspectives and goals in cascade because is more easy to see and understand.

Paul Maguire
Business Consultant, United States

BSC for Engineering Services

Constructing a BSC is essentially the same for any organization and/or in cascading throughout the organization.
- First, focus on the outcomes: what results and value do you desire?
- Then be arranged the perspectives in cause-and-effect fashion to deliver on those intended outcomes. If "engineering services" represents a corporate entity, then you will likely follow the traditional perspective format. However, a support unit will construct a BSC that is focused on the internal customer.
- The perspectives can be the same:
* Financial: how does engineering services contribute to cost, revenue or asset utilization?
* Customer: whom does engineering services serve? What value do they expect?
* Internal processes: what processes (or operational services) must we provide (do well)
* Learning: what skills and/or technologies must we develop? (there may be some contribution to culture here too - modelling desired cultural behaviors).
Bottom line advise: construct your scorecard as a means to generate conversation.

Moderated AI
Netherlands

Typical Balanced Scorecard for an Engineering Company

Designing a Balanced Scorecard (BSC) for an engineering company involves aligning strategic objectives across different perspectives relevant to its operations and goals. Here's an example of how a BSC could be structured for an engineering company:

FINANCIAL PERSPECTIVE:
- Objective: Ensure financial sustainability and profitability.
- Metrics:
  - Revenue Growth: Measure the percentage increase in revenue compared to the previous year.
  - Profit Margin: Track the percentage of revenue that translates into profits.
  - Return on Investment (ROI): Evaluate the effectiveness of investments in projects and resources.
  - Cost Control: Monitor and reduce operational expenses to improve profitability.
CUSTOMER PERSPECTIVE:
- Objective: Deliver high-quality engineering solutions and excellent customer service.
- Metrics:
  - Customer Satisfaction: Measure customer satisfaction through surveys or feedback.
  - On-time Delivery: Track the percentage of projects delivered on schedule.
  - Quality of Service: Assess the quality of engineering solutions based on client feedback and project success rates.
  - Customer Retention Rate: Measure the percentage of clients retained over a specific period.
INTERNAL PROCESSES PERSPECTIVE:
- Objective: Enhance efficiency and innovation in engineering processes.
- Metrics:
  - Project Cycle Time: Measure the average time taken to complete engineering projects.
  - Design Efficiency: Assess the ratio of design revisions to total design time.
  - Innovation Rate: Track the number of new engineering solutions or patents developed.
  - Process Improvement Initiatives: Monitor the implementation of process improvement projects.
LEARNING AND GROWTH PERSPECTIVE:
- Objective: Foster a culture of continuous learning, skill development, and employee engagement.
- Metrics:
  - Employee Training Hours: Measure the number of training hours per employee.
  - Employee Satisfaction: Evaluate employee satisfaction through surveys or feedback.
  - Employee Turnover Rate: Track the percentage of employees leaving the company.
  - Skill Development: Assess the acquisition of new skills relevant to engineering tasks.

Each of these perspectives and associated metrics should be aligned with the company's overall strategic objectives and reviewed regularly to ensure that the organization is progressing towards its goals. Additionally, the BSC should be flexible enough to adapt to changes in the business environment and evolving strategic priorities. Regular performance reviews and adjustments are crucial for maintaining the effectiveness of the Balanced Scorecard framework in driving the success of the engineering company.