Initial Situation

Following the takeover of the Swiss aircraft equipment and maintenance company with almost 40 locations and over 6,000 employees by an American defense group, the existing PLM system, which had become outdated and had been discontinued, was to be replaced by the PLM system of the new parent company. For smoother CAD data integration, the previous CAD system is to be replaced by the CAD system of the new PLM provider.

Since aircraft have a life cycle of around 20 years and strict regulatory requirements have to be met by the aviation authorities, there is extensive inventory data that has to be transferred without gaps.

A particular challenge is the combination of architectural CAD, mechanical CAD and electronic CAD, which is not common in the PLM environment, and which all have to be integrated into the PLM environment and regulatory requirements. The PLM disciplines CAD data management, BOM management, release as well as change management, ERP connection and systems engineering are to be mapped. The PLM system should be able to manage and visualize both the CAD data of the previous mechanical CAD system (Catia) and the CAD data of the future mechanical CAD system (NX). In addition, there is CAD data management and visualization for the architecture CAD system and the electronics CAD system.

Due to the tight budgetary constraints and the tight schedule, as many services as possible are to be provided by offshore capacities. At the customer’s main site, each contractor is expected to have a permanent project coordination role on the control team. Subject matter architects shall also be available in person at the main site as needed and for regularly scheduled alignment meetings. The project language is English due to the customer’s own resources.

The manufacturer of the future PLM system is not to be included in the implementation service for political reasons. The company is faced with a large number of potential service providers. It is noticeable that providers can cover individual service areas very well and others hardly at all. One provider for all service components cannot be identified. The architectural and electrical CAD data integration solution is critical to the success of the project.

Question

• How can the competencies distributed on the market be combined in such a way that a suitable solution is created in total?
• How can individual service providers be supported by centralized aviation compliance expertise to ensure that the solution meets the requirements of aviation authorities?
• How can deliverables be met within budget and time constraints?
• How can offshore resources from different providers be integrated and coordinated with each other without causing friction and delays?
• How can services be tendered in such a way that a comparable result and transparently comprehensible decisions are achieved?

Solution

The company opts for external vendor management with the aim of finding a fitting selection of suitable service providers who, taken together, can lead the project to success. To maintain neutrality, the vendor manager is excluded from the implementation service from the beginning. Vendor Management tasks focus on preparing the RFP, managing the bidding process, preparing vendor selection, operating the customer’s own system environment, testing until go-live, and vendor management during the solution and implementation phases.

After the contract is awarded, the project is divided into two phases. The first phase deals with the requirements determination and description of the user stories as well as the system architecture, which is mainly implemented on-site at the company. In addition, the system infrastructure and an MVP are built during this phase. On this basis, the second phase deals with the implementation of the requirements in the MVP, which is further developed iteratively until it goes live.

In addition to the solution and implementation program, in which all contracted business partners are included, an IT program, an HR program and a purchasing program are set up. The IT program implements the setup of the system infrastructure, testing, support and training for the project applications. The applications also include an ALM, documentation and testing environment into which all project partners work. Automated testing is dispensed with from the outset for short-term budget reasons. In the HR program, the company’s resource capacities are planned, employees are prepared for the company’s expectations and goals, and necessary process changes are coordinated with the departments. In the purchasing program, services, licenses and the necessary hardware are purchased and the required installations and room assignments are coordinated with facility management.

The operator concept requires that the productive, training, testing and integration environments be provided by the company and the development, testing and demo environments be provided by the respective contractors.

Implementation

The company has provided an existing ALM and documentation environment for all project stakeholders.

The existing high-level requirements (epics) from the portfolio level were broken down into capabilities and features by the vendor manager in collaboration with relevant divisional and departmental management and enriched with additional requirements. These capabilities and features were the basis for the definition of work packages and their description, which were reflected in the tender documents. Additionally, the RFP provided a bid matrix that allowed for a comparable response that could be processed efficiently.

Another task was to define and set up the system environments and build an MVP. The first MVP was limited to the bare PLM system without connections, a production environment, a testing environment and an integration environment. This initial MVP should then be further developed in the first project phase by defining the data model, access rights management and other basics. In addition, an integration and deployment infrastructure was set up and tested.

Within a joint appointment with all invited providers, the project, its goals and also special challenges were presented and first questions were answered. As the process progressed, a question document was available and regularly updated for all participants. After the submission of bids, a short list was formed based on professional selection. The remaining vendors presented their proposals and answered queries by vendor management and the company.

From this point on, it became clear to the company that the planned budget could not be achieved despite negotiation efforts. After a brief period of consideration by the company, the decision was made to cover vendor management and all related services using in-house resources.

Project Method

Vendor management and the first project phase were planned and implemented according to the waterfall model, because this laid well-thought-out foundations that would have been difficult or extremely costly to correct at a later date. The second phase of the project was carried out in an agile manner at the team level using a mixture of Scrum and Kanban (Scrumban) and scaled up to the program, solution and portfolio levels via SAFe.

Release Train Engineers (RTEs) from the Vendor Manager were expected to coordinate solution teams from different vendors through remote collaboration, mainly working from OffShore in India. The goal was to be able to provide working releases at fixed points in time, which were then to be further developed iteratively. A Vendor Manager’s Solution Train Engineer (STE) was to coordinate the programs so that milestones were achieved at specified solution reviews.

The Vendor Manager supported the company at the Solution level with a Solution Architect. Each contractor should provide the required System Architects for the program level and Technical Architects on their own solution teams. There should be close daily collaboration between the technical architects and system architects.

Challenge

In the course of the bidding process, it became apparent that the budget had been set significantly too low. For this reason, planned external services were provided by the company’s own resources. This included the majority of IT services such as e.g. the operation of the necessary system environments as well as the integration tests of the supplied solution components, which were originally planned in the area of vendor management. Unfortunately, the budget constraint has also victimized supplier management in the implementation phase, including the use of RTEs and STEs. The Solution Architecture was also taken into its own hands with this decision.

A second major challenge was constantly emerging requirements that were neither tendered nor offered as part of the fixed-price contract. In the resulting area of tension between the company and its contractor, the task was to smooth the waters through mutual understanding and lead to a workable solution.

The awarding of contracts with fixed prices and the agile project method in the second project phase additionally led to tensions between the company and its contractors, because at a certain point it was clear to everyone that the expected performance could not be achieved with the actual expenditure. Basically, this was already known to all parties involved after the bidding battle and the awarding of the contract. The resolution of this situation delayed the progress of the project for a long time and ultimately led to the need to increase the budget.

As expected, a particular challenge was the coordination of different contractors with different competencies and cultural characteristics, which affected delivery quality and delivery times.

Project Information

Project Duration: 3 months for vendor management

Project Team: 1 Solution Architect and 1 PLM Consultant

Project Budget: € 5 million

Conclusion

This project is a classic example of how underbudgeting ends up being more expensive than a cleanly budgeted project. Many of the resulting problems, tensions and delays could simply have been avoided if the parties had not taken off into dream worlds during the contract initiation phase. These dream worlds inevitably burst at the latest with implementation. More precisely, the difference between dream and reality becomes obvious in the Story Estimation after the Refinement in the teams and in the Sprints the dream balloons burst, so that the expectations hit the ground of reality hard at that moment. It is always astonishing to me why companies regularly fail with this and still do not draw any consequences.

The approaches were good and professional. The implementation was disappointing, expensive, lengthy and very nerve-racking. Already the decision for a tender with fixed prices was the basis for the incompatibility of flexibility and planning security – especially since the way to the goal was not foreseeable due to the unusual and industry-specific challenge.

My Employer

PLM consulting firm that provided a PLM Solution Architect and a PLM Consultant for vendor management.

My Role

As a PLM consultant, I determined the requirements, derived suitable work packages from them together with the solution architect, supported the solution architect in writing the tender documentation, and used this to create the bid matrix. In the bidding process, I handled communications with vendors, answered questions myself or in collaboration with the solution architect and company staff.

My role as RTE or STE did not come to fruition due to a budget-driven plan change by the client.