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A monthly publication from the Wisconsin Society of Professional Engineers
July 2008 Edition
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Evaluating the Product / Project
Opportunity |
| 3. | Governmental Immunity, When Does it Apply? By Attorney Robert J. Kay |
| 4. | Welcome New WSPE Members |
WSPE's President's Corner |
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Fellow PEs, As I am sure has been the case with many past WSPE Presidents, I begin my term feeling honored that I have been chosen to represent you and WSPE. At the same time, I am hopeful that I can do something important for WSPE during my term. WSPE, as is the case with many professional organizations, is confronted with the challenge to survive and grow. If there is one task that we need to be successful completing during the upcoming year, it will be to turn our membership decline around. WSPE membership, in some respects, reminds me of a comparison (author unknown) that is no doubt familiar to many of you: To the optimist, the glass is half full. With over 9,800 licensed Professional Engineers in Wisconsin and the membership in WSPE currently at 740 members, the WSPE glass is less than a tenth full. To the optimist, the opportunity for putting more members into the WSPE glass is great. In 1986, the earliest DRL record, the number of PEs licensed in Wisconsin was around 8,800. Projecting that even further back to 1970, the number of licensed PEs would have been around 8,000. In 1970, the WSPE glass may have been almost a quarter full with 1,700 members. In 2008, it is easy to take the pessimist’s view of the glass. Not only is the glass more than 90% empty, there is a leak that needs to be fixed, and it needs to be fixed sooner than later. The challenge facing the WSPE State Board, as well as the individual Chapter Boards, is to understand why this membership decline is happening and find a way to do something about it. There are no doubt a number of reasons for the decline that we will not be able to change or control. On the other hand, there are no doubt many opportunities for us to make improvements. I think the engineer’s view that the glass is twice as big as it needs to be may hold a partial clue as to how we can help WSPE. We might be wise to look at what we do and what we are about, while we look for new members? As we look forward to the upcoming year, there are a number of objectives I hope we can accomplish. In addition to handling the membership challenges, we need to continue our monitoring and proactive involvement in creating new laws and regulations that are good for Wisconsin and the engineering profession. This effort is critical and what we as an organization are about. Internally, there are a number of tasks that may be equally important, including continued coordination between the WSPE State Board and WSPE’s seven chapters and directing our energy to make the newly created Supporting Organization program even stronger. And finally, we should continue to look outside of WSPE and find more opportunities to team and collaborate with other professional and technical organizations. Teaming arrangements generally save cost and improve our overall effectiveness. As the 65th President of WSPE, I would like to close my initial e-news communication by thanking Past President, James A. Buggs, PE and last year’s State Board of Directors, Chapter Boards, various groups and committees, as well as our Supporting Organizations, for their past commitment. I look forward to their help and guidance in the upcoming year. Michael J. Lefebvre, P.E. |
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Evaluating the Product / Project Opportunity
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| Background How does your field sales and internal sales organization know what type of business to pursue? As opportunities present themselves, does the organization approach them differently based on current business conditions? Have you taken work during down times only to regret it a few months later? Do you consider lost opportunity for these types of projects? All these questions define a scenario where the future pathway of the company and growth is either under management control or it is an open loop. To affect some organizational consistency in the marketing and sales organization, it is important to develop some criteria for determining if a project is the right project, if it allows leverage, if it meets the management’s desire for business growth, and if it is supported by a product growth strategy. Creating the Criteria for Project Evaluation: An Objective Look To provide some consistency in the evaluation process, it is helpful to have a criterion to evaluate these new product prospects. A framework could be as simple as a list of criteria that must be satisfied in order to fit in the organization. This has little to do with the market fit or opportunity for market success; rather, it deals with the internal limitations of the organization. The benefit of this type of evaluation is that it removes the emotionalism in the decision making process. It also limits the effect of personal preferences and agendas, making the selection more objective and driven by a corporate decision-making process. To make this even more effective, factor the individual company’s time to develop the criteria, to determine ability to capitalize on the market window of opportunity. Perhaps the best way to accumulate the criteria is to establish a rating system, which assigns weight to each of the criterion and allows for an arithmetic means for selection. Setting up the Criteria One of the challenges is in setting up the criteria. What questions are important? What are the pressure points of the company? What are things to avoid? For example, is the opportunity dependent on the development of technology that requires a few select people? Are they available within the time frame you desire? If they leave the project, what means for recovery do you have? Given that this is an example of a pressure point as it relates to personnel, there may be a host of other pressure points that affect selection. As a rigorous part of the business development plan, it is important to develop these criteria customized for your specific business.
As an example, for the smaller privately held organizations that must make every dollar spent pay off, $ Volume, Definable scope, GM Profitability, and Development Leverage may be absolutely mandatory, whereas there may be some latitude on the remaining criteria. Consistency in Testing Each Idea Each idea should be tested against the criteria, as previously
stated. As shown in the figure, you may want to generate an “Ideal”
profile and compare projects to that “Ideal.” The following
is a format that can be used to evaluate an idea. It is structured
with a weighted sum arrangement of criteria. Each criterion is listed
as a separate item. Next to each criterion is a preference assessment
of that specific criterion. The preference assessment directly relates
back to the strategic initiative. Does the business desire that
attribute in a new product development? The range is from -1 to
+1. Next to this preference value is the assessment of how the product
relates to those specific criteria. The columns are multiplied and
summed to get the weighted value. They do, however, have an aversion to field service and support, perhaps a weak field organization. This criteria shows up as a negative value. Consequently, if the product being evaluated has a high dependence on this for success multiplying the preference and product assessment will be negative. When summed up with the other criteria, these will detract from the overall weighted value. This analysis simply serves as a numerical evaluation, which is objective, rather than talking yourself into the assumption; the product or business won’t need that much field organization support. As with any weighted summation, the absolute value of the sum does not hold a lot of meaning. It is when two programs are set side by side, or one is compared to an ideal, that the sums can be compared on a numerical basis to select the best alternative. This can be a valuable tool, given two conditions: 1. Be very careful when setting up the company criteria. Make sure it is an accurate reflection of the desire and capacity of the company. 2. Be consistent, accurate and honest when evaluating an opportunity against these criteria. If you are diligent about these two items, this will serve as a useful tool. Below is an example of such an evaluation:
Evaluation Criteria For a different set of criteria, a comparison below can be generated to show how this project stacks up against the Ideal profile.
Measure of Ongoing Effectiveness Understanding the Company’s Ability to Successfully
Address the Product, Channel, Route to Market, Manufacturing, and
Technology The new product opportunity must fit with most of the disciplines to be prosecuted properly. If there is an area that is not initially compatible or leverage-able with the opportunity, then steps can be taken to correct or bolster the weakness. If, however, there are too many areas that are inconsistent with the new product, then the chances of developing the product within the market window of opportunity are reduced, especially while effecting changes in the organization and supporting the existing business. The new product idea must be tested not only in the marketplace, but also within the firm to determine its fit-ability with the sales organization, the marketing organization, the current and anticipated capabilities in development engineering, and the integrate-ability of the product into the manufacturing organization. What is the Company’s Strategy in Pursuing a Market? To effectively evaluate the fit of a new product, it is necessary to understand the company’s overall product strategy. What has been the track record for embracing new technologies and product concepts? What were the expectations of each, and what were the results? Often many companies do not have a clear objective and as such cannot generate a clear strategy. Regardless of how lucrative an isolated product opportunity looks, few products can succeed as a one-time hit without subsequent market and product development. It simply puts the organization in a market position that is not defensible. In addition, a single success in an uncontested market will not remain so for very long, necessitating the need for continued development. Why Does the Business Development Team Think This Opportunity Will Take Off? New product development is a business venture. It must be evaluated like a banker or venture capitalist evaluates any business venture. Some developments may have very interesting technology and be very fun to work on. However, each must result in tangible value to the organization funding the development activity. As will be discussed later, the development team consists of several interdisciplinary elements of the organization. Therefore the development team must make the case for the development program. Why will it be successful? What is unique about the product or technology that will be desired and accepted by the marketplace at this particular juncture in time and space? These are the hard questions that must be answered satisfactorily very early in the process. The strategy, the timing, the functionality, and the company’s plans must be imbued into the development team and must be eminently clear to all involved. The team must initiate, champion, and carry the torch of the new product business plan. In Conclusion If you are diligent in selecting evaluation criteria and consistent in applying these criteria, you will go a long way to establish leverage in your operational departments and consistency in the expected results. Portions excerpted from Marc A. Annacchino’s book “The Pursuit of New Product Development” ISBN-10: 0-7506-7993-X Marc Annacchino, P.E., is owner of Marconi Product Development Institute, Inc., a company providing consulting services, contract development, seminars, and other services. He can be reached at Marconi@execpc.com. |
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Governmental Immunity, When Does it Apply? |
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| As I have previously noted in prior issues of this e-news, the Wisconsin Statutes provide that no suit may be brought against any governmental subdivision, or against its officers, officials, agents or employees for acts done in the exercise of legislative, quasi-legislative, judicial or quasi-judicial functions. The Wisconsin Supreme Court has determined that if governmental immunity applies, “legislative, quasi-legislative, judicial, or quasi-judicial functions” are synonymous with “discretionary acts.” A discretionary act is one that involves an exercise of judgment when applying legal rules to the facts involved. The statute granting immunity to governmental subdivisions and its officers, officials, agents or employees when exercising their discretion is not applicable to “ministerial acts.” To distinguish “discretionary” acts from “ministerial acts” may be difficult in some instances which then leads to litigation, but generally a “ministerial act” involves an act that is an absolute and certain duty imposed by law which usually prescribes the manner in which it is to be performed. The performance of a ministerial act does not require the use of judgment or discretion. In order to determine whether an act is required by “law” there must be an applicable statute, administrative rule, governmental policy or order setting forth the duty. In DeFever v. City of Waukesha, a case decided by the Wisconsin Court of Appeals in November of 2007, the Court reviewed the Waukesha County Circuit Court’s refusal to permit a lawsuit to proceed based on governmental immunity. The Court of Appeals agreed with the Circuit Court. In explaining its rationale, the Court of Appeals noted that the one issue for review was whether the City of Waukesha and the Waukesha Water Utility were immune from suit for negligence in failing to ensure that a water main was installed at the depth required by law. The plaintiff, DeFever, and other tenants of an apartment complex brought an action against the City of Waukesha because a water main under an entrance ramp to the apartment complex ruptured, causing significant damage to the residents’ property. The installing contractor had installed the water main according to Waukesha Water Utility specifications and the Wisconsin Department of Natural Resources had determined that the water main pipe should be installed at a minimum depth of five to seven feet. The onsite inspector confirmed that the water main was installed at a proper depth of eight feet. DeFever’s experts determined that the water main break occurred at an elbow joint which was only three feet below the surface of the entrance ramp and was caused by freezing. DeFever sued Waukesha for being negligent in the design and installation of the water main. The City of Waukesha moved for summary judgment arguing that governmental immunity barred DeFever’s claim. Based on a 2005 decision of the Wisconsin Supreme Court in Milwaukee Metropolitan Sewerage District v. City of Milwaukee, 2005 WI 8, 277 Wis.2d 635, 652, 691 N.W.2d 658, the installation of the water main was a discretionary act and Waukesha was therefore immune from suit. DeFever also argued that Waukesha’s engineers were guilty of negligent conduct in the design of the water main and that the general rule of governmental immunity should not apply to them under a recognized exception to governmental immunity for the acts of officers in the medical context. DeFever argued that in Scarpaci v. Milwaukee County, 96 Wis.2d 663, 686-87, 292 N.W.2d 816 (1980), the court held that a medical examiner’s office was liable for conducting an autopsy on a child against the parent’s wishes because the actual procedure of an autopsy, although discretionary in nature, was an exercise of medical discretion, not governmental discretion. In that case the court noted that the theory underlying the creation of immunity for governmental officials was to foster the fearless, vigorous and effective administration of policies of the government, which was not the objective when applying the concept to the exercise of normal medical discretion during an autopsy. In DeFever v. City of Waukesha, the Court of Appeals held that the medical exception for public officer immunity recognized in the medical context did not apply to engineers administering government policies when designing a water main system. The Court noted that the Supreme Court has refused to recognize a “professional” exception to the immunity rule beyond the medical context present in the Scarpaci case. Once again, the appellate courts in Wisconsin have expressed the view that city engineers performing a governmental function enjoy the governmental immunity recognized by state statute and previous appellate court decisions. As I have noted in prior issues of this e-news, that immunity also extends to engineers in private practice who are performing engineering work for governmental units where the governmental unit either sets the standard for the design or expressly approves the design furnished it by the engineers in private practice. Attorney Robert J. Kay is the senior partner in the law firm of Kay & Andersen, S.C. and devotes his time to representing professional engineers, architects, contractors, material suppliers and owners of construction projects. Please feel free to contact him at (608) 833-0077 or visit www.kayandandersen.com. |
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Welcome New WSPE Members |
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The WSPE board of directors would like to extend a heartfelt welcome to the following new WSPE members:
New members contribute to the growth, strength and leadership of the WSPE in enhancing its recognition as a leading voice for Professional Engineers throughout Wisconsin and promoting excellence in engineering. |
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