Pharmaceutical Plant Design: Newsletter Challenge (10/24/06)

The first engineer dutifully moved on to the next project assigned to him/her, with a lack of fanfare or even words of encouragement. As a matter of fact, he/she was berated for spending too much research time on the internet the very next day, and given average marks on his/her job evaluation.

The second engineer was heralded as a forward thinking, innovative, optimistic up and coming engineer with the foresight to build a plant to meet the needs of the future. He/she was promoted to Director of Engineering whereupon he/she immediately hired the aforementioned first engineer to design and build his/her future plants withing budget and specifications.

As a project manager, I know what would have happened to me if I was the second engineer - I would have been sacked for my "over-spec, over-budget" plant, which in the long run would have made a lot more return-on-investment for the company than the "on-spec, on-budget" plant!

The 2nd engineer's design was built. They moved the first engineer to Marketing.

The first engineer was eventually fired for having too many "Performs as expected" ratings on his performance evaluations. His plant was soon closed because the specifications, as usual, were inadequate.

The second engineer was promoted for actually meeting the real requirements. The additional expense of his plant was justified and it operated successfully well beyond the original specified service life.

Both Engineers are now unemployed because the drug has been knocked off and is now sold as generic or an over the counter medicine.

Generics took over---is the most likely scenario.

If both engineers could do it--never mind the budget overrun--India or China would have long back taken over.

Poor Engineers!

I suppose it all hinges on just how far the second engineers plant exceeded performance specs. For example, if the 2nd plant's performance is 2-3 times the first plants performance, then the new plant will pay for itself in roughly the same amount of time as the "per spec" plant, but would garner more profit once the initial investment has paid off. However, it it is just marginally better performing, it would take significantly longer to see a net profit for the company, but which time its manufacturing capabillities will be obsolete. I'd also like to know just how much money the original budget was...if the spec called for a $10 million building and that translated to $30 million, well scraping up 20 million extra might not be so difficult for a large pharmacutical firm. However, if the original budget called for say a $100 million facillity, then an extra $200 million becomes less obtainable. What I would do in this situation would be to build the first engineers building with the thought of expanding that facillity to the second engineers design once the facillity is manufacturing and paying itself off.

The first engineer went on to the next project, and the next, and the next, plugging away, eventually making the parent company zillions of dollars, while he was paid some nominal salary, kept behind the scenes and out of sight - all while the sales, marketing and upper managment folks raked in big commisions, enormous bonuses and immeasurably valuable stock options.

The second engineer immediately was hired away by one of the key suppliers to his project in return for buying so much from them, given a HUGE signing bonus, a promotion to being EVP of new product development, and became one of the "it" people. The second engineer's project, in the meantime, made the sales, marketing and upper management folks even richer still, but the second engineer was smart enough to know that money would NEVER make it to his pocket, so why stay?

The Second engineer became a boss.

This is one of those 'muddy' questions. Everyone gets mired into thoughts about the 2 guys, without checking the details in the question.

Quote "two different plants to produce drug products". Were each of the plants supposed to produce the same products? Was the same product or product range to be produced by each plant? Quote "separately tasked" - were they each given the same budget and performance expectation?

Was the information that the performance specification was met or exceeded a priori, or after the plants had been built?

Tell us more!

The first engineer, as suggested, was quietly moved on to his next project. When time came to lay off engineers he made the list because of continued "lackluster performance"-- evidenced by designs that only did what the specifications stated.

The second engineer's design was quashed during review by a cost-conscious manager who spotted the the cost overrun and said it could not be justified. He also made the list of engineers to be laid off for never being able to bring a project to completion. The manager was promoted for catching the obvious overrun. When demand for the drug rose exponentially, someone else was assigned to build a plant which, because of the lead time, was built after the bubble for the drug burst, leaving the company with overcapacity, insufficient demand and an inability to use the plant for anything else.

Both engineers eventually got other jobs-- the first became an inspector at construction sites; the second became chief engineer in a think-tank type contracting company where his designs were sold to the government and high-tech firms that did not have engineering divisions capable of performing his job.

This has to be the most "real life" answer yet, especially the conclusion!

Why would a Chemical Engineer be designing a plant anyway?

Because we can't help it.

exactly

Because that is what chemical engineers do. They design chemical plants, not chemicals, like some naive people believe.

The first engineer got on with the task as defined/assigned. The second engineer got everyones advice/buy-in and "vision" first and added them to the project scope.

The first engineers plant performed to specifications initially but needed much TLC and cash to keep it that way as it had been built to a bean counters budget. It had a short working life and was eventually scrapped, as was it's creator.

The second engineer was sacked for costing the company too much money. However his plant, which had been built to do the job, not to a price, performed exceptionally and eventually the company hired him back as a consultant at ten times what they were paying him as an employee.

So who are the two guys?

The first engineer was rewarded for a job well done. The 2nd engineer immediately received a call from the u.s. government and was hired on with a significant raise

Capital outlay & Techno-commercial project viability restricts a designer to work within a specified budget with optional overshoots.

A futuristic vision is always welcome option, however a practical down to earth vision & work are always liked by top management.

First engineer is allowed to go ahead & second engineer's ideas are kept in mind for future development as assisting the first one.

I endorse this view.

You would not normally have a budget elastic enough to stretch 2X or 3X. If it is somehow accommodated, the project viability goes off.

The likely situation is the first engineer's plant works with some constraints and would eventually need an upgrade at an additional cost of 0.5X or so to overcome the shortcomings.

I think an old fashioned slang expression for what the second engineer may have done is "gold plated" everything. Sometimes materials and equipment with "better" specifications (for what use?) can cost disproportionately more. Eg. teflon instead of polypropylene or HDPE for tubing and containers; micro instead of analytic balances; tighter tolerance electrical components instead of the more common type.

the first engineer was made redundant as he evidently wasn't needed anymore and the second engineer has the same old job as his boss, the manager touch the credit for the improved output from the second site and was thus promoted for his own incompetence not managing his engineers in a manner to ensure budget and time frames were maintained throughout the process

Engineer no. 2 was ostracized; then eventually phased out, just befoe vesting in his former company's retirement plan.

The plant was "deconstructed" to meet specs. So the produce could be priced to suit the market conditions and competition...and regulations. The expense was charged as a write-off.

Designing to specification no problem...building: materials and equipment shortages (substitutions to meet deadlines) and/or delays (aka katrina nearby) would get the bean counters tossed in the compost.

The first engineer was rewarded by giving him the position of engineering manager of his own plant.

The second engineer was reprimanded and sent off to work as the subordinate of the first engineer to learn how to run things within budget.

Soon the first engineer's plant is suffering from inadequate production because it cannot keep up with demand. He eventually resigns due to stress.

The second engineer is promoted and proceeds to upgrade the first engineer's plant. They give him the budget because the company has become desperate.

The second engineer's plant has been happily chugging away all this time, much to the fortune of one other engineer.

It's big buisness as usual. Both engineers are expendable, are in truth just warm bodies to fill a slot in the buisness society. In the end, they were paid a marginal salary for their performance to their employer, and have either moved on to bigger things, or are still filling warm body positions elsewhere. Either way I sit here in my cubical designing and building and receiving my glory all along knowing that my niche is not as expendable as most. So I can sit back and feel confident that if I make a mistake or two, I'll still have a job in the morning.

"I sit here in my cubical designing and building and receiving my glory all along knowing that my niche is not as expendable as most. So I can sit back and feel confident that if I make a mistake or two, I'll still have a job in the morning."

Really?! And who might you be?

The first had a clear and sane specification, the second did not. He had conflicting requirements, unclear deadlines and unfocused direction from management.

Since this is Pharma, the over achiever got sacked. The budget conscience engineer was promoted to Plant Manager where, true to the Peter Principal, he was in over his head and continued in the dead end job with poor performance until retirement.

The 1st engineer went on with his daily life

The plant designed by the 2nd engineer burnt to the ground because of some unforseen problem which was not seen in advance because of poor workmanship by the contractors that built it.

Since the 2nd plant went way over budget and ended in catastrophic failure, the 2nd engineer was fired from that job and went to work for the BIG DIG in Boston with a big raise.

Once both plants are built and fully operational, company management decides to hire both engineers as plant managers, except that they will manage the plant the other engineer designed and built. That way, the first engineer's plant will get the upgrades needed to exceed company goals with the help of the work of the second engineer. The second engineer's plant will then get the fat trimmed out of it and operate more efficiently with the help of the more frugal first engineer.

Not much different at first. The second engineer will be at first criticized for exceeding the budget, but since exceeding the budget in this type of projects is so common, he will move on. After the performance specs are met, no one will look deeper into performance. It does its job, and that's it. Cost becomes the hot issue, after the specs are fulfilled. He will not be credited for exceeding the performance specs, it won't be even noticed. Only cost will be a problem before his/her managers, but not for long.

The first engineer however, will not be credited for meeting the budget, and also will not be credited for meeting the performance. It's a project completed.

But, time will completely modify the picture. The first plant will have problems from time to time, people want to increase the plant capacity and will face many challenges; and each time such a problem occurs, they will remember the name of the first engineer; but not in good manners. He will be accused of short-sightedness, whereas the second engineer will be given full credit for his/her vision. Their fate will be similar after the completion of the project in the short-run, but the second engineer's career will have a turbo-boost in the long-run.

Sorry for being naive but how can a plant be built 'over-budget' - so to speak.

Why was the 2nd plant over budget?.

By silly example to simplify the logic, did the second plant get ordered, delivered, built , commissioned, and put into service - then to receive totally out of the blue, a single bill for (say treble) the money.

Or was it a day-to-day expenditure? in which case the 'over-budget' must have been gradual and foreseeable, and thus stoppable at any time, unless approved by management, long before the expenditure became too much. In other words the plant cost more than expected - but not over-budget.

In any case an engineering budget, is an accounting tool used by management to enable projects to progress without having to stop and discuss every penny at every point. As any engineer knows, holding up contracts is one sure way to run up an excessive bill. Which might have been caused by damn budget meetings.

If budgets are strict, then limits need to be set well beforehand, so that engineers running out of money know which side their bread is buttered.

The first engineer has got a job - the second engineer has got a problem - because he will be blamed.

And what is management doing - building a plant where the economics depend entirely and construction cost. It's running cost and maintenance that governs the viability in the long run. And we wont know what that is until both plants have been up and running for some time.

Normally, the second engineer will be relegated to a project where he can "do the minimum harm". However, as both plants have already been built and the money is already spent, management will mothball the first, because its running costs are higher, and set the first (cost-conscious engineer) to run the second. Eventually, maintainance issues will arise, consultants will be brought in, and the running-cost budget will be overspent. The first engineer will now be moved to manage the project of the second engineer, with considerable resentment on both sides. The engineers will hand their notices in on the same day (they are not talking to each other except where necessary). The first engineer will find a job in general management, while the second will move to another relatively low-paid engineering job.

The second engineer was a contributor to the Republican party and a personal friend of George Bush. He knew he could get away with the cost overruns.

actually the second engineer was a member of the democrat party, because he clearly does not care whether or not he wastes other people's money. But if that were true he would also provide a state funded needle give away program for the local heroin addicts, and a state funded tuition for people who came to this country illegally. Of course all of our taxes would have to go up to accomodate this, but he wouldn't care because it's not his money.

While he's at it, maybe he'll get the state to accept his idea for affirmative action where people get jobs based on the color of their skin instead of their credentials.

Oh ya, maybe he'll kill a bunch of babies too and call it ummmm...... uhhhh...... oh I know....We'll just call that one stem stell research.

Hmmmm,......biased, bigoted, and bitter? Makes me want to puke, and I'm not even a Democrat!

Politics, religion and .. what's the other thing?

I know the world revolves around these things, but if we go there, there'll be no room left for discussing CR4 stuff.

Wow! What great responses! (Seriously, no sarcasm) A lot of us have "been there, done that." Some of us have been the first or the second engineer, or both, at one time or another.

The likely outcomes are so varied, I would say that almost any of the thoughtful answers could be correct. With varying management styles, temperments, economic situations, strategies, etc. almost anything could and does happen.

Given the current state of our economy, and the climate of cost containment initiatives in the health care industry, the most realistic, probabilistic outcome is that the first engineer would be assigned bigger and better projects, with a possible promotion, depending on how good he played office politics. Otherwise, he would probably just continue to do good honest work and continue in his job as long as the company was stable and he was satisfied with meager raises. His plant would continue production so long as it did so efficiently and there was a demand for its products.

The second engineer would either be fired immediately (as a scapegoat, to take the heat off of the management that set him up for failure) or continue to work for the company on trivial projects, until he quit on his own. Two to three times the budgeted cost is way out of line, unless he could prove that the initial estimates were in error. However, that would be hard to prove if the other plant had the same specs and the same budget. This is not stated clearly in the challenge, however, one can infer that the "performance specifications" were the same in both cases, so the buget should have been the same as well.

The overbudget plant would be operated and a determination would be made if it was cost effective to continue operation. If the two plants were operated as individual profit centers, and the building costs were amortized as an expense in the operating costs (primarily for tax purposes), the second plant may or may not be profitable, despite exceeding the performance specifications. However, the building costs are now considered as a sunk cost, and unless the government allowed a one-time write-off of the cost overruns (unlikely), an enlightened management would look at the plant's contributions to the current revenues versus current (variable) costs, and was it continuing to contribute to paying off the fixed cost (budget + overruns), to determine if the plant remained viable.

Unenlightened management, especially of a publicly owned company, would be looking at the plant's quarterly profit-and-loss, which would include the amortization costs, and decide if the plant should remain open and viable. If it was a money loser on paper, and they (management) closed it and sold off the assets to recoup some of the losses (cost overruns), they would, on paper, appear as heroes to the stockholders.

WWED? (what would ENRON do?)

When companies build new facilities, part of the requirement is to impress other companies from whom they wish to gain business. This is not a requirement of the Pharmaceutical Manufacturing Industry. The customers only interest is the product- and if it is the best product on the market, the market will snap it up!

This means the pharmaceutical companies main requirment will be that the facility passes FDA/ MHRA inspection and they can produce efficiently in a compliant manner.

The next thought will be the companies shareholders. Keeping costs low means more money for them.

Engineer 1, has met the requirements and done his job. The company is happy that the FDA/MHRA will allow them to produce and the shareholders will be happy as there is money left for their dividends! He will probably be employed as a director to oversee the continued development of the facility (which importantly will come out of future years budgets).

Engineer 2 has done an excellent job, but not met the requirements of the shareholder. He will have an excellent example of his work for his resume and would be taken on by a more customer focussed company.

Both engineers will be paid double the amount researchers got for creating and developing the the multi million/billion dollar drug.

The answer must revolve on how the second engineer manage to spend all that money. Either the comany's manufacturing division had attrocious cost control, or the management approved the overspend. In the former case, predicting the immediate outcome is virtually impossible - though the longer-term outcome that the senior management in the division would be looking for alternative employment is almost certain. In the second case, he will have persuaded the management that each improvement was cost effective (lower running costs, higher volume capability, adaptable to other product...), and his plant will have been defined as the principal resource, with the other being completed as a back-up. So engineer 1 will be given similar projects in the future, because he can be relied on to produce a basic service, while engineer 2 will be promoted (if he hasn't already been) and assigned to oversee projects with the objective of finding opportunities for creating added value.

Both engineers and their plants disappeared with a puff back into the writer's imagination about 10 days after their creation and were promptly forgotten by everyone because everyone was busy trying to happily solve the next challenge question.

Despite what anyone else thinks, that is what really is going to happen!

It is stupid question!

Goodness, if any non-enginner read this whole thread, they'd think every engineer is a bitter unhappy worker, with a strong predisposition to snide analysis of the business world.

Good thing us engineers know it's true.

being a chem engineer working in pharmaceutical, i know for a fact that what is termed as specs today will be underspecs 2 years down the road. first engineer will be transferred to project team doing the second engineer plant

What a disappointing answer in the newsletter. The author of the question provided a flight of fancy that has no more logical basis than any of the imaginings posted here - in fact, it's less plausible than most. Unless there is a real-world case hidden behind the question, what's the point?

I just read the "Answer" and, once again, in typical Global Spec (if they are to blame) fashion, the published "Answer" is no more valid than any of dozens given in posts. Not only that, it really sounds like the author wrote this because of a particular grudge he/she was holding against a former or present employer, depending on whether the author was one of the engineers fired or a friend/relative/colleague.

Then again, this could justs be a hypothethetical situation made up by a paranoid, bi-polar, ne'er-do-well, with an axe to grind against US corporations in general and the pharmaceutical industry in particular.

I move that we petition Global Spec to publish "Challenge" authors' names, or at least their on-line identity, so that we might question the parameters of the challenge and have them defend these lame "Answers".

Do I hear a second to my motion?

Seconded!

Again, what's the point? I can read trash like this anywhere on the web. These questions are supposed to stimulate the old, unused, forgotten bits of engineering lore in the back corners of the brain, not stir up semi-political rants.

Moved and Seconded (with additional commentary from Fitzpatrick), unless there is further discussion, I call the previous question. All those in favor of Global Spec identifying the authors of "Challenge Questions" so that we don't get such lame "Answers" or vague Questions, say (type) AYE! All opposed, "neigh" (mis-spelling intentional).

Now, I wonder if anyone from Global Spec is even reading this!

I agree. Many of the user answers I have read on this thread, among many other threads from GlobalSpec, are totally ridiculous. And don't even get me started on the answers that they (GlobalSpec) post to questions.

Granted, I am relatively fresh out of school with both BS and MS in Mech. Eng. and only 5 years work experience, but come on! Many of these answers are what I would expect from a Freshman level student at the bottom of the class that spouts off random definitions and terminology to make themself feel smarter.

In the words of the comedian Carlos Mencia:

"Dee Dee Dee"

If I'm allowed the indulgence of a gloat I reckon my answer at 16 should get the cash (if only!) but I have a feeling that this challenge was based on a real life scenario as it rang vague bells with me when I was composing my answer.

Anyone able to expand on this?

The reason that this "rang vague bells" was that we have seen this challenge before!

As soon as I read it, I recognized the hypothetical situation, and knew its equally hypothetical "solution". While this may not have been previously published on CR4, or on Global Spec, I know that I have seen this before.

Ohh boy... When the heady gasses clear out, reality will settle in: The first engineer, as soon as the plant is built, is sacked by his superior(s) in management for having actually accomplished within the specs and budget s/he was provided - that engineer was immediately seen as a threat to their supervisors. The engineer may have even sent an inappropriate email to someone they shouldn't have: Such as, "Wow, it was tough going but I believe we're going to finish on time and within budget!"... As the plant started production, and as the argument surmises, the plant continued to spiral downwards, many in management were additionally sacked as scapegoats. The legal department thought of a hundred ways in which they could sue every supplier used by this first engineer, but in the end, they just allowed good money after bad to band-aid and repair the inevitable issues until either closing the plant in deference to building another one; or a patient who took medicine that was made in this plant ends up suing the company for manufacturing a bad pill, ISO compliancy be damned!

The second engineer, on the other hand, was fired as soon as his/her budget exceeded 120% of plan - before the first earth mover touched the plot of land the plant was to sit upon. THIS engineer's manager hired the first engineer to make sure time and budget were followed...

This is the type of question that I would have expected in a B-school Management course, or a course in Engineering Ethics, a question that really has no correct "Answer" but is intended to "stir the pot" so to speak and genererate discusion, which it did.

These type of questions have their place, even here on CR4, but please, do not call it a "Challenge" and then offer up some sour-grapes "scenario" written by an obviously bitter curmudgeon, as the "Answer", even IF it happened that way in one particular case.

I think we deserve better than this.

I, for one, hereby, now and forever, refuse to post further on this thread! (whistles, catcalls, loud clapping, gnashing of teeth, etc.)

As far as I know, "specifications" must cover expected average performance PLUS tolerances. One way to incorporate tolerances in a design is adding some redundancy, which requires extra budget, of course. If the plant of the first engineer could not be run correctly, than the specifications had not been determined correctly. The question is: who did give the specs to these two engineers? If anybody, this person could be blamed for the unsuccessful operation of the first plant.

Gabor Erdei.