High Value Engineering Centres - A Description
Description of:
'High Value Engineering Centres' (known as HVEC), sometimes referred to as 'Global Engineering Centres' (GEC) or 'Low Cost Engineering Centres' (LCEG), are typically wholly-owned subsidiary offices of global engineering firms used to provide design and engineering services on major projects at reduced labour rates.
What is it:
First instituted in the early 2000’s by major US engineering firms (eg Fluor Daniel), the concept is simple. By leveraging cheaper, overseas labour for certain tasks on an engineering project, the EP can bid a project at a lower blended hourly rate to the client, thus gaining a competitive advantage in the market.
Typically, certain simpler tasks, such as drafting and drawing production have been offshored to the HVEC, with a supervision and QC stream attached to reduce re-work of the product. The actual hours used to engineer the project are usually higher, due to inefficiencies in communication and time zones and quality, but because the global labour rates are so much less than North American rates, there is still a perceived benefit to overall cost.
As HVEC’s become utilized more and more and gain more experience, firms are moving more hours and more complex scopes of work, in a race to provide as low a blended rate to the clients as possible. This has resulted in a breaking of the traditional project model in the local work force, reducing the need and opportunity for junior members to enter the field and grow in their expertise.
How did it use to work:
Previously, before the introduction of HVEC, project teams were constructed of a balance of junior designers/drafters and engineers, intermediate level persons and top level, senior staff, all at various rates of pay, to provide the blended rate to the market. If there were a large number of deliverables on a job, you could weight the team heavily towards the junior/intermediate staff, utilizing your more experience and more expensive personnel for the technical, checking and supervisory roles. Junior members were supplied by local educational institutions and mentored on the job, through various increasingly complex tasks, increasing their skills and knowledge as the progressed through their career. Many moved on to be strong senior designers and leads who would then mentor a new crop of juniors in their wake.
