Implementing 3D Engineering at Grontmij Industry: New Service Development in Business to Business Consulting

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Implementing 3D Engineering at Grontmij Industry:

New Service Development in Business to Business Consulting

Master Thesis

Emiel Hartkamp

Student number: 1532987 Aquamarijnstraat 269, 9743 PG Groningen EmielHartkamp@gmail.com +31(0)613497269 University of Groningen Faculty of Economics and Business

MSc Business Administration Specialization Business Development 1st university supervisor: M.F. Pinilla Ramirez

2nd university supervisor: dr. J.F.J. Vos

Grontmij Haren

Nieuwe Stationsweg 4, 9751 SZ Haren 1st company supervisor: Arend Notenbomer

2nd company supervisor: Henk Luinge

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Preface

For me this Master thesis is the conclusion of my Master Business Development and the end of my time as a student. During the Business Administration Bachelor I especially liked the good possibilities to go abroad. My semester abroad in the third year was a great experience and I learned a lot from it. I still keep contact with friends from that period. I really enjoyed my Master because it is more focused and more practice oriented than the Bachelor. My internship at Grontmij was a very interesting way to put my knowledge to use and actually help a company.

The Grontmij company was new to me before my thesis internship. I found an application link on the Noorderlink website. Pretty soon I received a positive reaction. Grontmij turned out to be a very interesting company that is always looking to find new ways to help their clients. The division where I did my internship was a challenge for me. At the start I struggled with the technical nature of the Industry division. Thankfully the people there were very willing to explain about their work area.

I would like to thank Grontmij for the opportunity to do an internship and for giving me the freedom to write my thesis. Furthermore it was very nice to be involved in after-work activities with colleagues. An interesting time was the reorganization. For employees this was not very positive but for me it was very insightful to see a reorganization in real life. I would like to thank all the colleagues who participated in interviews and the survey, who provided useful information and shared their opinions on 3D engineering. I have particularly had some interesting discussions with Jan Schut and I would like to thank him for that. Finally I would like to thank my company supervisors Arend Notenbomer and Henk Luinge for their useful information and feedback.

Furthermore I would like to thank my university supervisor Maria Pinilla Ramirez for her flexibility, open attitude, interest in my research and useful feedback. Also my thanks go out to dr Janita Vos for her role as second university supervisor.

Finally my family and friends have always supported and stimulated me during my internship and I want to thank them for that.

Emiel Hartkamp

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Executive Summary

There is a lack in diversity in new service development, or NSD, case research. The vast majority of the new service development case studies is about financial services. An important outcome of those studies is that many NSD efforts are done on an ad-hoc basis, skipping preparation activities, while it turns out that it pays off to follow a structured approach from the beginning. It is not clear if those outcomes of NSD research in financial services apply to other industries.

This case study adds to the diversity in NSD case studies. The case study researches the development process of a service, 3D engineering, that is new to engineering consultancy Grontmij Industry Haren and offers advice for the launch of the new service. At the start of the research the organization delivered 2D designs mainly for adaptations to, and renovation of, existing industrial installations and sometimes for entirely new installations.

The main research question is:

How can Grontmij Industry Haren successfully make the transition to designing in 3D?

To answer this question five sub questions were formulated:

1 What does the existing service look like?

2 How can 3D designing improve the service delivery process? 3 What are the main threats to the implementation of 3D designing? 4 What can be learned from the pilot project?

5 How can Grontmij Industry Haren maintain momentum after the pilot project?

A new service development model has been used as a framework for the structure of the research. Research methods for this research included literature and document research, semi-structured interviews, observation and a survey with closed-ended questions.

The existing service, 2D engineering, turned out to leave room for improvements in efficiency, quality and functionality. For Grontmij Industry 3D designing can facilitate higher design quality and offer more functionality. Furthermore efficiency can be improved for projects that involve repeat elements. A concern felt by organization members, was that 3D design might only be used for entirely new installations. Laser scanning can be a tool to use 3D design within renovation or expansion projects.

Key issues for the implementation of 3D engineering at Grontmij Industry are information and motivation. The new service development process had an ad hoc approach and the motivation to

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change was not clear to employees. A survey during the pilot stage pointed out that communication about the change to 3D, management support and some practical issues could be improved.

For the full launch of the new service it is advised to improve communication and management support, use work procedures and evaluate quality and keep strong relations with two Grontmij branches that have experience with 3D engineering. Through 3D engineering, business can be expanded geographically and into the market for more complex designs. Future NSD efforts at Grontmij Industry would benefit from an evaluation of the launch and a more structured NSD approach.

The case study supports academic findings in financial services that advise a structured approach of new service development. Finally this research found that social science can be of added value in a technical organization. Further research into NSD in business to business consultancy is recommended, preferably involving fully introduced developments.

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1 Introduction

1.1 Problem context

The research area of New Service Development, or NSD, is relatively new in comparison to New Product Development. It is striking that most of the case studies in NSD literature are about financial services. This can be illustrated by referring to the only extensive literature review on NSD that was available through EBSCO at the moment this research was conducted. De Jong and Vermeulen in 2003 did a review on studies that focus on the organization of new service development that have been conducted between 1988 and 2002. Of the fifty-one articles, thirty-seven study financial services. Of the other fourteen, one article briefly mentions a case of an engineering firm but does not go into detail about the development process that was followed. The thirteen remaining articles do not include business to business consultancy at all.

These numbers indicate a lack in diversity in new service development cases. The case research presented here can help to reduce that lack in diversity as it was done in business to business consulting. Also we can see if NSD efforts differ between this business to business consulting case and financial services cases. The next subsection introduces the case study.

Grontmij is a Dutch design, engineering and management consultancy. The company is based in De Bilt, the Netherlands, and has approximately 7800 employees working in over 170 branches in 29 countries. Grontmij’s mission is ‘to be the leading European sustainable design, engineering and management consultancy for the built and natural environment’ (Anon. 2010). An overview of the services offered can be found in Appendix A. Grontmij is organized in three business lines. The branch in Haren, where most of the research has been conducted, is the head office of the Dutch Water and Energy business line. This case research has been conducted at the Grontmij Industry1 division of Water and Energy. Grontmij Industry Haren consists of 110 persons and is subdivided in Electrics, Instrumentation and Automation (EIA) and Mechanical (wtb). An organization chart can be found in Appendix B. The Grontmij Industry division mainly works for the oil and gas industry, food industry, electricity industry, pharmaceutical industry and chemical industry. Theoretically, the whole of the Netherlands can be considered as the market. Main competitors are Tebodin, Jacobs and Vicoma. Grontmij Industry consists mainly of engineers and designers, who usually make designs for adaptations to, or expansions of, industrial installations. Sometimes a greenfield project is done. Until recently all designs for Grontmij Industry projects were made two-dimensionally, using AutoCAD software. In 2009 a course was set out that should enable Grontmij Industry in Haren to make and use three dimensional drawings, using AutoPLANT 3D software, within a year because this was seen as necessary to keep up with competitors. The goal of this report is to advise Grontmij

1_{If Grontmij Industry is mentioned in the text, it refers to the Dutch Grontmij Industry division in Haren.}

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Industry about the change to designing in 3D, from the viewing point of Business Development. Business development is about achieving a significant change in the fit between demand and supply. This can be done by changing at least two of the three elements ‘organization’, ‘product/service’ and ‘market’. The goal of the new service (new to Grontmij Industry) that is to be developed is to provide internal benefits for Grontmij Industry and a significant change in the fit between demand and supply (market). Using 3D design, new possibilities can be offered to existing customers and possibly also new customers. So for Grontmij Industry this new service should provide business development.

1.2 Problem analysis

The management issue that lies at the heart of the case study is that the management feels that Grontmij Industry should make a step forward to keep up with competitors. It is assumed that making the change towards designing in 3D will help doing so. Discussions with the team manager Mechanical and a senior process engineer provided input for a cause-and-effect diagram of issues that play a role in the current 2D design process:

Figure 1. Preliminary cause-and-effect diagram of the underperforming service delivery process at Grontmij Industry

The problems listed on the left of the model are problems designers face when working on projects. When a drawing is made, separate parts lists have to be set up. This takes time and leaves room for error. Furthermore the current 2D drawings are not very suitable for complex designs. A lot of drawings are needed if a complex design is required. This again takes time and leaves room for error.

Service delivery process leaves room for improvement Drawings are not exciting; flat Low grow in demand Parts lists are

made separately from drawings Efficiency could be improved Current 3D designs not detailed enough Many 2D drawings needed for complex designs Many actions needed if a change in design is

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Finally if a 2D design needs to be changed, a lot of actions are needed. That leads to the same problems as mentioned before.

Besides the above explained efficiency and error problems the 2D designs are not exciting to look at. Furthermore there have been efforts to make 3D designs but those were not detailed enough to use for purposes other than giving an impression of the project. Together the mentioned problems all lead to a service delivery process that leaves room for improvement. Grontmij Industry management has decided to introduce 3D designing to solve that problem.

This brings up the following main research question:

-How can Grontmij Industry Haren successfully make the transition to designing in 3D?

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2 Research Framework

2.1 Research questions

The main research question is a result of the problem analysis. To answer the main question several sub questions are formulated, as stated below. First the problem analysis is tested and refined by looking at the existing service. Then a comparison is needed between the old and new services, to see if the new service can solve the management problem. Then the threats to implementation are researched. In the development process of the new service, the pilot project is a milestone. It is chosen as an important point in time to assess the 3D course participants’ opinions about the transition to 3D, which gives information about possible actions for the further implementation. This is why question four is included. Question five results in an advice for the launch of the new service.

Finally this research should provide an answer to the question:

-How can Grontmij Industry Haren successfully make the transition to designing in 3D?

1 What does the existing service look like?

2 How can 3D designing improve the service delivery process?

3 What are the main threats to the implementation of 3D designing?

4 What can be learned from the pilot project?

5 How can Grontmij Industry Haren maintain momentum after the pilot project?

These sub questions can be answered by using empirical data and comparing that with findings in academic literature. In the next section the structure of the research is pointed out. After that the used literature is discussed. The research design in chapter three gives an overview of the methodology.

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2.2 Research structure

The take-off point of this case study consists of an intake meeting with a manager and a senior process engineer at Grontmij Industry. This results in an overview of issues that is presented in the problem analysis. The cause-and-effect diagram is modelled according to Van Aken et al. (2007), because it is a simple but clear method. Their terminology is also used in the Reflection chapter.

To answer the research questions, a theoretical guideline is needed. As is explained in the introduction, the academic reason for this research is to add a case from a non-financial sector to new service development findings. A NSD model is therefore used as a guideline. In the Literature section this model is introduced and elements of it are elaborated with other theory about services. Together those services theories form the base for this research.

The chosen NSD model provides a framework. The development stages in the model form the sections of the Results chapter of this case study. Using the methodology in chapter three, the different aspects of the framework are researched at Grontmij Industry. Those results are used to answer the five sub questions (page 9). Furthermore they show how the NSD process is performed in a business to business consulting case, thus making an effort to reduce the lack in diversity in NSD cases.

In the next section the above mentioned theories are introduced.

2.3 Literature

Literature research was done to find a suitable model as a guideline for researching and advising on 3D design as a new service for Grontmij and to structure the case research in order to compare it with the results from financial services case studies. First the used NSD model is introduced. Then additional literature is used to elaborate on services and success factors for implementing a new service.

2.3.1 New Service Development process and models

There is a massive amount of literature on New Product Development. The development of new services is a research area that is in development. Most NSD models are adaptations of New Product Development models. If a formal development process is used, often the stage-gate model by Cooper (1986) is the starting point for an NSD model and some stages are left out. The well-known stage-gate model includes many formal review points. When developing a service, it is not always possible to identify that many steps to evaluate. This is connected to the characteristics of services, which are mentioned in the next subsection. New services are usually not developed in a formal process and testing them is described as difficult because of simultaneous production and consumption. Many service entrepreneurs regard new service development as “an ad hoc process” (Reidenbach & Moak

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1986; Gallouj & Weinstein 1997; Martin & Horne 1993; Kelly & Storey 2000; Sundbo 1997 as cited in De Jong & Vermeulen 2003). An alternative to testing is launching the service on a small scale (Thomke, 2003). Research suggests this is a characteristic of successful service firms (De Brentani 2001; Easingwood & Percival 1990 as cited in De Jong & Vermeulen 2003). However, others say that service failure causes low financial loss in comparison to the cost of testing and services are easily copied (Davidson et al 1989; Easingwood 1986; Mohammed-Salleh & Easingwood 1993; Reidenbach & Moak 1986 as cited in Johne & Storey 1998). It seems to depend on how easy it is to copy a service, whether or not it makes sense to test it before launching it.

In contrast to an ad hoc process, it appears that successful service providers use a formal development process (De Brentani 2001; Kelly & Storey 2000 as cited in De Jong & Vermeulen 2003). Special attention is paid to the early phases of development. A review by Cooper and de Brentani concludes from seven studies that it pays to put more effort in the first phases of New Product Development (Cooper 1979; Cooper 1980; Cooper & Kleinschmidt 1987; Cooper & Kleinschmidt 1980; Maidique & Zirger 1980; Rothwell 1972; Rothwell, Freeman, Horseley, Jervis, Robertson & Townsend 1974 as cited in Cooper & de Brentani 1991). Unfortunately such an extensive review does not yet exist for New Service Development. In many studies on success factors for NSD, the research by Cooper and de Brentani is cited. However a recent study on a random sample of 183 new hotel service development projects in Germany also concludes that NSD pre-launch activities have a significant positive influence on the success of innovative projects. For a service development project to be more successful it pays to do a market study and financial analysis and develop a detailed service concept in the earlier stages of the innovation process (Ottenbach & Harrington 2010). So there are clues that similar conclusions to those of Cooper and de Brentani might apply to NSD. This case research is aimed at adding it findings to this field of research.

Finally an important point with services is that employees need training to acquire the skills necessary for delivering the new service. When developing a new service these points should be taken into account. A model that does that is the one by Den Hertog (2000). First, Den Hertog sees a service as a concept. Second, the importance of interaction with clients is acknowledged by including the Client interface. Third, the importance of employees is included by adding the capabilities, skills and attitudes in the Delivery system dimension. Fourth, it is acknowledged technology can play an important role in services by adding the Technological options dimension. This last dimension is important for this research because technology is an important facilitator for creating and delivering designs at Grontmij Industry. The downside to the Den Hertog model is that it has not been tested in practice.

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A more practical model that combines the issues addressed by Den Hertog with a cyclical development element is that of Johnson, Menor, Roth and Chase:

Figure 2. New Service Development model by Johnson, Menor, Roth and Chase (2000)

The model contains design, analysis, development and launch stages of development that are divided in a planning phase (design and analysis) and an execution phase (development and launch) (Johnson, Menor, Roth & Chase, 2000). The service is at the centre of the model. Furthermore enablers are included that “reduce new service development cycle time and allow service developers to design the service delivery system so that the new service offering matches the needs of the customer” (Johnson et al, 2000). These are similar to the four elements Den Hertog uses. The idea is that services should be reviewed and improved, or replaced. This cycle can help firms to be more competitive.

Because the Johnson et al model is the only NSD model found to attempt to be as much adapted to services as possible and it has a continuous quality aspect, this model was chosen as a guideline for this case research, as was described in the Research Structure. This does not imply the Johnson et al model is ideal for all new services.

The coming literature subsections zoom into services and the enablers that can be used to speed up the development process and find a better match between the service and the needs of the customer.

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2.3.2 Services

In the description of the problem context it has become clear that Grontmij Industry offers design services to a variety of customers. In the Johnson et al (2000) model, the service is of course the focal point. In academic literature, at least since Berry in 1980, a service is called a performance (Berry, 1980; Lovelock, 1991; Zeithaml & Bitner, 2000). The interpretation of what a service is, is changing. The distinction between a service and a product is diminishing. Recently Kotler and Keller added to the definition that a service can be tied to a physical product (Kotler & Keller, 2006). Others already went further by saying any case of applying specialized competences to the benefit of others is a service and that even production can be considered a service (Vargo & Lusch, 2004).

The much used overview of characteristics of services may provide useful insights in the special characteristics of services. Services are largely intangible, heterogeneous, there is simultaneous production and consumption and unused service capacity is lost (Lovelock, 1983; Zeithaml, Parasuraman & Berry, 1985). These characteristics are tested in section 4.1 to give a clear image of the current service offering at Grontmij Industry.

2.3.3 Service classification

When the new service for Grontmij is analyzed, it can be classified according to existing theory. With that classification this case study gets a recognizable label within the academic literature. A number of classifications exist. Johne and Storey have reviewed the new service development literature in their 1998 article. They compare Booz, Allen and Hamilton’s new product classification with that of Lovelock’s new service classification. These are the most commonly used classifications. Johne and Storey combine the widely cited product development work of Booz, Allen and Hamilton with that of Johne (Booz, Allen & Hamilton, 1982; Johne & Storey, 1998). That way Johne and Storey’s classification offers more categorization possibilities for new services than the service categorisation offered by Lovelock. Booz, Allen and Hamilton describes a range of new products including new-to-the-world, new product lines, additions to existing products, improvements to existing products, repositionings and cost reductions. Johne argues that “cost reductions and repositionings are not distinct types of product development in their own right” because they can be applied to all of the first four types (Johne, 1996). Johne builds on the ideas of Booz, Allen and Hamilton.

First, he broadens cost reduction into process development. Cost reductions are an effect of other actions. Process development may involve a fundamental rethink and redesign of business processes. This may create superior capabilities and core competencies. The increased performance improves value for the customer. Boone introduces a very similar concept which she calls service process innovation (Boone, 2000). Service process innovation is more focused on technology to change the service delivery process. Process technology change can improve efficiency and/or

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effectiveness (Goldhar & Jelinek 1985 cited Boone 2000). Service process innovation uses process technology to reduce cost per unit, reduce lead time, improve quality and/or increase flexibility.

Second, Johne broadens repositioning into product augmentation development. This is not only about targeting new markets or market segments, but also about the support given by suppliers to customers. Service augmentation “embraces the processes by which customers evaluate, purchase and consume the service” (Johne & Storey, 1998). It is about the whole experience and the way a service is placed in the market (Grönroos, 1990; Storey & Easingwood, 1994). The Johne and Storey framework looks like this:

Table 1. Service classification by Johne & Storey (1998)

New-to-the-world: new to the supplier and clients New product lines: new challenges for the supplier Additions to existing product lines

Improvements to existing products

Service process innovation: applicable to all four Service augmentation development: applicable to all four

The adaptations introduced by Johne and Storey (1998) make a better fit with the business development idea by looking at all the systems behind a service (organization) and looking from a customer perspective (market). Therefore it is used as the framework to classify the new service in this case research, as part of the answer to sub question three: how can 3D designing improve the service delivery process?

2.3.4 Success factors for Development and Launch

In the development phase and during the launch insights from literature can be used to increase the chances of success of implementing 3D designing. For that the enablers mentioned by Johnson et al (2000) can be used . Findings from other research can be linked to those enablers. Various authors list factors they have, in case studies, found to be important for new service success. The presence of those factors in this case study are tested. Based on those tests an advice is given for optimization of the NSD process in this case study. The success factors that are mentioned below have been validated in new service development and change management literature:

• Synergy between the types of needs served by the new product or service in its marketplace and the operational capabilities of the supplying organization (Johne & Storey, 1998; Cooper & De Brentani, 1991).

• The development process can be aided by having a powerful product champion (Shane 1994 cited De Jong & Vermeulen 2003) and top manager support (Johne & Storey, 1998).

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• Explicit communication of the new service’s advantages and creation of a clear image for the service (Cooper & De Brentani, 1991; Clark, Johnston & Shulver, 2000).

• Employees experience a feeling of support from their management, during the implementation process (Dong, Neufeld and Higgins, 2009).

• Use of multifunctional teams to cooperate and share information so knowledge and competencies can be combined (Cooper & Kleinschmidt, 1995; De Jong & Vermeulen, 2000; Griffin, 1997). • The way of delivering the service is more important than what is offered, as services are easily

copied (Johne & Storey, 1998). The quality of the service experience and customer service is meant here.

• Effectiveness of the launch of the new service; a post launch evaluation programme is important to learn about the effects of the new service on the organization and its customers (Johne & Storey, 1998; Cooper & de Brentani, 1991).

• Resource dedication: resources are needed for the change itself and as a buffer for the initial drop in performance during the transition period. Without extra resources meaningful change is less likely to occur. Especially assigning full time team members speeds up development (Vermeulen 2001 cited De Jong & Vermeulen 2003).

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3 Research Design

3.1 Methodology

These methods are used to gather information about the current situation at Grontmij Industry, the possible advantages of 3D for Grontmij Industry and the presence of obstacles to, and preconditions for the new service.

3.1.1 Document research

Internal documentation has been used to gain insight in the organization and its working methods. These documents include strategy documents, training policy, meeting reports and quality documents.

3.1.2 Qualitative methods

Interviews have been used to gather important information about the transition from designing in 2D to designing in 3D and organization members’ motivation and ideas for this transition. The interviews were taken in April and May 2010. These interviews were conducted in a semi-structured manner because of the diversity in respondents. The interviewees work in different layers and departments of the Grontmij Industry division in Haren. An overview of the organization structure can be found in Appendix B and C. The division has a matrix structure with project and process managers being the horizontal linkages. The interviewees range from project employees to the head of division (Table 2). The sample has a size of ten out of hundred-and-ten. The sample was not randomly picked because response from all layers in the organization was needed. The higher management was included because of their strategic insights. Two interviewees were selected because of their long history in the organization. One project leader was selected because of his involvement in quality management. The project employees in the sample were selected because they were in the first 3D training group.

Table 2

Participants interview one

Head of division _Advisor

Team manager EIA Senior process engineer Team manager Mechanical Project employee Mechanical (1) Project leader Project employee EIA

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Questions were asked about the 2D design process, the influence of customers, quality management, pros and cons of 2D and 3D, expectations, motivation and support for the change and the possibilities for 3D designing for current customers and the Dutch industry engineering market. The questioning guideline used for the semi-structured interviews can be found in Appendix D.

Another round of interviews was conducted to get an outside view of the possibilities and threats of 3D design. These open interviews were taken in May 2010. The first interviewee is an expert on engineering in 3D from Grontmij Industry Belgium. The second is an engineer/designer who has experience with working in 3D and has been, at the time of the interview, stationed at a consumer goods manufacturer for three years. The interviewees are:

Table 3

Participants interview two

Technology coordinator Grontmij Industry Belgium Seconded engineer/designer Mechanical

Finally, observation has been a very important method. Observations were made at meetings, during conversations and everyday work. They provided indications about the attitude and knowledge of organization members regarding the implementation process of 3D engineering. Most of the observations have been direct observations. Sometimes an indirect observation was done in the form of the report of a meeting (Gill & Johnson, 2002: 150).

3.1.3 Survey

After the pilot project was completed, in July 2010 a survey was conducted among the sixteen project employees who followed the 3D software training. Eight persons responded, one of whom was involved in the pilot project. His results are compared with those of the other seven respondents who were not involved in the pilot, to see if someone who was involved in the pilot answers differently. The survey is aimed at measuring, after the pilot project, the presence of the enablers and success factors in New Service Development which are mentioned in the literature section (2.3.4). The survey attends training, technical infrastructure, resources, support systems, management practice, management support, employee motivation and employee dedication.

The survey starts with four general questions about the respondent, that are included to be able to categorize results. The following thirty questions, except for a multiple choice question and a yes or no question, are closed questions with a seven-point Likert answering scale. Research on the optimal number of response categories suggests using a seven- or ten-point scale (Preston and Colman, 2000). The full questionnaire can be found in Appendix E.

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4 Results Of The Case Study

The case study general structure is described in section 2.2. Section 4.1 analyzes the 2D situation at Grontmij Industry, using the enablers terminology, to expand the problem analysis and answer sub question one. From 4.2 on, a graphic at the bottom of the page indicates the development stage in terms of Johnson et al (2000). Section 4.2 analyzes and discusses the Design and Analysis phases and the start of the Development phase of the change process and the way the organization reacted. This answers sub questions two and three. Section 4.3 analyzes the Development phase and focuses on the pilot project to answer sub question four. The final results section (4.4) offers recommendations for the full scale launch to answer sub question five. The Conclusions briefly answer the research questions. Then the overall Conclusions and Recommendations chapter finishes the article.

4.1 An analysis of 2D engineering at Grontmij Industry Haren

This analysis of the existing service should provide an image of the starting point for the improved service to be designed. The service concept, systems, technology and people of the existing service will be discussed. The terminology of Johnson et al is used for consistency. An important note to bear in mind while reading about the service concept is that the service is delivered on a project base. That is why there is not always a standard procedure. The main sources of information have been interviews and quality documentation.

4.1.1 Service concept of 2D engineering

Grontmij Industry delivers designs for a number of companies that are mainly situated in the northern part of the Netherlands. These are most of the time existing customers who would like to have a design for an adaptation to their production facility or renewal of a part of an installation. These companies usually have small engineering departments to control their production processes. For adaptations or renovations they often hire an engineering consultancy to do work for them.

At Grontmij Industry the first contact about a new assignment can go through a variety of people. If it is a new customer, the business development manager has the initial contact about the possible assignment. Furthermore there are account managers for existing customers that represent a certain value. It is common practice however, for other employees to hear about or be contacted about a new assignment before an account manager does. Often employees have closer contact with customers. Still that employee delivers the assignment to an account manager and the account manager then follows the quality procedure for new offers.

When an assignment comes in, Grontmij Industry needs to know the customer’s needs. The information that is given differs per customer. Some deliver highly detailed documentation, including

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drawings and technical information about the existing situation. Others put their requests on one piece of paper or they only tell what they need. In all cases a project scope needs to be agreed on. This describes what will be delivered at what price. Sometimes a customer only wants a number of options to be explored in ‘conceptual engineering’. After an option has been chosen, usually Grontmij Industry does ‘basic engineering’ (Sometimes the customer has already done the basic engineering). The layout and most important specifications for the design are determined in basic engineering. This should be a ninety percent accurate project definition (Grontmij Industry 2009). The customer can make comments on the basic design, after which changes can be made. If the basic design is approved, work on the detailed design starts (if that is part of the project scope). Then the real designing is done. The ‘detailed engineering’ should provide a final design that is suitable for ordering materials and constructing a facility, installation or device. It again depends on the project scope if Grontmij Industry also does the procurement for the actual construction and the construction management. A design is finished when the customer and the project leader have agreed upon the result. Ideally this is when the requirements from the project scope have been met. When a customer wants something that is not in the scope, it has to be paid for. This extra work has to be agreed on before the project continues. Changes can have consequences for planning, budget and/or quality. Usually customers have a meeting with Grontmij every two or four weeks, but it happens a lot that customers just call or email about small changes. When the design is agreed upon, it is delivered both hardcopy and digitally.

The designing itself is intangible. The result can be made visible but without significant knowledge of engineering it is not usable. The service is heterogeneous because the scope of the projects differs and the outcome is almost never the same. Customers have a big influence on the transaction. Designs cannot be made to stock.

4.1.2 Systems used to deliver services

A new project is registered on the Grontmij database server. All project documentation has to refer to that registration number. The required project documentation is provided and explained in quality documents. Grontmij Industry has made additions to the Grontmij quality system to make quality documentation better suited for its work.

Changes to designs are made according to guidelines in the quality standard. They have to be indicated on a physical Master drawing in a specific way and the document(s) based on which the change was made has to be filed under the project number. Sixty-three percent of the respondents that were asked about this, doubted that changes are correctly indicated and registered by all employees. Furthermore it was mentioned that designers often do not check their work before discussing it with the lead engineer or the client. This basic principle is not described in project plans because it is assumed to be common knowledge. Nevertheless it was mentioned in interviews that this check is not

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always made. An interviewee told that a few years earlier he performed a study at Grontmij Industry to gain insight in the amount and types of errors. The main outcome was that most of the errors were made by the first person in a design process. Sixty-three percent of the interviewees indicated that quality control should be improved. This also can improve efficiency because it is less work to correct an error in an early stage.

Besides following the quality system, employees have to work with internal standards that customers use. This is a specific design issue. For most customers the design templates differ. Some customers are such large or specialized companies that they have their own material specifications standard. Smaller firms often use such a standard and adapt it to their situation. All these different standards require Grontmij Industry to adapt each 2D drawing to the templates and specifications of the customer.

Another important issue in the work process is that many projects are multidisciplinary. The disciplines at the Grontmij Industry division include Electrical, Instrumentation and Automation (EIA) and Mechanical. In projects that include new buildings they cooperate with Construction, which is represented at the Haren branch as well. These disciplines have to combine their designs into one working, fitting solution. In practice this means physical drawings are compared to check for congruence between disciplines. First there are disciplinary checks. Then there is an interdisciplinary check. A lot of communication is needed to align the designs. This was mentioned as a problem area by all interviewees.

Finally technically it is sometimes very difficult to see on flat drawings that a design will give problems. In a multidisciplinary design a six meter deep trench was needed. No problem was seen on the drawing, but in reality the contractor did not dare to dig the trench because there was a real risk that a part of the existing installation would fall in there. This example illustrates that the service is difficult to communicate and constructability can be improved. Furthermore it has become clear that quality is very dependent on employees and needed improvement in the 2D situation. The interviewees were concerned about the amount of errors that was made in designs.

4.1.3 Technology used to deliver services

Designs are made with the use of AutoCAD 2D software. This has a number of disadvantages (-) and a few advantages (+). Some of the disadvantages have already been pointed out in the initial problem analysis and have been confirmed by organization members in the first series of interviews. The results can be seen in table four on the next page.

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Table 4

Technological advantages and disadvantages of AutoCAD 2D software

- If a customer delivers data to start the design with, they have to be put in manually by the designer.

- If a part of the design needs to be looked at, the designer needs to make a whole new drawing.

- Because the program is in 2D, different views have to be drawn separately

- Isometric drawings have to be drawn separately

- There are no templates, only basic shapes that have to be adapted

- The program cannot tell if design elements fit. This has to be checked manually

- The designer has to check, using multiple views, whether elements clash

- The materials list has to be written by the designer, after making the drawing

- A change in one element of a design has to be carried through manually in all corresponding

documents. This leaves a lot of room for errors and takes considerable time

- There is 3D functionality, but it is not detailed enough for engineers + Compatibility: a lot of customers work with AutoCAD

+ A small adaption in the design of an existing installation can be made quickly because existing design

documents are in 2D

From this table, the conclusion can be drawn that the technology leaves room for improvements in efficiency, quality and functionality.

4.1.4 People: required skills and the role of managers and employees

Grontmij Industry is a consultancy so people are a very important part of the service. The highly technical nature of the services offered adds to the importance of knowledge and experience. In the 2D situation most of the employees have a lot of experience with designing. However, even for them it is hard to get all required information into a flat design.

Because the work is on project basis, it differs how busy employees are. If there is no direct demand, people have nothing to do. Designs cannot be made to stock.

Relations are complex. The Grontmij Industry division has a project matrix structure (Appendix C). The main body of the organization is organized into two teams or disciplines. The horizontal linkage is organized by project management. Project managers are responsible for the result of projects. Functional managers assign people and provide technical expertise. Communication is needed to find a balance between project- and functional manager’s interests. There is a constant flow of information about the allocation of people and project deadlines. Decision making is quite directive. On work level the project employees have some freedom to make decisions, but on team level there appears to be little participation.

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4.1.5 Market and competitors of Grontmij Industry

Formally, the market consists of all industrial companies in the Netherlands. In practice most of the clients are in the northern part of the Netherlands. Most of the projects in the north are renovations of existing installations. Most of the clients have a history with Grontmij Industry and they regularly have new projects for them. Most clients have their design data of existing installations stored in 2D drawings.

Clients are more and more critical about the designs that are delivered. If they find errors then Grontmij has to pay for fixing them. The cost of fixing an error in the completed design is often a tenfold of the cost of fixing it in an early stage. So the financial consequences of delivering less than desirable levels of quality are severe. Then there are contract types such as turn-key projects that are increasingly in demand and give the engineering firm even more responsibility. If errors are made in such a project, the negative financial and reputational consequences are even bigger for Grontmij. The main issue with customers was that they complain about the amount of errors in Grontmij Industry’s 2D designs.

A lot of competitors already design in 3D. All the interviewees pointed this out. However they also indicated that most competitors do not solely design in 3D. They probably only use 3D for new installations or factories. An example of a project done by a competitor illustrates the advantages of 3D for new installations. A client wanted a design for a new installation. The design was more expensive but costs were saved in the build phase because the design fit. In 2D there are usually errors in sizing that require adaptations in the build phase. As was mentioned earlier, adaptations in later stages are much more expensive.

4.1.6 Discussion

The results confirm the initial problem analysis. Figure 3 on page 23 shows that this analysis is shared by the organization members that were interviewed. The service delivery process mainly leaves room for improvement in quality and efficiency. The problem analysis is strengthened by the results of the interviews. Low quality and efficiency are not likely to be perception problems because both the interviewed designers and managers named the number of errors as the main problem and indicated that efficiency could be improved. Also it was reported that clients have complained about low quality. The quality and efficiency problems are not target problems because competitors are capable of making fewer mistakes and delivering faster. Therefore they are real problems: “a situation that in reality does not meet realistic standards” (Van Aken, Berends & Van Der Bij, 2007).

The service is largely intangible. The deliverables offered by Grontmij Industry are very heterogenic. Customers and employees have a large influence on the outcome and unused service capacity is lost. All the characteristics of a service are clearly present.

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Figure 3. Elaborated cause-and-effect diagram

4.1.7 Conclusion

The initial problem analysis is supported and extended by these results. The quality and efficiency problems are real so they can be managed. Finally the offer is clearly a service, so new service development could show result in this situation. 3D designing was chosen by management as a solution to the organization’s problems. In the next section the Design and Analysis period of the change to designing in 3D will be analyzed with the use of new product and new service development literature. Low grow in demand A lot of interdisciplinary communication needed Inconsequent quality control New drawing needed for new view and isometric

No templates

Manual: input of design data, materials list, elements fit and clash check No document connection Clients complain about quality Competitors offer higher quality Low quality Low efficiency Difficult to communicate a design in 2D Current 3D designs not detailed enough Service delivery process leaves room for improvement

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4.2 Design and Analysis of 3D engineering at Grontmij Industry

4.2.1 Start-up of the NSD process

The transition towards designing in 3D was decided upon by higher management late 2009. The objective was in the first place to improve quality of design deliverables. A 3D engineering software package was chosen based on what was the most widely used within the international Grontmij company. A contact person for the software supplier was chosen. He scheduled a number of training sessions. Sixteen employees from the EIA and Mechanical groups were selected to be educated in the use of AutoPLANT, a 3D design package, in spring 2010. The management immediately jumped to the Development phase by starting the training of employees. In interviews and through observations it quickly became apparent that hardly any preparation had been done before the decision was made to train staff in the use of AutoPLANT. No formal Design and Analysis were done. This conforms to results in NSD literature that many NSD efforts are done ad-hoc (2.3.1). Based on the information available it can be concluded that the start-up of the new service development project at Grontmij Industry left room for improvement. In the following paragraphs an analysis of opportunities and threats concerning the implementation of 3D design at Grontmij Industry is made.

4.2.2 Technical opportunities and threats of 3D engineering for Grontmij Industry

In the end the goal of the change to 3D is to improve quality and efficiency. The 3D design package offers a number of advantages in comparison to the 2D software. Based on observation of a user of both software programs, product information, and interviews with users and an expert, a comparison is made in Table five on page 25. In the pictures below, the difference between a 2D design and a 3D design can be seen very clearly.

Figure 4. The same installation shown in 2D and in 3D

Design Analysis Development Full Launch

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Table 5

Technical Advantages of 3D Designing

2D 3D

If it is necessary to view only part of a design, a new drawing has to be made by the designer

AutoPLANT can make a new drawing of a part of a design, by itself

Technical drawings, views and isometrics have to be drawn separately by the designer

If the technical design is finished, views and isometrics can be created with a few clicks

Different views have to be drawn separately All views are immediately available and in full technical

detail, if needed

Templates are not included. There are only basic shapes that have to be altered for (almost) each project

The 3D package has an extensive library. If software administrators make good templates per customer then designers do not have to draw shapes anymore.

The designer has to check for himself if the design elements fit

AutoPLANT consistently chooses the material size once a design is started with a particular size. Still some inspection is needed to check if the size is right in the first place

For piping the flow has to be checked manually by comparing different 2D views

Piping flow can be checked by AutoPLANT. The software alerts the user when a flow is causing problems

The specifications for equipment have to be calculated manually

The software package can do some of the calculations. This simplifies the calculation of the specifications of equipment

After making the drawings, a bill of materials has to be listed manually

The software uses the library to connect the design to the bill of materials. The BOM can be called up very easily and added to any view

The content of material labels and size indicators have to be put in by the designer

The designer can choose which label to add and the software gets the information from the database

A change in one element of a design has to be carried through manually in all corresponding documents

The 3D design package has a database that is linked to a number of documents. Changes in corresponding documents are carried through automatically

Files take a large amount of space The files are smaller than 2D files for a similar project

A lot of clients still work with 2D. Drawings of their existing facilities are usually in 2D

It is possible to work in 3D and then export the design in 2D

A design with many crossing pipes is impossible to draw in 2D

In 3D it is possible to see if crossing pipes hit each other

Clients need to have specific knowledge to interpret a 2D design

Anyone understands a 3D model. Furthermore it is exciting and useful that it is possible to ‘fly’ through a 3D model

Both software packages run on existing hardware at Grontmij Industry

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The table on page 25 shows there are potentially great benefits for Grontmij Industry in using a 3D design package. It should be noted however that software can automate, but it has no intelligence. It will still be necessary to check designs. A potential danger is that engineers/designers rely too much on the automation in the software. Furthermore the extensive possibilities of the software may cause users to work in any way they like. De Bruyne advises to document work processes to prevent these issues (M. De Bruyne, personal communication, May 31, 2010).

Another distinct advantage worthwhile exploiting is in the combining of disciplines. In many projects the three Grontmij Industry disciplines Electrical, Instrumentation and Automation, Mechanical and Construction are represented. As was described earlier, in the 2D situation physical drawings from different disciplines within Grontmij Industry have to be compared and a lot of communication between the disciplines is needed. If the three disciplines start using the same 3D package they can see the combined design in 3D and almost real-time. Multidisciplinary designs can be made more easily and with more insight because of the extra dimension. Impossibilities between disciplines could be seen straight away. The example of the contractor who did not dare dig a six meter deep trench would probably not have happened the same way if the design had been in 3D. In the 3D design the risk could have been spotted before the contractor started his work. The advantage of 3D design in interdisciplinary projects also depends on quality procedures.

Designers from the various disciplines cannot change each other’s design, but their designs can be combined in one model. Just like in 2D, a potential danger would be that designers change things in their design without consent of the other disciplines. That may cause confusion, so coordination is still very important. As one of the interviewees said: “automation has advantages, but only if people do it consciously”. A seconded employee explained that the engineering department where he works does not combine disciplines at the same time because of the risk that employees change things at the same time. Another interviewee also mentioned that the sequencing can be changed because of the use of 3D.

The Construction department can arrange permits and make a tender once the setup of the design is clear. Then construction can already start while the installations are being designed further.

For the food and pharmaceutics industries a 3D design offers much more insight in risks. If production flows can be seen entirely it would be possible to see conflicts between different flows more easily and it would for example be possible to see in an early stage that a particular room has to be classified as ‘dangerous’.

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4.2.3 Influence of the change to 3D on people, systems and technology

The expectations are that the biggest impact will be on the work of engineers/designers. They will work with the 3D software. The skills employees have in working with AutoCAD are helpful but not sufficient to work with AutoPLANT 3D. Some commands are the same, but the architecture of the software is different because of the database connections and of course the extra viewing dimension in the design program. The package is more complex and requires new technical (computer) skills. One interviewee mentioned 3D as a design package for engineers. However, the two interviewed experienced users of 3D engineering software independently described 3D software as suitable for all project employees.

The main difference between AutoCAD 2D and AutoPLANT 3D is that AutoPLANT is an integrated package. The different elements of the package all use one database with material and equipment specifications. In AutoCAD the specifications have to be entered manually. Process flow diagrams, views, process and instrumentation diagrams and bills of materials all have to be made separately. In the 3D situation once a 3D design has been made, the coupled software can create the documents mentioned above within a much shorter period of time and with consistency because the 3D design is coupled to a database with specifications. 3D engineering expert Marc de Bruyne explained that there is a risk that designers make changes in generated documents, because that seems to them to be the easiest way (M. De Bruyne, personal communication, May 31, 2010). The automation however does not go in two directions. A change in a generated document is not carried through in the 3D model. Colleagues will not know the designer changed something. That is why the 3D model should be used as the new Master design. In 2D the Master is a physical drawing on which changes are indicated. Because of the issues explained above it is advisable to use the 3D model as the Master.

What changes in the work process of designers is that they pick parts from a database and connect them. They do not have to draw parts themselves anymore. Furthermore different views do not have to be drawn by the designer. The software can generate them based on the 3D design.

One interviewed user of the program indicated that it is mentally more straining to work with the 3D package. One can see more in a 3D design and this requires more attention.

Also the software program is more complicated than AutoCAD. It would be good to monitor in project evaluations whether these are real problems and how big they are, as this was just a single remark. A problem could be the database. If users do not use the right data from the database then the design looks nice but it is not useful. Ten years ago already an attempt was made to implement 3D designing. The problem then was that the database was not filled right. The first large 3D project then almost turned into a financial disaster.

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It is essential that the database is filled carefully this time because it is the backbone of the 3D engineering package. It is advisable to have another experienced employee check the database. Another issue concerns the time it takes to fill the database. This was underestimated and that caused the implementation to slow down.

Another point that was mentioned by forty-five percent of the interviewees is that although (and because) there is a lot of automation in the 3D package, users of the package have to check if what they did was right in the first place. Also they have to be aware of the effects of automation. For example it was explained by one interviewee that when a separate design of a machine is used in different composite designs, changes in the design of the machine are carried through in all the designs in which it is used. These problems should be prevented by having clear work instructions.

In multidisciplinary projects the supervision of changes is very important because changes are made more easily. An engineering technology expert explained that it is crucial to assign a person to check for conflicts between disciplines per room in the design (M. De Bruyne, personal communication, May 31, 2010).

Another important new role should be that of the contact person for questions about 3D designing. In the launch phase there will be many problems to solve. De Bruyne advises to have a contact person per work group who can answer questions or contact an expert (M. De Bruyne, personal communication, May 31, 2010). It is important to incorporate learning by discussing main problem areas and documenting those discussions.

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4.2.4 Market possibilities for 3D designs for Grontmij Industry

Sixty-four percent of the interviewees indicated that there have been requests for 3D designs. For example, one of the interviewees told there has been a case in which a customer wanted 3D and wanted to pay more for such a design because it would offer benefits in the construction phase of the project.

Seventy-three percent of the interviewees said 3D will offer most benefit in a greenfield (design from scratch) situation. Twenty-seven percent of the interviewees said they think 3D will only provide significant benefit in greenfield projects. In a brown field (existing situation) project it would be inefficient to use 3D because the entire installation has to be put in 3D.

However, experience at Grontmij locations in Belgium and Middelburg (NL) has proven that it is possible to scan an existing installation and import it in the 3D package. This laser scanning is done by setting up a laser and a number of reflectors so that the entire room is covered. The reflections of the laser beams can be combined into a point cloud. The point cloud can be made more realistic by using digital photographs as overlays. The point cloud can be imported in 3D design software and parts can be added. This way an addition to an existing installation can be designed in 3D, even though there are no 3D files of the existing installation. An example is shown below in figure six:

Figure 6. Point cloud with photo overlay and new piping (white/pink) and valves (red)

Furthermore there are projects in the region that might be done entirely in 3D so renovations in the future might be in 3D. On a wider scope there appears to be a market for 3D designs. Suppliers of manufacturing installations use 3D more and more.

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One interviewee argued the market really has to be convinced of the advantages of 3D designs. That may be so but a number of stakeholders in the client’s organization have great benefit from 3D designs. Process managers, executives, operations employees and e.g. safety employees in the food sector find it much easier to understand a 3D design. They can identify potential problems in a design more easily. The engineers do not have to explain to them how to read a 2D design. This is in line with management literature findings: “A 3-D model is an excellent communication tool between the designers and the owners and for coordination between disciplines” (Nemetz & Bernhardt, 2009). Research in business-to-consumer e-commerce and the electricity utility industry confirms that a 3D model offers more information and insight in functionality and is more appealing to customers (Ozok & Komlodi, 2009; Korremla & Goins, 2008).

An important point to make here is that for Grontmij Industry it is most important to improve quality by improving consistency. This might also be done by working in 3D but delivering in 2D, if clients do not want 3D files.

For Grontmij Industry managers there will be a change in their commercial activities as account managers. A 3D design offers advantages for acquisition because it is a more insightful and appealing design than a 2D design. In the past someone has made a 3D video of a project design and this video is still often used for acquisition.

One of the goals is that the organization should become more efficient. However, clients pay for the amount of man hours so more work will be needed to keep everyone productive and improve the results. Also the total investment costs of training people, preparing the database and buying software licenses have to be earned back.

Another goal is to reduce the amount of errors in designs. This should be achieved by the coupling of documents to the database, the improved insight in a model and the clash detection function in the software. This quality improvement and the appeal of 3D models should improve the professional image of Grontmij Industry.

Further professionalization can be achieved by allowing clients to discuss designs while they are not in the same room. They can view a 3D design with free viewing software. This would also make it easier to have clients that are not located in the northern part of the Netherlands.

A financial review of the new service concept is not included because the decision to invest in 3D as a new service had already been made. 3D is seen as a necessity for the division to improve quality.

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4.2.5 Classification of the new service

Now that the impact of the new service has been discussed the new service can be classified according to the literature discussed in the research framework. 3D Design in this case is primarily used to improve performance in the existing engineering consultancy and it offers new functionality. Therefore it is an ‘addition to an existing product line’ in terms of Booz, Allen and Hamilton (1982). It should not require radical changes from the supplying organization and clients. The improvement in performance should be reached by a redesign in business processes, in this case the way a design is made. Technology, 3D engineering software, is used with the goal of improving quality and reducing lead time. This is process development or service process innovation (Johne 1996; Boone 2000). The primary goal of the new service is not repositioning, but the new service offers opportunities for repositioning in the future. It would be possible for clients to view a 3D concept on their own computer and discuss it with Grontmij without the need for face to face contact so the geographic target market can be enlarged. Another possibility would be the market for complex designs. 3D design is a prerequisite to get complex design assignments (M. De Bruyne, personal communication, May 31, 2010). So the new service is an addition to an existing product line, with process development and opportunities for repositioning.

4.2.6 Motivation of organization members

It has to be noted that these results come from interviews with a limited number of people. No survey was taken about this subject in the Analysis phase.

All the interviewees agreed that the management at Grontmij Industry is motivated and committed to the change to 3D designing. Management believes in the quality, efficiency and image improvements 3D might bring. The motivation for change was clear to management (Cummings and Worley, 2005). At the same time it was mentioned that the communication about the preparation and introduction of 3D designing has not been sufficient. One interviewee said that project employees see 3D as a marketing tool because it has not been explained why 3D will be used, how it will be used and for what types of projects. The impression of project employees is that the change to 3D is made, simply because all competitors do so. Twenty percent of the respondents had no idea about the amount of support for 3D.

Implementing 3D Engineering at Grontmij Industry: New Service Development in Business to Business Consulting