Where does COST fit in, was COMM: Where does MPI fit in?

J

Jeffrey D. Brandt

Donald Pittendrigh wrote:
>
>I am having some real problems coming to grips
>with the real issue of this MPI thread and
>would appreciate it if some one could explain
>what the real issue is here
>
<snip>
>
>Maybe I am missing something, if so I would be
>grateful for the correction, please don't tell
>me it is the financial thing, I live in South
>Africa and we suffer from a down trodden and
>inflation ridden badly managed economy, and my
>clients can still afford the use of quality
>equipment, I cannot believe this is a
>consideration in a country like the USA which
>is undoubtedly the most affluent economy in
>the world.

This is an interesting case of reverse-stereotyping. Isn't is strange that someone from beyond the shores of the US has the opinion that 'cost would be a consideration' in 'the most affluent economy in the world.'

It wonders me (as we say in Pennsylvania Dutch) as well. Why would a OEM argue over meal charges after a successful field trip, amounting to $15.00, for a$4,000,000 project? Why do customers ask if I can save them money buy using 'used parts'? Why does my competition shop for materials on eBay?

Darned if I know, but, the fact of the matter is that THIS is the reality of the controls business where _I_ live. Siemens or no Siemens, cost is always a factor, and is generally (recently) the ONLY factor.

When I present my 'Triangle of Truth' (Good, Fast, Cheap: pick two) CHEAP is always chosen.

Now, I'll say this: If anybody else read Donald's message and said the same thing: What gives YOU that impression????

[standing by, donning my flame retard. clothing]

D

Donald Pittendrigh

Hi All

Just one small correction, it doesn't suprise me that cost is a consideration, to ignore cost implications is obviously silly. The magnitude
of the consideration is what surprised me, that people would go several times around the block to try and save the cost of the "right" interface
card, by using something which was strictly speaking not intended to be used as proposed. (glad I typed that and didn't have to say it out loud)

Cheers
Donald Pittendrigh

> This is an interesting case of reverse-stereotyping. Isn't is strange
that
> someone from beyond the shores of the US has the opinion that 'cost would
be a
> consideration' in 'the most affluent economy in the world.'

B

Bob Close

My 2 cents... for what it's worth.

In the US there are very many choices for motion products and they cover the gambit of price and performances. This often makes the selection that much more difficult and certainly takes it out of the realm of simple black and white price vs. performance decisions. Small changes to filtering, software interfaces, tuning algorithms and connectivity can make huge changes in the cost to install set up and support motion products. Choices of slight price reductions over performance can lead to large user expense, however because of the huge selection we have it's ridiculous not to attempt to save where you can. This makes the selection process much more complicated, however it also leaves one with an optimized design that will make an OEM's machine more cost competitive or a user's machine less
expensive (life cycle cost) to employ on the floor.

I think the generalization of America being cost over performance/reliability is an exaggeration, although there hundreds of system integrators and manufacturing engineers who would beg to differ with me.

Bob Close
Executive V.P.
Precision MicroControl Corp
TELE 760-930-0101
FAX 760-930-0222
[email protected]

R

Richard McMahon

When we talk about costs we must not forget that:

cost != purchase price

but rather

cost == purchase price + maintenance cost + hassle factor + ...

When making a purchase, it is easier to justify a decision based on numbers i.e. price, than a value judgement including the whole life cost
of the equipment, which frequently includes some form of subjective assessment. When you buy a car for your own use, you include all your previous experience of the model and manufacturer in the decision.

Therefore, why let money be the sole deciding factor in work place?

Answer: Because you can't be criticised if you produce the quotations for supply.

Richard McMahon
Tel.: +44 117 954 5160
Research Assistant
Bristol
UK

K

Ken Brown

Jeff,

What a great summary of life in the manufacturing sector of the good-ol-U-S of A!

I think there are two major camps from where I sit. There is the camp that says they will buy any type of controls as long as it has an
Octagon on it - regardless of what it costs or whether it makes any sense or can even handle the app, these customers seem to go in cycles with a love hate relationship with the almighty octagon. AND the other big camp is - whatever is cheapest .... buy it. . . regardless of how much personal effort and cash they have to put into it to get it running, try to keep it running, and eventually to replace it with the next cheap fix that will solve some of the problems it has created.

A third and less prominent camp consists of those who actually think about what they need to accomplish and consider the long term
consequences of the choices they make. These are few and far between, but when we run across a customer like this, we bend over backwards to
get them and then if things look really good, we make efforts to fire one of our less favorite customers from one of the other camps. Nothing
limits your ability to grow and be a good service provider than a short-sighted customer who abuses vendors.

BTW . . . we have bought some nice Tektronix and Fluke items on ebay and are considering selling some of our surplus control gear as well . . . .
ain't America great!

Best Regards,

Ken Brown
Applied Motion Systems, Inc.
http://www.kinemation.com

L

Lunnon, Robert

This is too simplistic, The problem is not really as you outlined, although many companies do spend an extraordinary amount of effort trying to minimise capital costs, so try not to see it from an us and them point of view. The problem is you are looking at the problem from a technology point of view while they are looking for a value justification.

If you think like an accountant, then you can see that in many cases the capital cost is the hardest to justify (Hence the pre-occupation with it). It is necessary then to convince the accountants then that leaving in that extra PE cell is not only the right way to do it but will SAVE THEM $$. Even redundant systems can be cost justified. Lets say you are working for a water manufacturer on a procuction line producing 10M worth of tap water into refillable containers per annum with a real profit margin of 10% based on 99% availability in a 24x7 operation and that production has predominately fixed overheads. (That means it takes 328 days to pay the overheads and the profit is made in the remaining 33 days.) Lets also assume the PE cell is buried deep in the machine and takes 6 hours to strip down and replace (ugh) The cost for failure of that device then = 1M/33/4 = 7575 which comes directly off the profit. There aren't too many accountants who will argue with you after that ! Put another way, lets say this companies sums are based on 95% availability, then they are actually counting on losing 18.25 days of production per annum. They make 1M profit and have 9M fixed overheads so the 9M is made in 9/10 *347 days (312 Days) the 1M profit takes a further 347-312 = 35 days to make. A small modification you want to make can raise the availability to 98% by reducing jamming on the production line. This reduced the planned downtime to 7.3 days. The difference is then about 11 days. Because the costs are fixed (probably not quite true in most cases, but in many cases such as mining can be a reasonable approximation) the extra production is free. The rate of money making is 10M/347 days = 28800 per day (Roughly) so your company stands to make an extra 316000 (less variable overheads) per annum. Now ask the question. The modification costs 10000 to do, Approve/not approve ????? What this reveals is that where there is no performance increase associated with a modification (reliability is the concern) it is absolutely essential to know the cost of downtime in presenting an appropriate value justification. This fact has been missed in just about every organisation I have worked for. Ahh well, at least I understand ... ;-) Bob J John Vales I know I'm going off the subject a bit, but I'd like to add to Jeffrey's reply. The same is true where I live, and work, too. (Chicago area). I have to agree that in terms of controls, electrical wiring, and All Things That Spark, I, too, have found that many customers view our field (controls engineering) as a necessary Evil. Examples of this mentality: Do you _really_ need two prox switches to detect this? Why can't you do it with only one? What do you mean, it's going to take two weeks to debug my 2M system? That can't be right! You controls geeks are all alike. I find this ironic, especially in this time when everyone and everything lives and dies by technology. Everyone wants the latest and greatest on their systems and machines, but when it comes time to pony up with the$$$, everyone looks for a place to hide. jfv John F. Vales [email protected] D Donald Pittendrigh Hi All The prospects of having to justify my engineering designs in this way to a non-technical bean counter I find totally nauseating. I mean what if you aren't a good enough salesman, can't convince the guy, and therefore end up with a plant with inherent weakness in its design which kills someone 3 years down the line. This is a perfect example of engineering decisions for all the wrong reasons. The use of quality equipment on a project is not some do Donald a favour thing, sometimes I wish the client would take his whole project and test the length of his arm, but I have a policy that I turn no-one away, now an accountant is doing me a favour by allowing me an extra 0.00001% to do the job properly and I have to BEG FOR IT. No way that accountant can take his project and his money, his boss his entire organisation and go for a walk on the wild side. Regards (Highly aggravated) Donald Pittendrigh > If you think like an accountant, then you can see that in many cases the > capital cost is the hardest to justify (Hence the pre-occupation with it). > It is necessary then to convince the accountants then that leaving in that > extra PE cell is not only the right way to do it but will SAVE THEM$.
> Even redundant systems can be cost justified. Lets say you are working for
a

For example, suppose you have to connect 70 PLC's to 14 PC's (5 PLC's to each PC). You only have to share a small amount of data so if you had, e.g. an S7-200, you could use the PPI cable and Prodave light, for a total cost of around $4000. If you spent a day doing your own protocol on the freeport mode you could shave another couple of thousand off that price. On the other hand, with the S7-300, you need a CP card to do the MPI and there is no freeport alternative, so we are talking at least$11200. If we move on to OPC we are talking $21000 (also, the customer wants to use Windows because 'their staff always have trouble maintaining NT' - his words, don't flame me). Now, that setup of 70 PLC's then needs to be replicated at at least one site, possibly more. If the 300 had a freeport mode like its little$200 cousin, we have $20000 saving on the first two sites alone. That's worth spending a days coding for. "Look after the pennies and the pounds take care of themselves" -- Dickens C Curt Wuollet Hi Ken > What a great summary of life in the manufacturing sector of the > good-ol-U-S of A! > > I think there are two major camps from where I sit. There is the camp > that says they will buy any type of controls as long as it has an > Octagon on it - regardless of what it costs or whether it makes any > sense or can even handle the app, these customers seem to go in cycles > with a love hate relationship with the almighty octagon. AND the other > big camp is - whatever is cheapest .... buy it. . . regardless of how > much personal effort and cash they have to put into it to get it > running, try to keep it running, and eventually to replace it with the > next cheap fix that will solve some of the problems it has created. I get to see both sides of this as a captive supplier and I'm coming to an epiphany, A radical view that there has to be a better way. Cost is important, real important, and both of those camps cost too much, just in a different way. The cheapest way is not remarkably different from the Octagon and friends. The Octagon way is supposed to be efficient because it's "off the shelf" with a little value add for programming and services. The cheap way is supposed to save you enough on hardware to pay for all the integration headaches you take on by not buying from a single source. OK the big picture is that both of those and even the third group are broken and grossly inefficient causing costs to be very discouraging. The Octagon approach is broken by overselling the advantage of a single source and taking advantage of the lock-in. In our situation the integration cost is still excessive and it's big money whenever you need something. And it can be really hard to get the people that you need. The good part is that you aren't always reinventing the wheel, some knowledge carries forward to the next project. The cheapest approach can work if you're lucky, if not, you end up doing a lot of rework. Since the cheapest stuff changes day to day chances are that you engineer new wheels on about every project. Help isn't a problem since it's brand new to anyone. And the knowledge gained probably won't apply to the next project. The optimum approach would be if you could always use the same stuff yet not get raped for the priviledge. Almost all the knowlege would apply for future projects and you wouldn't have the churn. For this we need a platform thet is versatile and works with everything to keep suppliers honest. It would use protocols that already exixt and off the shelf hardware. Since development was just for the system itself, it could be replicated cheaply. And if everyone used it and shared notes the amount of wheel engineering would be small. This is the promise of the octagon approach, with the cost of competitive commodity hardware. I had this epiphany because the cost of integrating a proprietary line got close to what it would cost to develop a full custom solution due to the barriers at every turn that are inherent in the proprietary approach. I know what you're thinking..... I still wouldn't save anything. Not on this job. With the next one I would save a lot. And with each job the cost would diminish. Now suppose I gave that solution to other integrators. They would have that same cost curve and increasing profits. This is what the Linux PLC project is about. Taking the cost of developing an integrator friendly, versatile solution and spreading it out among enough companies that the cost becomes in effect nothing. Maximizing reuse, eliminating duplication of effort, and very important, creating a market for vendor neutral IO hardware and competition for that market. The product would be owned by all equally so competition would be back on quality of solutions you provide with that product. The great majority of the cost that people object to is directly and indirectly the cost of providing and maintaining 150 complete and functionally equivalent solutions to the same problems. Every dollar saved in eliminating that huge burden is another dollar that flows to the services and solutions providers that solve the problems and make factories work. Who do you think deserves the lion's share? The dramatic decrease in the cost of computing in general can be directly attributed to the standardization of platforms and the elimination of the total duplication of effort. > > A third and less prominent camp consists of those who actually think > about what they need to accomplish and consider the long term > consequences of the choices they make. These are few and far between, > but when we run across a customer like this, we bend over backwards to > get them and then if things look really good, we make efforts to fire > one of our less favorite customers from one of the other camps. Nothing > limits your ability to grow and be a good service provider than a > short-sighted customer who abuses vendors. It goes a long ways towards good and happy customers if you can demonstrate that you spend their money well. A couple of outlandishly spendy doodads each time they want a change erodes the goodwill in a hurry. _I_ am embarrassed at the cost of the proprietary offerings. I am at a loss to explain why connectors cost$80.00 and why you can't do anything without buying more "special" stuff. Most customers won't begrudge you a profit but it's hard to add to already inflated pricing. There is much less resistance to commodity hardware simply because it's reasonable.

We are trying to provide that alternative but, we need help. If you think there should be a rational choice and an alternative to the status quo, we need coders and people with experience in all facets of automation. We have a _lot_ of lurkers on the list but, we need some push to make it happen.

Regards

cww

R

Richard McMahon

> The prospects of having to justify my engineering designs in this way to
> a non-technical bean counter I find totally nauseating. I mean what if you
> aren't a good enough salesman, can't convince the guy, and therefore end
> up with a plant with inherent weakness in its design which kills someone
> 3 years down the line.

Donald, a quick question

How do you make out an ALARP case if an accountant determines the expenditure level with no reference to system design?

Richard

R

roger Irwin

Richard McMahon wrote:

> When we talk about costs we must not forget that:
>
> cost != purchase price
>
> but rather
>
> cost == purchase price + maintenance cost + hassle factor + ...
>

This is very true, and why I believe for 1 off solutions ease of use should be preferred over cost, but as instances increase you have to look very carefully. Also, the fact that a product is expensive does not mean it will have low maintenance costs, it does mean that they will spend a lot of money trying to convince you that this is so.

As for 'single source', this often increases hassle factor, as no single supplier will always have the most suitable product for all your
requirements, so you will find yourselves with workarounds and compromises.

Sometimes things work in reverse. Also, many high priced products try to maintain profit margins and justify costs by adding in features rather
than improving and fine tuning what they have. I like to go for the simplest possible solution using tried and trusted techniques rather than lots of fancy bells and whistles. Far less hassle, far lower maintenance costs.

H

Helmut Meissner

Hello Roger,
Hello Donald,

you're true, when you say that the licence cost con go up. We in our company have the same problems. With every machine you have to give away
a Scada-system or something to store, cummulate, prapare etc. PLC-Data and make printouts for the Company-Owners and controling-stuff)

For the S5 you could get a dozen products of different companys; you where not forced to buy Siemens Prodave-Licences. Then S7 started it was
a big problem to contact to PC. We use for plant or machine installations L2-FMS and a cheap Scada system (no licence fees) and had to buy the expensive Siemens Hardware (CP, PCI-Card).

For the small machines we programmed a small DOS program and used a company licence of AS-511 Drivers. (one time cost about 3000 DM appr. 7000 US$) I contacted the company process-informatic 2 weeks ago, because i will not get any more S5 PLC by siemens in the future and had to chance to S7. They have MPI-drivers (PC-MPI-S7-Link with company licence for about 3998 DM about 10.000 US$ depends on the Euro-Exchange ;-), Project
licence for endusers 999 DM about 2400 US$) I think it is worth to watch 3rd party companies. In the Online-shop you can buy licence and source-code !!! http://www.process-informatik.de/shop/shindex.htm Their description (sorry only in german) shows nothing yet for Linux. But I think we have to wait 3-5 years until endusers and company-owers will see that MS is not the only solution for PC Operating systems. We will try to use MS-DOS as long as possible, because it is stable and cheap (Dos-Clones) and for the endusers easy to handle. (Some Function-keys, and Arrow-Keys are the best for unemploied works, No Mouse, no touch: just write down: Press Key xxx, then Key yyy, etc.) Helmut Meissner Manager Electric and Software Department Schlosser-Pfeiffer GmbH [email protected] PS: If you need some information how it is running under MS-DOS please contact me in about 3 weeks. B Bruce Durdle Just to add another log on the fire ... A few years ago, while working in the UK, I attended a meeting on the topic on the economics of Cogeneration projects for industrial applications. First item on the budget - at something like 10% of main plant capital cost - lawyers' fees to obtain al the necessary environemtal and other permits. Engineering consulting fees - to make sure the damn thing worked and didn't create the environmental problems the lawyers were concerned with - 2% or less. Something screwy somewhere. Bruce J john coppini well, well, well, lots of comments here! so this one will probably go unread. but here's my observation: ****the powers that run a company are usually not in engineering and manufacturing. the power is in in finance and management. so....engineering and manufacturing get the short, dirty end of the stick. furthermore, engineers let this happen to them by selling themselves too cheap! for example, control systems consultants have a hard time selling their services for$75 per hour on the west coast. by comparison, business system consultant get as much as $200 per hour. the people that pay the bills and run the company have no problem spending$200 per hour on themselves! but they are really cheap on engineering and manufacturing expenditures!

***in summary, most engineers are technicians, not businessmen! rationalize as much as you want, but this is the situation. so just keep wasting your time reinventing the wheel in Linux----riduculous!

John Coppini
Engineer

A

Anthony Kerstens

....
> First item on the budget - ...10% of main plant
> capital cost .... - lawyers' fees ...
> Engineering consulting fees - ....- 2%....
>
> Something screwy somewhere.

Yes something is screwy. We as engineers are not making enough $. Anthony Kerstens P.Eng. D David W. Spitzer John, This is a good point. We (engineers) are somewhat at fault, but in a world of "just in time training" (think a while on that one), "it's user-friendly" (read easy enough for anyone to do), and "if you can't do it, we'll get someone that can" attitudes, engineers can become a commodity, even if reality says "not so fast". Also, I differentiate between three types of engineers with three different pay scales. At US$75 per hour, you appear to be describing the second group below.

1. engineers who work directly for a company (with a steady income plus benefits...)

2. (contract) engineers who are contracted to work part/full-time on an ongoing basis for the same company (with a relatively steady income plus few or no benefits...)

3. consulting engineers (consultants) who work a small number of hours on specialized problems for multiple clients (with an erratic income plus no
benefits...)

Each seems to affect the pay scale of the next. After all, why pay US$200 per hour for a consultant when an employee can do it for US$40 per hour? We know there is more to it than this. The employee may be skilled in other areas and take many times the time to do it incorrectly (yes, incorrectly).

Just a couple of weeks ago, I observed an installation that had been troublesome since its installation 8 years ago. The employees were about to make the same mistake again, but one employee (whom I had met years ago at an ISA show) "knew what he didn't know" and called in a consultant. The core problems were defined in 2-3 hours. The whole project, including the site
visit, report, and design basis to solve the problem will likely be less than 30 hours.

Interestingly, the first two groups often have an adverse affect on their own future earnings, because in semi-retirement, they often attempt to join the latter groups.

Regards,

David W Spitzer
845.623.1830
www.icu.com/spitzer

C

Hi John

</rant>
Not unread anyway. This is a problem in all the technology fields. One hears these days about this tremendous shortage of technical types. I haven't seen it. What they mean is that they advertise for someone with every current hot buzzword skill they can think of and offer $35k a year and those jobs go unfilled. Hmmm.. Must be a shortage. I know of serious computer people who are working in other fields because they're tired of being abused and underpaid. The latest cure for this is to go offshore to find exploitable people, it isn't working because the highly skilled people from other countries aren't stupid either. And a lot of jobs that go unfilled pretty much suck. Yet as soon as market forces begin to work to push wages for technical people up, there's a tremendous hew and cry to import talent or churn out more graduates "because there's a shortage!". No one thinks of retraining older skilled workers that can't find a decent job. No one wants to pay for developing workers from within. If you can't get the exact skill set you want at below the already depressed market rate, there's a shortage. I'll bet without exception that upping your offer by say 30% will take care of any shortage you might be experiencing. I have headhunters calling with ridiculous proposals and I'm sure they go away with the impression that there's a shortage also. <rant/> Why is it that employers are so dead set against paying for the skills that are building the new economy? Regards cww A Anthony Kerstens New economy? It smells like the old economy: Make as much as you can while paying as little as possible for overhead. And speaking of overhead, I wonder if anyone who knows (and is willing) could describe a typical breakdown of where$75/hr goes, if an engineer is being paid $35k. ($US )

My _guess_ is the hourly salary works out to
about $16.83. Plus 40% benefits comes to$23.56. Plus a decent computer (every year) comes to about $1.50 per hour. Office space at$10.00/sqft, at 4000 sqft per 20 people
(desk/hall/lobby/lunchroom/library/test room)
comes to something like $12.00/hr. Training if your lucky might be$2000.00 per year, which comes around to $0.96/hr. I personally might consume 4 hours per week of support staff time, so 1/10hr *$15 come to $1.50/hr. And lets throw in another$10.00 for things I may have forgotten. The grand total is $49.52. (No wonder home offices are so popular.) That leaves$25.48 for the firm, from which
there's marketing costs, upper management salaries
and taxes on the remainder.

Oh yeah, subtract $6.73 for every$10k above
that $35k salary. Don't get me wrong. I'd love to make more money. And I think I deserve to make more money. I just don't think money is the cause of a "shortage" of technical types. There's plenty around. The problem is that even though some of us are worth the good salaries, there are more that are not. You get a handful of prima donnas, and a bucket full of something else. Those belonging to the bucket probably don't know it, and are bitching about salaries right along with everyone else. You still have to pay for the bucket full because you need warm bodies to fill a desk and keep work "flowing". The trick is finding an employer who can differentiate between you and the bucket when it comes to paying out salary. If an employee feels his employer isn't seeing that difference, then maybe he should be keeping his eyes open for other opportunities. Anthony Kerstens P.Eng. R Rick Daniel &lt;perk> Please tell me where I can find an engineer for$35k/YR! I'm excited! We're paying more than that for fresh-outs! According to my salary survey from the American Electronics Association, engineers make 2 to 3 times that.

Rick Daniel
Intelligent Instrumentation