Häufig gestellte Fragen
When is a project-capable ERP worthwhile for project manufacturing?
A project-capable ERP makes sense when a significant share of orders has a genuine project character, meaning order-specific engineering, long lead times and frequent change orders. As a rough guide in practice, the additional effort pays off at the latest when a substantial share of revenue is generated through one-offs or very small series rather than recurring standard products. The specific threshold, however, depends heavily on the industry, order structure and the ratio of engineering to manufacturing content and cannot be fixed as a flat percentage. A sound decision therefore requires an assessment of your own processes, ideally based on a requirements document.
What distinguishes engineer-to-order (project manufacturing) from make-to-order and assemble-to-order?
With engineer-to-order, the typical principle of project manufacturing, the customer order triggers both the individual engineering and the subsequent production, resulting in a largely newly designed one-off. Make-to-order, by contrast, relies on an existing product design, where the order merely determines the configuration and production date, without any significant engineering share. Assemble-to-order produces assemblies in advance based on forecasts and only assembles them into the customer-specific final configuration once an order arrives, placing it between make-to-stock and make-to-order production. All three approaches share the fact that, as pull principles, they are triggered by the incoming customer order; they differ above all in their engineering and pre-production share.
How does an ERP handle growing bills of materials in project manufacturing?
In project manufacturing, the complete bill of materials is often not yet finalised when procurement and production already have to start, because long-lead major components are frequently ordered weeks before detailed engineering is completed. Classic standard systems usually require an item to be fully designed and released before parts can be planned, which would come too late in the project business. Project-oriented ERP solutions therefore support the concept of the growing or incomplete bill of materials, in which assemblies that are not yet fully detailed can already be planned and procured. In parallel, changes run through engineering change management, which feeds later design modifications into the structure, procurement and costing in a controlled manner.
What does concurrent costing mean and why is it important in project manufacturing?
Concurrent costing is a continuous plan/actual comparison in which the costs actually incurred for material, in-house work and external services are continuously set against the preliminary costing. It is so important in project manufacturing because, with long durations and high order values, a margin deviation would otherwise only become visible after project completion, when correction is no longer possible. If actual times are posted directly from the shop floor, for instance via shop floor data collection, project management can detect early whether engineering hours or material costs are running over plan, and take countermeasures. The final costing at project end additionally provides empirical values that flow back into the preliminary costing of future quotations.
How are long-term project manufacturing orders treated in the balance sheet?
Under German commercial law, the realisation principle of Section 252 (1) No. 4 HGB generally applies, so profits are only realised upon acceptance, and until then the order is predominantly accounted for under the completed-contract method, with the production costs recognised as work in progress. Partial profit realisation is provided for under the HGB only in narrowly defined exceptional cases, for instance for economically and legally separable partial acceptances. Under IFRS 15, by contrast, revenue recognition over time is required if certain criteria are met, in practice frequently via the percentage-of-completion method based on the ratio of costs already incurred to total expected costs (cost-to-cost). As the rules are complex and differ between HGB and IFRS, the specific treatment should be agreed with the auditor.
In which industries is project manufacturing typical?
Project manufacturing is found above all where products are largely engineered to customer specifications and produced in lot size 1 or very small quantities. Classic fields are machinery, plant and apparatus engineering, tool and mould making, steel, metal and industrial construction, shipbuilding and the maritime industry, as well as shopfitting and interior finishing and special-purpose vehicle construction. The principle is equally widespread in custom engineering and in construction supply — in other words, wherever every order involves a high engineering share. What matters for the classification is not the industry itself, but the degree of customer-specific design and the project-based control of each individual order.