Volker Neumann, Commercial Senior Project Manager at SIEMENS for major projects in the global rail business and Executive Advisor for OYSTEC, talks with Gernot Kapteina, Founder of OYSTEC, about SIEMENS and its rail business in times of digitalization, as well as which methods and techniques are particularly relevant in projects. The interview was conducted in German and translated into English.
Volker, thank you very much for doing this interview! You have been a Project Manager at SIEMENS for many years now, focusing on commercial Project Management in the rail business. How did that come about; can you first tell our readers something about your career path?
Neumann: Very much so. I've always worked at SIEMENS, where I started as an Industrial Manager. Pretty soon, I was assigned to one of the first major foreign projects in China. Since then, the project business has never left me, so I still take on the role of commercial project leader today. I am a practical person. But despite all the practice, a driver's license is part of the driving; that's why I've had myself certified via the PM@Siemens career path all these years up to currently Level B "Senior Project Manager". This second-highest internal certification allows me - together with a Level A "Project Director" - to manage even our largest and most complex projects worldwide. In these cases, I then take over the commercial project management.
We will get to the interesting projects in which you have taken on Project Manager roles in many parts of the world in a moment. First, let's talk briefly about the company: SIEMENS has a traditional reputation with its 170 years of existence, overcame a possible breakup after World War II, was centralized as SIEMENS AG in 1966, and yet was supposed to be split up - this time deliberately - by Joe Kaeser starting in 2010. Now, with Roland Busch, a more technically oriented CEO will once again lead the business. What is your opinion of SIEMENS as a whole, how do you see the current development - in general and especially for your area of railroad technology?
Neumann: It is indeed not yet clear whether the decentralization communicated since 2010 will continue in this way or not. I still remember a presentation by Joe Kaeser with a picture of an aircraft carrier and smaller warships. Kaeser's point was that smaller speedboats would be a better way to handle the capital market than a rather heavy-maneuvering capital ship. And yes; it will also have an influence that SIEMENS with Roland Busch is now again headed by an engineer, whereas Kaeser came from the finance side. So we'll have to watch how things develop. It has often happened that business units have first been outsourced and then reintegrated. But that would be pure speculation.
In my division, SIEMENS Mobility, we are responsible for the railroad business of SIEMENS, which is a great business - also at present. It is precisely in times of crisis that governments begin to invest in the railroads, because they are systemically relevant. This is not only thought of in Germany, but globally. In times of a lockdown, the infrastructure has to be maintained, for example to transport food. But what strikes me independently of Covid is, of course, that we are also digitizing at SIEMENS: We are moving away from industry and toward the digital track. The focus is more on software than on hardware development. Manufacturing hardware in Germany is not always the smartest option. The digitization of our rail business is even leading to one of our visions being to sell licenses in the future so that we can then operate the interlockings for our customers from the cloud. Of course, the focus will remain firmly on the customer. However, this also requires high-performance hardware, which we also provide to the customer. All in all, however, rail remains rail.
What are SIEMENS Mobility's strongest competitors?
Neumann: First and foremost, I would mention Alstom and Bombardier, which merged their rail technology divisions a few months ago, and offer roughly the same as we do - however, they are still financially struggling for a while and therefore may not be able to drive innovation to the same extent as we currently do; thus, they also do not have the same good financial rating as SIEMENS. However, this has now become a big player, and could develop into a bigger competitor for us. In addition, larger competitors are developing out of China, for example CRCC, China Railway Construction Corporation. And I'm now also talking about the European market. They are even bidding for Deutsche Bahn. That's why it seems a bit strange to some Siemensians that the EU has rejected the intended merger between Siemens and Alstom, when the Chinese are practically standing at the gates and have already completed projects here in Europe. CRCC has founded entire cities in China, piled up land, built gigafactories there, just to produce the parts they need for the market. They are also already equipping Africa.
Interesting. Let's talk more specifically about the rail business itself: Can you describe your core business to our readers in more detail, i.e. what exactly you offer and implement?
Neumann: SIEMENS Mobility is divided into five business units: 'Rail Infrastructure' for rail traffic signaling and control technology, 'Turnkey' for the construction of turnkey rail facilities, 'Rolling Stock' for trains of all kinds, 'Customer Service' for maintenance, and 'Intelligent Traffic Systems' for traffic control systems. I myself work in signaling technology, at the Braunschweig plant in Germany. Here we have the very best colleagues on site who do an outstanding job. We are ensuring that public transport is becoming ever safer - and now also more digital. In doing so, we want to continue to get better. This means, for example, that we are working to achieve more efficient train times in order to move more people and more goods from A to B faster, but also more safely. To this end, we offer our customers state-of-the-art interlocking and ETCS technology. ETCS stands for European Train Control System, a train control system with a level-dependent mode of operation. Depending on the customer's requirements, a specific level must be reached that defines specific interactions between rail lines and trains, the ways in which information is sent to the trains, and also which functions are to be executed on both the rolling stock and trackside. Here, there is often the challenge of making our new technology usable for older train systems that are to be modernized by us. Because as long as it's not a turnkey project, it's always a matter of integrating different technologies. I should perhaps mention other technical components as part of our signaling product portfolio - these range from railroad signals to axle counting systems, track circuits, block transmission systems, switch setting systems and others. Control technology is also important, that is, the technology that visualizes everything in order to provide the customer with operating systems.
What are the order volumes for such a portfolio of projects?
Neumann: In the metro business, we're talking about projects with a turnover of between 10 and 100 million euros. For example, 15 years ago you and I worked on one of the longest metro lines ever: Delhi Metro Line 3 in India. As far as I know, there are hardly any lines longer than this anywhere in the world. However, the price level in India is very low, so we didn't reach 100 million. But in terms of the portfolio, the spectrum covered the entire country equipment of modern ETCS solutions, as in our current project in Norway. In the case of this relatively new rail project, however, we are talking about a very high sales volume - namely 800 million euros. This includes planning, implementation, but also maintenance - all from the point of view of our signaling technology alone. Other suppliers also take care of a number of further areas, such as control technology and train equipment. The trend is now also moving more in the direction of large-scale projects.
At the beginning, you already briefly talked about your roles in the project business. Can you give our readers an overview of your personal project history and describe your roles - and also what makes each project special?
Neumann: Then we have to go back to the 90s: From 1994 to 1998, I was commercial Project Manager for the Guangzhou Metro in China. This was a turnkey project co-financed by KfW (*German abbreviation for 'Reconstruction Loan Corporation'), where not only the signaling technology but also other trades were professionally outsourced. It was also interesting to see how we won this project against Alstom, where the conflict between China and Taiwan also played a role, but that's another story. In any case, we were all able to learn a lot in this project right from the start.
In my next project, I was the commercial Project Manager for the TKE (Tseung Kwan O) Line in Hong Kong from 1998 onwards. This is where you and I met for the first time and then worked together on many of the subsequent projects. The special thing about this project was our cooperation with the French partner company MATRA: While we from Germany designed the interlockings, the French were responsible for the train control system. It goes without saying that there were one or two challenges here and there. In the end, we all learned a lot in various intercultural training courses, which is still valid today: As Germans, we usually have a solution concept and a goal in mind pretty quickly in projects, which we concentrate on, while a Frenchman tends to organize brainstorming sessions with everyone involved, and everyone can think freely for a very long time. We Germans are more impatient, and then we sometimes clash. Another thing I'm thinking about is that our projects used to be much smaller than they are today - not only in terms of turnover, but also in terms of project members. Back then, we had around ten to fifteen people in the Hong Kong project in Germany, whereas today there are up to 250 people in some projects.
After Hong Kong, I was reassigned to the Xin Min project as commercial Project Manager in 2000. This was a smaller project, namely a 20 km line on concrete piers - a successor project to the Transrapid, which colleagues of ours had also managed from Braunschweig. After the Transrapid, the Xin Min project was a first, new opportunity for us to equip subways again - albeit on a somewhat smaller scale - in China.
Then came the New York project, starting in 2001: We had won the implementation project for the control technology for New York's entire rail network, including Manhattan. Our customer was NYCT (New York City Transit Authority). The control technology from an American competitor had failed in advance, and we from SIEMENS stepped in. At that time, you also worked for us on the configuration of the individual components of the New York control technology in the project. The biggest challenge was definitely the World Trade Center attack in September 2001. We had employees in one of the towers - they were sitting right there when the planes came, and everything was destroyed. When the first plane hit the first tower, our employees from the second tower started to leave the building as a precaution. Then the second plane came. We lost two American colleagues with it, unfortunately; many others still escaped with a lot of dust on their skin and hair. And a lot of documentation was destroyed. Nevertheless, in the end we were able to go into operation as planned in 2005.
And then came India in 2005 - the Delhi Metro Line 3 and later other extensions. This was the fastest LZB project (line train control system) we had ever done: from signing the contract to the first train was only 14 months! Here, I was again the commercial Project Manager for the signaling technology. The whole project was more complex, in particular we had colleagues in India including you as claim manager on site, plus other employees from SIEMENS Thailand and China. From a commercial point of view, this project was quasi Champions League! The Indian customer questioned points in our contracts and very smartly renegotiated them over the duration of the project. The motto that I had followed up to that point - agreement comes from agreement - was quickly put to rest. Since then, we have been "filleting" requirements in our contracts piece by piece in advance - from acquisition to verification with experts. The first Indian project was followed by more and more subsequent projects. This all went on until 2015.
From 2013, however, I myself was already appointed as commercial Project Manager for South Africa. The country had launched an infrastructure program to develop the regions near Cape Town, Durban and Johannesburg - including the rail infrastructure. We had won the contract for 100 stations in the Johannesburg region, where we designed and supplied the signaling technology. I was also there on business, and then you realize that Africa is a different continent.
And your current project is now ERTMS Norway.
Neumann: Exactly. The client is BANE NOR, and the 'ERTMS' in the project stands for 'European Rail Traffic Management System', which was already prepared from 2016 and won in April 2018 - with a volume of 800 million euros! 650 are earmarked for implementation and 150 for subsequent maintenance until 2034. We at SIEMENS are responsible for all the signaling technology, whereas other companies such as Thales are designing the control system and Alstom is equipping the trains. BANE NOR wants us to work with these companies in a kind of "new collaboration approach," which we are of course implementing. What makes this project special, for example, is that we are designing the first purely IP-based interlockings, which will be controlled from just two control centers in the country. For this purpose, 400 interlocking containers are being distributed throughout Norway, which are connected to the control centers. These are always on "hot standby." So if one control center fails due to a terrorist attack, the entire country can continue to be served from the other location. In this project, I am once again acting in the capacity of commercial Project Manager. Specifically, I am in charge of the scope of supply and services for the German share, which is 330 million euros. However, the current Covid situation has made the overall budget situation somewhat more difficult. That's also why we have very specific requirements in the area of claim management in this project. From a commercial point of view, I am therefore paying even more attention to consistent tracking of costing, optimization of opportunity management and consistent risk avoidance.
That's a very impressive project history! Which of all these projects do you remember the most?
Neumann: Probably just like you: the Delhi Metro project, where the customer was extremely professional in his actions from a commercial point of view. Of course, so are other customers, but business in good-old-India is very interesting. We had to deliver performance in a very short time and managed to have the first metro running within 14 months - and that in an emerging market. With this dynamic, that is probably no longer feasible today.
How important is the topic of project methodology in such projects? What methods do you use nowadays and what makes them stand out?
Neumann: In a grown organization like SIEMENS, it is important to have a project methodology and to live it. I was even involved in the introduction of project management processes at SIEMENS Mobility in the 1990s. All of this helped to ensure that projects were managed even more professionally and in a more uniform manner. Today, with PM@Siemens, we have a standardized process that takes into account customer categories and provides the necessary processes, techniques and tools. We follow IPMA/GPM recommendations and have therefore also divided our projects into D to A project classes. The Norway project, for example, is an A project because we are rolling out new products, the value is very high and it has a high level of technical complexity. On the other hand, you can't overdo it with project methods: As tenders become more and more complex in today's world, it must be ensured that a project methodology continues to really support us in the project execution that comes afterwards and must not limit us. These increasingly complex tenders demand a flexibility that otherwise established processes sometimes no longer offer. Then it is time again for a change, i.e. for another meaningful update of the project methodology. In sum, a project methodology is extremely important, especially for global organizations and not only but especially for large projects.
Another important project topic, in addition to or as part of a methodology, is claim management, which you have already mentioned twice - once in the Delhi project and then in the Norway project. What gives claim management such a high priority in projects?
Neumann: The installation of a functioning claim management is virtually a kind of life insurance in the project. On the one hand, because it has become standard practice. Government clients in particular are interested in fair and transparent project management - and they have good people who are happy to request extra deliveries or have them carried out during the course of the project. In this case, however, fair payment should be made for additional services - and then it depends on how claim management is implemented in the contract. There are various categories where you can start to get variation orders approved. And on the other hand, from a commercial point of view, you can also name other reasons, for example, despite the best risk management, you have to reckon with so-called "nonconformance costs" (NCC). They are part of it; you have to live with them. Here, too, something can be done to counteract them from a commercial point of view with a functioning claim management system.
Now we've talked for a while about the project business itself. My next question is perhaps no longer just about that, but also more generally about SIEMENS as a whole - how important is and will digitization be for you?
Neumann: We ourselves are using more and more integrative digital products, and in some cases have been doing so for some time, such as using SAP software, although we are still in the process of migrating to S/4HANA. Our Mobility Division had pioneered this, among other things, by being the first to test the migration of legacy data into the new S/4 system, for example. However, the reason why this conversion process is continuing is that our system landscape is very complex, and we also have many in-house developments in the previous SAP ECC. The use of SAP takes place at both management and project levels. We use other digital products, for example BIM 360, the 'Building Information Modeling" from Autodesk, for planning project preparations of our projects. We have also made great progress in the area of 'automated test environments', so that we can test through various case studies at lightning speed. But digitization does not stop at our external products: I mentioned ETCS at the beginning: the train control system with the corresponding levels. In our current and future projects, we often offer the highest level 3: This means that a great deal of our customers' work will then only take place digitally on and off the rail line, for example encrypted IP communication with digital interlockings.
If we look into the future, where will SIEMENS railroad technology develop?
Neumann: It is imperative that we defend our market leadership. New global competitors are coming, so we must continue to shine with innovations in order to maintain our current lead. Digitization will also move us forward mightily in Germany in this regard. For example, the German government has launched the "Digital Rail" project - a 17 billion funding program in our infrastructure. With or without Corona, I assume that other countries will continue to formulate similar programs, where we at SIEMENS can certainly offer our strong solutions. In addition to this commercial aspect, technical areas will also continue to develop - for example, driverless operation of trains will become more and more common, especially in conjunction with ETCS Level 3 and ATO, or Automated Train Operations. This has already got off to a good start in metro traffic, and one can also imagine it becoming more widespread on long-distance routes, such as in Norway.
In addition to your role at SIEMENS, you also support OYSTEC as an Executive Advisor. Thank you very much for that! Against the background of your experience as a Project Manager in the global project business: How do you rate the capabilities of OYSTEC?
Neumann: You have a number of things that help organizations move forward - I see your services for project and claim management, for example. It is always important to have a healthy mix of theory and practice. If you use PMI, for example - as you do - that's a very good thing. But of course the soft skills and experience from previous projects and other industries also count; and of course a project methodology cannot act alone. As long as you continue to focus on the customer and always have "an ear to the ground", you are doing a good job.
Thank you very much. Now that you have spoken in such detail about the rail industry - where can an interested reader delve further into this subject?
Neumann: What I personally really like is the InnoTrans trade fair in Berlin, an international trade fair for transport technology. Many suppliers and potential customers always come together here; exhibitors show the latest highlights and products. Then I like to regularly read the 'Railway Gazette', which is published monthly and provides me with the latest updates from my industry. I can highly recommend both of these.
Volker, thank you very much for the interesting interview!
One of Volker Neumann's hobbies: railroad model making
Link: SIEMENS Mobility Website
Link: InnoTrans-Messe Berlin
Link: Railway Gazette
Link: OYSTEC Offering - Interim Claim Manager
Link: OYSTEC Offering - Design of a Project Management Methodology (using PMI PMBOK7)
Link: OYSTEC Offering - Projekt Management Coach
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