Prior to the physical build of the industrial automation system, some challenges arise, such as processes’ cycle times calculations, ergonomics and safety evaluation, and the integration of separate machines to the complete production shops. This, in turn, requires reconfiguring the processes and component parameters. As a result, the lifecycle of the system development is prolonged, and the potential for erroneous performance increases. In modern digital manufacturing environments, virtual engineering (VE) and virtual commissioning (VC) serve as effective tools to tackle the aforementioned problems and their consequences. The virtual models developed for VE and VC not only assist system developers in the physical build stage but also in the following stages of the system lifecycle by providing a common virtual model, a digital twin (DT), of the manufacturing processes and the product. This developed model should possess the ability to simulate the system behaviour, e.g., the mechanics, kinematics, speed and acceleration profiles. Three stakeholders are involved in the development process: the machine builder, system integrator and end user. The current work focuses on the virtual engineering approach to support the entire lifecycle of a manufacturing system from the machine builder, system integrator and end user perspectives. For this purpose, it puts forward a systematic methodology of implementing VC and VE using a toolset developed by the Automation Systems Group at the University of Warwick within an industrial project. The suggested methodology is illustrated in a case study where a digital twin of a physical station was modelled, developed and tested in parallel with the physical machine development and build. Finally, the benefits and limitations are highlighted based on the gained outcomes and the implemented activities.