Introduction
In 2023, AEC Business Solutions (AECBS) partnered with 3C Engineering to implement the innovative “Find the Lost Dollars” training program. This case study explores the huge impact on this small California engineering firm from engaging with AECBS, and the direct impact of the program on 3C Engineering’s profitability and project management effectiveness.
“We’ve seen tremendous results so far to date… it was definitely worth our investment, both time wise and financially.”
– Kelly Robinson, CEO, 3C Engineering, San Luis Obispo, CA
Background
3C Engineering is a growing engineering firm known for its excellence in project delivery. However, like many small growing engineering firms, they faced challenges including low profitability, inconsistent project management practices and overall operational efficiency.
These challenges were hindering their ability to grow profitably and maintain their competitive edge in the industry. They also realized they had the typical issue of a lack of financial and business acumen in their leadership and management teams. In response, Kelly Robinson, the CEO of 3C Engineering, looked for help in addressing these costly issues. After reading the best-selling book, Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms, and a referral from an architecture client in their area who had been through the training, they heard about the Find the Lost Dollars program and sought the expertise of AEC Business Solutions to address these issues.
Business Challenges Uncovered
In their initial consultation with AECBS, they identified the following issues causing them to lose profits and frustrating their leaders and managers:
Inconsistent Project Profitability
One of the primary challenges confronting 3C Engineering was the inconsistency in project profitability. Despite their reputation for engineering excellence, some projects consistently failed to meet profit expectations. For instance, a major infrastructure project, which seemed promising on paper, experienced unexpected delays and cost overruns, leading to a significant reduction in profit margins.
“I think in general, most of our projects were going over budget or at least breaking even. It wasn’t like we had a bunch of victories. We were just kind of barely hovering around breaking even on what we were doing.” -Kelly
Difficulty in Identifying and Handling Scope Creep
Another key challenge was the difficulty in identifying out of scope work during projects. The firm lacked a systematic approach to identifying extra services and requesting change orders. They weren’t tracking write-offs, and most of their contracts were fixed fee contracts, resulting in projects that went over budget.
Need for Improved Project Management Practices
3C Engineering recognized that their project management practices needed enhancement. Their project management was “horizontally integrated”, and they did not have a clear Project Manager role. While their engineering expertise was unquestionable, they struggled with project control and resource allocation. This issue became evident when they encountered difficulties in tracking project progress accurately, resulting in inefficient resource utilization and cost overruns.
Lack of Accountability
One of the hurdles encountered by 3C Engineering pertained to maintaining accountability among employees, primarily due to the lack of enforcement regarding essential tracking protocols. The team exhibited inconsistencies in completing their time sheets accurately and lacked effective time management practices.
Inconsistent Data Tracking
Prior to completing the Find the Lost Dollars Program, 3C Engineering did not track their data in a consistent manner. They were not entering opportunity data, they weren’t separating their direct and indirect labor, and they had poor data to reflect on overall.
“We didn’t know what to do when we started the company. I bought QuickBooks. I was an engineer. I had no clue. We didn’t even have payroll. We weren’t even making money. And so just going back and better understanding expenses and costs and making sure everything was mapped correctly and setting up that back end so that we knew the data were looking at was real data, and not having to do fuzzy math in our head to extract that out.” – Kelly
Desire for Increased Overall Profitability and Efficiency
Beyond specific project-related challenges, 3C Engineering had a broader goal of increasing their overall profitability and operational efficiency. They sought to not only recover lost profits but also establish a sustainable framework that would enable them to consistently deliver profitable projects and remain competitive in the A&E industry.
Collaborative Approach
AEC Business Solutions introduced the “Find the Lost Dollars” program, a comprehensive approach aimed at identifying and recovering hidden profits within 3C Engineering’s ongoing and completed projects. The collaboration involved the following key steps:
- Business Management Assessment: AEC Business Solutions and 3C Engineering enlisted feedback from their team to identify strengths and weaknesses in 9 areas of their business. Their employees provided insights needed to create a roadmap for business process and systems improvements. They did this using the Business Management Assessment (BMA).
- Process Optimization: Based on the assessment, AEC Business Solutions recommended process improvements and best practices in project management to prevent further profit leakage.
- Technology Integration: They were able to identify where automation could increase efficiency and provide better reporting for executive decision making.
- Training and Development: AEC Business Solutions provided the Find the Lost Dollars program of online and live training sessions for 3C Engineering’s leaders and project managers, empowering them with the necessary skills to ensure profitable project delivery.
- Monitoring and Support: Continuous monitoring of project performance allowed for early identification of issues, enabling timely corrective actions.
Results
The implementation of the “Find the Lost Dollars” program yielded significant improvements for 3C Engineering.
Increased Profitability
By identifying and addressing profit leakage, 3C Engineering saw a notable increase in project profitability. In less than one year, they went from zero profit to a 20% profit margin!
Streamlined Processes and Improved Data Tracking
Process optimizations reduced inefficiencies, resulting in smoother project execution and cost savings. They are now tracking opportunity data better, for improved sales effectiveness. They have improved the way they manage and report on projects, which has helped them control project costs and reduce project write-offs.
Real-time Insights, Improved Accountability & Transparency
Advanced technology integration provided real-time data, enabling proactive decision-making and improved resource allocation. Due to the changes 3C Engineering made in time tracking and data recording, everyone on their team can now see who spent what amount of time on what category, etc., for every single project. This transparency throughout the company has improved accountability tremendously, and all team members now understand the importance of correctly tracking their time and metrics.
Enhanced Project Management
They implemented a Project Manager role or “layer” across the company, where they did not have this specific role before. The training and development of their project managers has increased organization amongst their teams and consequently improved their ability to deliver profitable projects consistently.
Sustainable Growth
The program has facilitated a culture of continuous improvement, setting the stage for sustainable long-term growth.
Tackling Scope Creep
They now make sure that project managers fully understand scope and how to talk to clients about scope and extra services. As a result of completing the training, they found $175,000 just in extra services in a few months. They implemented better project kickoff meetings to identify scope and started meticulously reviewing contracts to make sure that they identified to the client how they were going to handle that scope.
Confidence in Financial Management
The management team at 3C now has more confidence in talking with clients about money, charging higher fees, and asking for change orders. Very often what holds A&E professionals back from asking for more money is fear. By training them in financial concepts, they now have the confidence to discuss financial issues in a more business focused way and appreciate what the firm needs to make a living.
“I think one thing that we’ve really improved is making sure that the project managers understand scope and speaking up for additional services, really kind of understanding what the customer is asking for and where those ad services are. Just this last year, I think we’ve got 175 grand in ad services. So, understanding scope and having people speak up when there’s asks being made that are out of scope and getting those ad services communicated has been good.” – Kelly
Conclusion
The collaborative effort between AEC Business Solutions and 3C Engineering demonstrated the effectiveness of the “Find the Lost Dollars” program in enhancing profitability and project management within the A&E industry. Through this partnership, 3C Engineering not only recovered lost profits but also established a foundation for ongoing success and profitability. This case study serves as a testament to the value of a proven approach to improvement of processes, systems, and training technical team members on business and financial concepts withing the architectural and engineering sector.
3C is committed to continuing to improve their business management practices, using the concepts and tools learned in the Find the Lost Dollars program.
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