Best Practices

How to be a Top Tier A&E Firm

The majority of A&E firms will concur that 2017 and 2018 have been stellar years for the industry.  Opportunities have been abundant, and economists are telling us that it is likely that the momentum will continue into next year.  With this high volume in the AEC industry, profits are up and we know from industry survey data that the current median profit percentage across all A&E firms in the last year has risen to about 15% depending on your size and geographic and industry markets.  This means that half of all A&E firms have profits below 15% and half are above 15%. In fact, the top 5% of A&E firms in North America are at 30% – we refer to these as the Top Tier firms. Our mission is to help our clients maximize the potential of their teams and achieve this status in their specific niches.      With these higher profits it is easier to attract and hire the most talented team, grow faster through acquisition or organically, and give shareholder and employee owners a much higher level of return.  What is keeping 95% of the firms in the market from achieving this top tier status?  We have researched and assessed over a hundred firms … Continued

QK Finds Lost Dollars with Profit-Enhancing Employee Development Program

“While I have always been concerned for the client, the company, project performance and profits, as an engineer my focus has always been on the technical aspect of the work. This focus on quality and technical excellence will never change. What has changed, however, is my behavior and focus on how the technical discipline and the project management disciplines are inextricably tied. By changing the way I look at and value project management, I am helping my company serve our clients better AND Find Lost Dollars!” – Lisa Wallis-Dutra QK, originally Quad Knopf, has been helping clients build great communities and healthy environments for more than 40 years. Based in California and founded in 1972, QK was built on five distinct areas of expertise that work together to make the built environment possible. Their creative professionals specialize in engineering design and construction management, survey and GIS, urban design and landscape architecture, biology and environmental permitting and planning. Issues affecting low profits and stalled growth In early 2017, the executives at QK realized that their strategic purpose, “one connected team, working in partnership, to make the … Continued

10 Strategies to Boost Employee Retention

The number one challenge stated by our clients right now is hiring and retaining employees. Because finding experienced employees is so difficult in the A&E industry, many firms are getting creative with their compensation plans, benefits, profit-sharing and other tactics to engage and retain their existing client. What Does it Cost to Lose an Employee?  Statistics show that losing an employee costs the average employer about six to nine months salary. For a $50,000 person that is about $25,000 to $37,500 for one person. And in fact, it can cost over 200% of salary for an executive level person.   These figures are mostly based on finding, replacing and training the new employee, however there are many other hidden costs such as:  Decreased client satisfaction  Employees taking clients and other employees with them  Ramp-up time to get the new person up to speed  Project issues and rework due to loss of continuity and teamwork  Loss of staff engagement  Having to turn work away due to lack of capacity  Losing the employee’s knowledge of clients and projects  Obviously, this is a huge expense that most firms want to avoid, yet many firms are still finding that the average tenure … Continued

10 Dirty Secrets of the Best A&E Firms

The Architecture, Engineering and Environmental industry is as hot as it has ever been in my 30-year tenure, yet even when work is booming, I still find even the best A&E firms struggle to meet targets in any given month, quarter or year. So many factors impact the success of a firm, including some institutional “dirty little secrets” that plague the firm’s growth, retention and profits. These are the bad habits, cultural discretions and unintentional results of focus on fast growth causing leaders’ sleepless night, and employees’ endless frustration. If they exist, they are also undermining the future success of your firm by eroding client confidence and loyalty, handicapping your best performers, and deteriorating your firm’s great reputation and ability to invest strategically. What Can be Done to Clean Up the Dirty Secrets? While fixing these problems is not easy, it is critical to overcoming plateaus in growth, and enabling a small firm to grow into a mid-size or large firm. The good news – these dirty secrets can be reversed and overcome! But first you need to acknowledge they exist. By first recognizing, and … Continued

The Blessing and the Curse of Being So Busy

The Architecture and Engineering industry is busier right now than it has been in a long time. This is great for your firm – right? I talk with at least 5 to 10 A&E firm CEOs a week, and their results are surprisingly mixed. While it is obviously a booming market for services, being busy does not necessarily translate into high employee performance, recruiting success or project profitability. How Can you Position Your Firm for Success in this Market? Every economic market provides us opportunities and obstacles, yet many firms run on autopilot, assuming that the dynamics of making money and growing are the same in up or down economies. This approach assumes that the opportunities will be obvious and take care of themselves, and that is not usually the case. To be successful in a fast-paced business climate, it’s imperative to position your people, strategies and decisions to recognize opportunities when they present themselves, and be agile enough to move quickly to take advantage of them. Likewise, we need to prepare for an inevitable future downshift and availability of work, and the hidden opportunities … Continued

Why Some A&E Firms Make More Money Than Others

Many A&E firms come to me because their profits are too low, not hitting expected targets, and barely enabling the firm to grow. In most cases, their projects are making a profit – just not at the levels expected or needed. The leaders of these firms are frustrated, and want to know – what do we have to do to get to the top 10% of firms in the industry? By getting to spend quality time with the executive team of over 700 A&E firms over the last 28 years, with confidential access to their key financial indicators (KPIs), I was able to see a huge variation in the profit margins from one to another. While some firms struggle to hit 8% profit, others are sailing along with consistent profit margins over 30%, and in some cases, in excess of 40%! What Profit Should You Be Making? While these higher margins are much more expected and targeted in most other professional services industries, the average architecture, engineering, environmental and Geotech consulting firm is targeting 13% to 15%, and lower if 100% of their work is … Continued

10 Keys to Increasing Utilization

  The employee utilization rate is one of a handful of key performance indicators (KPIs) used by A&E firms to measure the ability of the firm to keep employees working on billable projects.Your employees are your firm’s primary asset and optimizing their performance and use of their time will make the difference between low or high project profit margins. For a 100-person A&E firm, just a 1% increase in utilization is about $225,000 in additional revenue per year. Firms are the busiest they’ve been in over a decade, so I have to ask, If everyone is so busy, why do so many firms struggle to hit utilization targets? So why do so many firms fail to hit utilization targets and keep their billable staff fully utilized? There are really only a handful of reasons that utilization is not optimized: Poor and/or Inaccurate Time Management Lack of Direction / Focus on Non-Billable Time Lack of Scheduling Processes Inability to Forecast Poor Communication with Staff Insufficient Scrutiny / Approval of Time Not Enough Work 10 Keys to Increasing Your Utilization Now Hitting utilization targets involves careful attention … Continued

Over 12 Million Lost Dollars Found at 2018 AEC Profitability Summit

  The AEC Profitability Summit is an event developed specifically to help architecture and engineering firm leaders increase profits by focusing on implementing business management best practices. The 2018 Summit, held at the beautiful Eden Roc resort in Miami Beach, Florida, was a tremendous success. Attendees enthusiastically looked for and found lost dollars and shared ideas and proven solutions in an interactive environment. Focus on Four Common Areas Where Businesses Can Improve The Summit helped A&E firm executives work on developing new approaches in four areas of their business: Selling on value and differentiating their firms; Developing effective project management processes; Increasing employee productivity and utilization; and Implementing positive accountability and performance management programs. Many firms had multiple leaders attend which enabled them to work together with their colleagues on their firm’s most challenging areas. As attendees identified opportunities for improvement in their business they were encouraged to assign a dollar value to the impact of implementing a solution. The leaders returned to their offices motivated to implement solutions and to communicate the financial benefits to increase staff buy-in. Over $12,000,000 of Potential Profit Found … Continued

Tolerating Mediocrity – What is the Cost?

  When we close our eyes and dream of the ideal business and team of employees, we imagine a world where there are no conflicts, everyone is a top performer, and we never have to give negative feedback. Not all employees are created equal But the reality is that not all employees are created equal. We all start out hiring people because we believe they are a good fit, have the right skill sets and experience, and we like them. I am assuming this since most of us don’t hire people we don’t like. After we hire them, we start to give them assignments, and within a few months, realize they are everything we hoped they would be, or not. This is the critical point in an employee’s tenure with us that often determines how the rest of their employment will go. If we accept a lower level of quality, attitude or competence than we need or expect, we set ourselves up for mediocrity with the employee. The worst part is – the primary problem is what we are not doing rather than what we … Continued

How to Strategically Grow and Retain Your Best Clients

  Trying to get work in the door can be a challenging process for A&E firms, and many may be missing the easiest opportunity of all. Getting more work from existing clients! You may assume that your clients are giving you all the work they have, but what if they aren’t? What if they don’t even know everything your firm is capable of? Are Your Business Development Efforts Strategically Focused I frequently see business development effort focused on getting new business while ignoring the greatest asset the firm has – it’s existing clients. Research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) shows increasing customer retention rates by 5% increases profits by 25% to 95%. And it is well known that it can cost 5 to 10 times more to acquire a new client than it does to retain an existing one. While many A&E firms rate themselves as having excellent client relationships, the truth is that much of that is by accident. Only a small percentage of firms actually have a documented and strategic initiative to retain and grow … Continued

5 Ways to Increase Accountability in Your A&E Firm

If there is one issue that I have heard repeatedly in working with A&E firms over the last 27 years, it is the difficulty of getting employees to fully accept responsibility – to be held accountable for their actions and performance. This issue goes so deep, that some business owners shy away from putting policies in place for fear that they won’t be able to get their employees to follow them. This practice often has the negative consequence of inconsistent quality control, compromised employee safety, and reduced project profitability. Another very damaging and frustrating result of not enforcing company policies is the constant frustration felt by your compliant managers and employees. When employees are consistently showing up for work late, not following company processes, or not responding to requests in a timely matter, it has a detrimental effect on every one of your employees. This frustration flows down to the lowest levels, resulting in a decrease in confidence in leadership, and creating dissent among those employees who are behaving well and following the rules. What is accountability and what isn’t it? Webster’s Dictionary defines accountability … Continued

5 Crucial Steps for Project Manager Success

The success of your Project Managers (PMs) can make or break your firm. Right? Considering all of the tasks that the typical project manager is required to perform, it is no wonder that many PMs get frustrated or even lose money! I did an assessment of the typical duties of the PMs that work for our clients, and here is a comprehensive but not necessarily complete list of the responsibilities that get thrown at PMs on a daily basis: Responding to RFPs and creating proposals Estimating project fees Documentation of work product Managing subcontractors Scheduling and using resources effectively Maintaining high utilization Solving client problems Budgeting and planning projects Project financial management Project quality control Management of the project timeline Reviewing and approving employee time and expenses Reviewing and approving client billing Collecting Accounts Receivable (AR) Nurturing client relationships Recruiting and interviewing new hires Mentoring and training staff Managing staff performance, and dealing with performance and behavior issues Managing contractual deliverables Avoiding scope creep and/or billing for extra services Preparing for and attending internal and external meetings Business development and networking (including events, social media, etc.) … Continued

Finding the Lost Dollars™ in Your Civil Engineering Firm Podcast

In today’s post we’re sharing a podcast of an interview of June Jewell by Anthony Fasano of The Engineering Career Coach. >> Click HERE to listen Here are some key points discussed in the podcast: Many engineers are more focused on their technical skills, the quality of their projects and the relationships with their clients and not focused on the money. Sometimes money is the last thing that gets paid attention to when working on a project and by the time you get to the end of the project you find that it wasn’t as profitable as you would hope it would be. Time and materials contracts are one where you bill your client for every hour that you work. Make sure that your billing rates are covering your costs of the project when you are billing clients hourly as a lot of money can get lost on time and materials contracts. The firms that share more financial data and help their managers to understand business and accounting concepts and financial terminology have better project profitability and their employees do a better job of managing … Continued

3 Estimating Lessons to Boost Project Profits

We have all had projects that for some reason did not meet our financial expectations. Overbudget projects happen for many reasons, including bidding on the wrong projects to begin with, underestimating the number of hours needed to successfully complete the project, failing to allow for delays and problems, or just not knowing the client well enough to anticipate what they really wanted.   Not only does your firm lose the profit margin associated with budget overruns, but overruns can also have a negative impact on client relationships and cause stress for your teams as they try and minimize the losses.   A great deal of value can be gained by analyzing past project failures to understand what went wrong, and designing safeguards, processes and approvals to minimize the chances they happen again. The following are three of the most common issues with developing accurate estimates, and some structure and practices you can put in place  to turn prior past project disasters into lessons that add protection for future jobs:   1. Understand the client’s expectations One of the most common problems in accurately developing a … Continued

Time is Money: Improve Your Employee Time Management

Time is more valuable than money. You can get more money, but you cannot get more time.  ~Jim Rohn, American Speaker and Author In a professional services business, the expression “time is money” is truly accurate. Your employees’ time is the greatest asset your business has. It needs to be managed with great care, as if each hour of their time is a valuable piece of inventory. Certainly, if you were selling diamonds for a living, you would build a secure storage facility, get armed guards, and buy insurance to protect this valuable asset. However, most firms do not protect their greatest asset—employee time—with this level of care. Employee time is often the most ignored asset in the company. Employees are notorious for complaining about having to do timesheets and often look at it as a cumbersome requirement. I regularly hear that firm principals, even ones who are highly billable, are the biggest violators of the firm policies, and cause the accounting department extra work and little support in trying to get employees to submit timesheets on time. Employee Time Management is Critical to Your … Continued