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

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

Turning Around an Underperforming Team

Are you frustrated because not every team in your firm is hitting their goals or performing at their highest level? Unfortunately you may have groups that struggle to be profitable, have high turnover, or don’t embrace your firm’s culture. It can be difficult to hold remote offices and project leaders’ accountable, and even figure out what is going wrong. There are many options to attacking the problem of an underperforming team including replacing team leadership, closing a remote office, or other intensive measures. Very often an office is opened or a new team assembled in order to accomplish one of the firm’s strategic goals such as breaking into a new market, geography or client. Depending on how the group was created – from breaking off from another successful division, to an acquisition, to a key strategic hire, many things can cause a group or remote office to underachieve. Measuring Team (Under)Performance In measuring the performance of our groups or teams, we often look at revenue or profit goals, but it is also important to understand the other key metrics behind the scenes that are causing the group … Continued

Why Accountability is NOT a Dirty Word

I was meeting with an engineering client recently that was explaining his firm’s culture. He said, “Accountability is a dirty word around here. We don’t measure anyone or have any consequences because we don’t like to punish people.” That statement stopped me in my tracks. No accountability at all? In fact, this large firm (over 500 employees) has no measurements at the individual level. They don’’t even have measurements at the business unit level. The only financial information that is published or reviewed is at the firm level. This caused me to step back and think about how hard it might be to work there. Certainly, there were top performers, mediocre performers and some team members that were bottom performers. But they have no way to figure that out, decide who to bonus or promote, or even figure out who to let go. I believe this is a detriment to the firm, the top performing employees, and even the clients. I had to ask a few questions: Question: Do you want to be the best you can be? Answer: Yes, of course. Question: How do … Continued

Building an AEC Firm: It’s a Business, Not a Hobby

After 30 years as a Principal in the firm KCCT Architects in Washington, DC, Tom Twohey recently retired at the age of 79. Tom was one of the founding partners in the firm, and my client for the last 22 years. Unlike most architects, Tom had a business mind, and managed the firm’s finances as they grew from four partners in John Chapman’s house in 1983, to a successful Connecticut Avenue firm of just under 50 employees today. I was fortunate to get the opportunity to sit down with Tom recently in his South Riding, Va. home, and record the fascinating story of his career and world travels. After graduating from Berkeley in 1957, Tom got an entry level architectural job making a few bucks an hour. He worked in several places, including a period of time working for himself. This was his first exposure to business management. In 1969 while working at Rex Whitaker Allen in San Francisco, Tom was sent to Cambridge, MA to start a new office. Rex Allen was teaming with Hugh Stubbins to renovate the Boston City Hospital. That is where Tom met his wife and life-long companion … Continued

Are Your Clients Taking Advantage of You?

    In today’s post we’re sharing a podcast of an interview of June Jewell by STEVE GORDON on The Unstoppable CEO. >> Click HERE to listen   If you have a professional service firm… you can’t miss this one. Have you ever done a project and ended up making less than you estimated? Maybe even lost money? The project went off without a hitch. In fact, you over-delivered. It may be hard to believe… but that’s where you went wrong. June Jewell of AEC Business Solutions shares the dangers of “culture traps” that allow professional service firms, to flounder financially even while providing great service. June also shares a business model that gives your business a guaranteed income every month. Listen now and you’ll get straight talk from June about… When – and how – to turn down a client request Ways to guard against the dreaded scope creep How to make sure “technical” people keep profitability front of mind The training your team needs now that could save your business How to guard against the biggest “money drains” The importance of estimating – … Continued

Top Ten Reasons Change Initiatives Fail

    Over and over again I have seen major change initiatives fail. In fact, studies show that over 70% of most internal initiatives fail to meet stakeholder expectations. Whether it is implementing a new system, a merger or acquisition, business process improvement, opening a new office or pursuing a new direction, these major internal projects meant to help the company grow, improve, and thrive are derailed due to issues that could have been planned for, but weren’t. The cost of these failed initiatives, beyond the obvious inability of the business to grow and flourish, is hard dollars and time invested and lost. Hard costs include outright purchases of software, products, travel and outside services. There is also investment of time of employees and leadership wasted or misused. But there are also many “soft” costs such as lost confidence in leadership, missed opportunities or loss of competitive advantage. These costs can ultimately far exceed the tangible measurable expenses. In working with clients through the six steps to increase profitability outlined in my blog and detailed in my book, Find the Lost Dollars: 6 Steps to … 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

Reinventing Your Culture to Enable Growth

  The drive for progress doesn’t wait for the external world to say “It’s time to change.” – Jim Collins, Best-selling Author, Good to Great Recently I was talking with a prospective client about challenges they were facing with their project management. They are a 50-person Civil and structural engineering firm that has been growing but not achieving the level of profitability they wanted or planned for. While their projects were mostly profitable, they were still realizing profit margins of 5 to 8% rather than the 10% to 12% they needed for sustained growth. They realized that their culture was holding them back, and told me they were trying to “reinvent” their culture. Always focused on technical skills and client relationships, they had neglected developing business acumen with the project managers and other leaders that were controlling most of the money. This is a common issue that I hear about on a weekly basis in architectural and engineering firms of all sizes. It is something you would expect from the smallest firms, but even plagues the large firms as they grow, integrate acquired firms, and … 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

Gannett Fleming Launches “Change is Good” to Spur Increased Growth

  I was fortunate to get the opportunity to sit down with Gannett Fleming President Bob Scaer to discuss the January 1st launch of their major reorganization which he has endearingly named “Change is Good.” As bad a connotation that change has in the A&E industry, Bob has managed to successfully pull off a major re-engineering of the firm’s reporting structure and process, and garnered buy-in at all levels of the organization. This was an 18-month effort that included a large number of Gannett employees, and largely driven by strategic initiatives to grow the firm over the next 10 years. It is easy to instantly get excited when talking with Bob about this huge initiative. Bob has been the major force behind “Change is Good,” and staked the future of the firm’s success on its adoption. His passion for successfully leading this enormous project is contagious – making what is obviously a very complex venture seem optimistically doable. This success would not have been possible without the total buy-in, commitment, and tireless hours by key leadership in the firm to help shape and drive this initiative. This massive reorganization involved realigning all of the … Continued

Hillmann Consulting Finds Lost Dollars with Innovative Business Management Training Program

“We are making Finding Lost Dollars part of our culture now. That’s the way we want it, that was the whole idea of choosing the Find the Lost Dollars training. We have systems in place. We have processes. We have happy clients and are more profitable.” – Michael Gerasimenko, Controller     Hillmann Consulting, LLC is a successful Environmental and Engineering consulting firm. After all, they have been in business since 1985 and have been recognized by Zweig Group as one of the fastest-growing firms in the industry for the past 3 years. Your Property. Our Priority is their mission. Their commitment to service is clear and has proven to be one of the major cornerstones of their success. They build long lasting relationships with their clients, offering them the peace of mind they need when environmental concerns arise or the unthinkable occurs. This dedication to their clients was part of their culture, yet certain business practices regarding keeping clients happy as well as some inefficient business practices came at a high price. They were not as profitable as they desired – like many other firms … Continued

6 Steps to Win on Value Instead of Price

We’ve all been there, sitting in front of that client we know we don’t want to work with. But the fear takes over. The fear of not having enough work. So we don’t walk away. We succumb to the pressure and lower our fee. Or maybe it is our best client, and he is threatening to go to one of our competitors, telling us we are too expensive. What do we say? Do we just agree and go ahead and give him a break on his estimate – know we will lose money on the job? Situations like this are happening every day and slowly killing the architecture and engineering services industry. The problem is, we really do start to believe that we can’t get the kind of fees that we need to be successful and profitable, but we still don’t know how to turn down work. It is just against our nature. As our employees navigate these difficult situations every day, small amounts of money are being given away. Rather than believe we are adding additional value to our clients’ projects, we assume we … Continued

6 Keys to Building a Profitable Culture

Increased competition in the Architecture and Engineering (A&E) industry is driving down fees and making it feel like a buyer’s market. This is putting a squeeze on A&E firm profits, and forcing many firms to re-evaluate their strategy including how they go to market, what services they offer and how they can run more efficiently. I am seeing an evident trend for firms to look at their business management practices, and how they can increase project profit margins, with a strong emphasis on project management success. The old ways of doing business are being challenged, and along with it, the long established practices stemming from the firm’s entrenched culture. So what does it mean to build a profitable culture? I have developed the following definition which can require a radical shift in thinking and behavior, and could be a game changer for those organizations willing to take a critical look at all of the long-held beliefs and practices that work against the firm maximizing its profitability. While the business school definition of corporate culture is “Patterns of accepted behavior, and the beliefs and values that … Continued

Making a Difference – One Client at a Time

We all work hard every day and hope that what we are doing is adding value to our clients. We usually don’t get much feedback about whether our work is making an impact, although occasionally something happens that puts a smile on your face and makes it all worth it. That happened to me today. Out of the blue, I received the this picture in my email. It was from my client Geralanne Maglione at Hillmann Consulting in Union, New Jersey. She knew I would love it. For the last year I have been working with the employees at Hillmann to transform their culture into one where everyone is focused on profitability. After reading my book, Find the Lost Dollars™, a couple years ago, Chris Hillmann, CEO, signed up 10 of their key staff for our Find the Lost Dollars Pilot Program to test out our new online training platform. This training is focused on teaching employees business skills and creating a profitable culture in which project managers and other key employees are looking for many ways they can help increase company profits by 1% or … Continued

Do You Have a Strong Project Management Culture?

There were many trends discussed for engineering firms at the 2013 national American Consulting Engineers Council (ACEC) national conference last month in Washington, DC. I always pay close attention to these discussions in order to make sure I am on top of the latest issues, and prepared to address the concerns of our clients as they navigate the ever-changing business environment. One of the catch phrases that I heard a couple times was the idea of a strong project management culture. Since the topic of firm culture is one I have studied and written about, I decided to try and define what it means to have a project management culture and identify criteria for how do you measure the strength of your project management culture. What Does it Means to Have a Strong Project Management Culture? At it’s essence, the culture of project management in engineering firms today is varied based on the size of a firm and its ownership makeup. Older firms with older owners tend to be set in their ways, and slow to change or adopt new technology. Younger firms who are … Continued

Profitability Expert June R. Jewell Raises Awareness of How Corporate Culture Is Stealing Profits from Business Firms

For Immediate Release Profitability Expert June R. Jewell, CPA, Raises Awareness of How Corporate Culture Is Stealing Profits from Business Firms Vienna, Virginia– April 26, 2013 A company’s corporate culture could be its own worst enemy, according to profitability expert June R. Jewell, CPA. The core values and beliefs of your workforce can adversely affect your bottom line. The key is being aware of costly culture traps that are holding your business back. If management is not aware of cultural beliefs of employees, they can turn a blind eye to contracts, budgets, and other project management best practices that affect profitability. “The culture of your firm directly impacts your profitability. How you look at money, deal with your financial management, and manage your staff directly translates into policies, processes and behaviors that cause projects to go over budget. Without a healthy focus on profit, an owner may find it difficult to grow the business.” June R. Jewell, CPA, Author In her new book, Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering, and Environmental Firms, June exposes the ten cultural traps that are … Continued

Ten Culture Traps that Steal Your Profits

The culture of your firm directly impacts your profitability. How you look at money, deal with your financial management, and manage your staff directly translates into policies, processes and behaviors that cause projects to go over budget. Without a healthy focus on profit, an owner may find it difficult to grow the business. The following are the main “culture traps” I see affecting how a firm manages money and influences their ability to be profitable. These mistruths cause many firms to ignore their contracts, budgets, and other project management best practices: Trap #1: Quality is everything Most professionals want to offer the highest quality possible. However, the reality is most budgets are lower than the level of quality we desire. Trying to balance the level of quality with an inadequate budget is a critical yet often poorly mastered component of project management. Setting realistic expectations from the beginning is critical to a profitable project and happy client. Trap #2: Keep the client happy at all costs We have all heard the old adage, “the customer is always right,” however, this trap can have the unwanted result … Continued