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

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

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

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

Improving the Business Side of Engineering

    Today’s post is by our guest author Becky White, Vice President/Organization Development of Sain Associates, Inc. Becky has more than 26 years of project experience in transportation planning for public and private sector clients. In her Organization Development role, she leads Sain’s Strategic Planning and Leadership Training initiatives. She is a certified Professional Transportation Planner   Engineers in the private sector often complain that their college curriculum did not teach them anything about the business side of engineering. Typically they have to do that type of learning on the job. At Sain, we take seriously the responsibility to provide business-related training to our staff. Not only does that sort of training help us run a more efficient and profitable company, but we find that improved business skills help us deliver better quality services to our clients. In preparing our strategic plan for 2017, we decided to take the commitment to business skills training to a higher level. To accomplish that goal, we contracted with June Jewell, a CPA and author of Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering & Environmental … 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

10 Ways to Prosper in the Uncertainty of 2017

Change is the law of life. And those who look only to the past or present are certain to miss the future. – John F. Kennedy If there is one thing we all know about 2017 it’s that we have no idea what is going to happen. This will be a year of change and possibly, more surprises. Many of us will be nervous and even fearful of making decisions and investing in growing our businesses as the uncertainty of what lies ahead can be paralyzing. My whole career has been based on helping A&E firms implement change, deal with resistance and determine next steps when uncertainty exists. In fact, I would argue that this is what architecture and engineering are all about – progress, innovation and change. Yet when faced with figuring out how the new world order will impact our companies, many executives play it safe. But is “playing it safe” really safe? The firms that are embracing the new technology focused environment we live in may have an advantage. While the cost can be high, getting ahead of the curve can be … Continued

10 Tips to Survive the Next Recession

Another recession is coming. It is inevitable. Based on past history, it should be next year. But these things are hard to predict, so all I will commit to at this point is that another dip is coming. And we don’t know how bad it will be. What I do know for sure is that a lot of our clients are not thinking about it too much right now. The Architecture and Engineering industry is doing very well. Our clients are growing and hiring and profitability is up for the first time in many years. But it feels like a bubble to me and that is why I am worried that our clients are not doing everything possible to prepare for the eventual downturn. So what can you do to prepare for the next recession? I believe there are at least 10 strategies that you can focus on that will make your company financially and operationally stronger, and enable you to survive possible tough economic times ahead – regardless of whether that is next year or five years from now. Enabling a number of these … 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

The Elusive “Right” Conversations A&E Firms Frequently Miss Getting Right

Conversations fuel A&E firms’ success. Conversations are taking place all day long at A&E firms, yet 75% are the wrong conversations. Most conversations in your company are killing productivity, utilization rates and ultimately profits. Did you realize there are only four types of conversations you and your personnel can possibly engage? That’s absolutely true. Whether the conversations are between a team member and a prospective client, a team member and a current client, two staff members, a partner and a staff member, a manager and their direct report, there are still only four possible conversations. And, it’s vital you and your staff understand that three of those four conversations are the “wrong” conversation. By “wrong” I mean it is not a conversation that drives a desired outcome or brings to resolution an issue that needs resolving. The Four Conversations is a workplace communication model created in the midst of facilitating a workshop for a client in 2013. The four conversations are: The wrong conversation with the wrong person The wrong conversation with the right person The right conversation with the wrong person The right conversation … Continued

10 Ways to Make More Money in 2016

It is hard to believe 2016 is here. I always get excited about the beginning of a new year – I look at it as an opportunity to start over, correct the mistakes of the past and achieve some of the goals that eluded me in the previous year. For most of our clients, 2015 was a good year for business. We saw a growing number of projects, expanding revenues and larger backlogs than we have seen in a long time. But with growth there are also challenges – a war for talent, increasing competition and with it, a resulting increase in salaries. More than ever we need to be innovative, efficient and run our businesses smarter than our competitors. We face many unknowns for the future including declining energy prices, fall elections and continued technology advances. Every year I attend 8 to 10 industry conferences in order to take the pulse of the industry, as well as understand the challenges that our clients face. Based on this last year and various expert’s predictions for 2016, Here are my top 10 recommendations for how your … Continued

6 Ways to Differentiate Your A&E Firm

  Are you feeling the pinch of reduced fees and increasing salaries these days? You are not alone. Pressure on profit margins is causing many architecture and engineering firms to revisit their strategy and look for ways to differentiate from their competition. Competing against 5 to 10 other firms for work with smaller margins is not what any of us envisioned when we started our businesses, and developing a strategy to combat this state of the market is paramount to developing a profitable firm. The firms demanding the highest fees are the ones being sought out by their clients rather than the typical situation where you must fight to win every job. To reach the top of the fee ladder these days takes a specific focus on creating a brand that sounds, acts, appears and IS different from everyone else. Here are six ways to start the process of reinventing your firm to be able to garner the higher fees that the most successful firms are getting:   1. Develop a New Strategy The first step in the process is to figure out who you … Continued

Hot Topics at the 2015 Zweig Awards Conference

  For the 7th straight year I attended the Zweig Industry Awards Conference held at the beautiful Copley Plaza Hotel in Boston. This event, previously held as three separate conferences, recognizes the Hottest Firms, the Best Firms to Work For, and Marketing Excellence in the A&E industry. This is one of my must-attend events every year, and my main reason for attending, besides presenting and networking with the most successful A&E firm leaders in the industry, is to gain valuable insight that I can re-purpose for my clients. As usual, I met lots of great people, like Gary Dahms, CEO of T&M Associates in New Jersey, Ted Bumgardner, President of Xpera Group in Solana Beach, CA, and Mike Fischer, Senior Vice President at LHB in Minneapolis. I always take lots of notes so that I can identify all the hottest topics at the conference and then do follow up research so that I can provide more solutions to the challenges faced by our clients. I have consolidated the myriad of topics discussed into four primary subjects that are front and center in the A&E industry, … Continued

Why I Want My Firm to Be Like Tesla

    I started a new business last year which gave me a unique opportunity to figure out my new brand – how I wanted AEC Business Solutions to be viewed and perceived in the marketplace. It is very exciting starting a new business after 25 years doing the same thing. The new business is different, and the new image and “look and feel” of our online presence, messaging and other marketing needs to be aligned with how we want clients and potential clients to evaluate us. I gave this a lot of thought. I started with what I didn’t want: I didn’t want us to be the same as we were before I didn’t want us to look like our competitors I didn’t want to say the same old thing that everyone else is saying Then I tried to consolidate how I DID want my new firm to be branded: I want us to be relevant for the future I want us to be innovative and cool I want to offer more value and measurable results I want to have clients that are raving … Continued

{Guest Post} 6 Steps to Holding Employees Accountable

  Ineffective communication is the root of all evil. Recent research has shown that the average employee in a professional services firm wastes 40-minutes per day due to ineffective communication alone. In the average company with an average payroll this equates to approximately $5,220 per employee per year in lost productivity. And, that is just wasted time due to ineffective communication. If you add low trust, low morale work environments with low levels of employee engagement, and the lack of consistent communication around managing job performance and behaviors, that $5220 per employee per year in lost productivity and under-performance goes up three-fold. There are a myriad of places that ineffective communication can be found – within teams, between employees and their supervisors, with vendors, subcontractors and clients, and between departments. Because there are virtually unlimited ways communication leads to low productivity and performance, companies struggle with getting a finger on exactly what to do and where to start. Many professional services firms struggle with holding employees accountable. This issue is often grounded in deep cultural foundations over many years. This problem not only affects financial … Continued

3 Steps to Increase Your Fees Now

In a recent survey of our clients across the U.S., one of the most pressing concerns noted was how to raise fees. While the economy is improving, faster in some sectors and geographies than in others, fees for Architecture and Engineering firms are not increasing across the board. During the recession from 2007 to 2010, most firms saw their average project revenues and multipliers decrease, along with corresponding hourly rates. Most of this was caused by competition, a reduction in available projects, and a glut of available experienced talent. Now we face a period of increasing volume of work, a potential shortage of human resources in some areas with resulting growing salaries, yet fees have not increased at the same pace. The average firm fears “not winning” and so they sabotage their own success by reducing fees in order to win work. So how do you get out of this vicious cycle? Here are 3 steps that I have practiced myself and witnessed personally among several successful architecture and engineering firms over the last several years that can allow you to transform your firm into a … Continued

Top 10 Topics Discussed at the ACEC Large Firm CEO Roundtable This Year

In April, I attended the Large Firm Roundtable at the ACECNational Conference to find out what pressing issues are top of mind for our clients. ACEC defines a large firm as 200 to 500 employees, and we work with a lot of firms this size. These roundtables are mostly attended by CEOs, Presidents, and other top level executives in engineering firms. This is a brief outline of the questions asked, topics discussed, and some of the concerns these firm leaders expressed: 1. Do most firms have an in-house counsel? – There seemed to be some consensus that at a certain size, usually between 200 to 300 employees, most firms will bring in counsel to help them minimize risk and implement better contractual practices. Several leaders expressed how valuable this had been to their firm, and recommended doing it sooner rather than later. 2. Challenges of doing business in multiple states – Everyone agreed that it is getting harder to do business in multiple states. From compliance and taxation issues, to some states making the barriers to entry so restrictive that it impedes competition. They discussed … Continued

Spring Cleaning for Your Business

Doesn’t it feel good to throw things away? I don’t know about you, but I hate clutter. It makes me feel stressed and disorganized. Every year I resolve to clean out my office, my garage, and all the drawers and closets in the house that get cluttered over the long winter. It feels so great to actually throw things in the trash that you once found valuable. So this year I am promoting a concept called Spring Cleaning for your business. This is where you look under the cover, peek around the corners, and discover the old habits, practices, and business management methods and tools that are no longer working for you. I will not fool you – this is a lot of work! It takes both time and an open mind to dig into what is not working in your business, and figure out how to fix it. And it often takes courage to throw away those processes and systems that you used to depend on. But the payoff can be significant! In my new book, Find the Lost Dollars, I demonstrate the significant … Continued

Increase Business Value with Improved Processes and Systems

If you are thinking of retirement or considering selling your company in the next five years, one of your priorities should be to maximize and increase the business value of your company. This requires attention to the numbers, and ensuring that a potential buyer will view your firm as a well-run business with value above and beyond simple asset value. One of the key things you should focus on is the processes and systems that drive your employees’ behavior and operational efficiency every day. A new buyer is going to want to see that your firm has grown beyond the small entrepreneurship that it grew up on, and is now functioning efficiently. A great area to start is with your accounting and CRM systems which can add a lot of structure and reliability to your time collection, transaction processing, billing, and monthly reporting. A potential buyer will want to see consistency in the monthly processing as well as in the marketing and sales systems that support the business development and revenue generation side of the business. Larry A. Davis, Partner at Aronson Capital Partners in … Continued

Succession Planning and Your Exit Strategy: Are You Preparing Your Future Leaders?

I attend many industry events in the A&E industry such as conferences held by the ACEC, SMPS, and AIA, and have observed a trend lately that has me concerned. This trend is the aging of the A&E firm principals, and based on my recent conversations with staff at several firms, many of their employees are concerned about this too. I first recognized this as an issue while at the ACEC national conference in April in Washington, DC.  From my observations it appeared that at least 75% of the attendees at the conference were white men that appeared to be over 50 years of age. I started wondering what these firm leaders were doing to prepare for their eventual retirement, and transition to a younger group of leaders, and how will this affect the A&E industry? Is your firm doing succession planning? So I started to ask my clients questions. I also started talking with the younger generations in these firms about their concerns and what they were being told about the firm’s succession plans. Let’s face it, if a firm leader is over 55 years … Continued

How To Gain A Competitive Advantage in Your AEE Firm – Part 4

This post is part 4 of a 6-part series analyzing marketing trends, technology, and the role of the marketer in an A&E firm. The previous three posts looked at the culture of an A&E firm and how it affects marketing success, trends in marketing and where A&E firms are struggling to keep up, and how technology can help you gain a competitive advantage. One of the aspects of the A&E culture that I write about in my recently published book, “Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms,” is the disappointing way that marketing is looked at in the A&E firm. Rather than taking a strategic view of marketing expenses, and how they can help to grow the business, many firms view marketing expenses, and their marketing resources as a necessary cost of doing business. According to the Zweig White (now Zweig Group) 2012 Annual Marketing Survey of A&E Firms, the top performing firms spend between 12% to 15% of their revenue on marketing, yet the average firm spends 7% or less of their revenue on marketing, and during … Continued