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 hire new project managers (PMs) that have a range of different business skills and experience. By and large, this has become one of the biggest growth challenges for firms of all sizes in the A&E industry.
The idea of “reinventing” culture is becoming a more common conversation in businesses of all types. The long-held values of just focusing on great service are no longer serving many professional services companies. With the trap of commoditization squeezing fees tighter and tighter, and firms feeling like they have to lower their bids to win work, more businesses are realizing that culture is at the root of their brand and value issues.
Changing culture is not easy, and starts with the leadership. Leaders must be more willing these days to share their Mission, Vision for the future, and Values with their employees, and focus on future growth, better client selection and business best practices to get ahead. Today’s slimmer margins require that businesses run more efficiently, and scope management, efficiency and effective leverage of investments in automation need be as high a priority as day to day operations.
Culture is really about the behaviors of employees as they do their jobs every day. It is the values of the organization, and the messages sent to employees and clients about the value of the firm and its services that guide activities and whether projects are profitable or not. Changing culture requires both changing the mindset and the behavior of employees to focus on business management best practices, accountability, and optimizing resources.
A few dollars lost every day or hour, by every employee adds up to a large amount. Just a 1% improvement in many small places can be a significant gain to the company, and provide the fuel and stability for growth needed. It also ensures that the company is continuing to improve and focus on being the best it can be. This is the key to sustainable growth in today’s Architecture, Engineering, Design and Construction industries.
DID YOU MISS THIS YEAR'S PROFITABILITY SUMMIT?
That's okay! You can find your lost dollars by joining us for our next complimentary web training!
Find the Lost Dollars: 9 Areas Your A&E Firm is Losing Profit
Thursday, October 10th - 1:30pm ET
Many A&E firms are leaking profits due to ineffective processes, non-integrated systems, and a culture focused on technical excellence and not business success.
In this session you will learn how to improve 3 Key metrics – your win rate, utilization and project profit margin by improving business management and operational practices that will lead your firm to find the lost dollars in your company. You will gain useful best practices that can lead to increased financial success including sales & proposal success, estimating, project management, time management and client relationships. Learn how to identify problem areas by doing a company-wide assessment and getting valuable insight from your employees. This web training will focus on how to assess people, processes, and systems including what questions to ask and how to ask them.