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.
Cash is King Webinar
Managing Cash Flow in a Down Economy
Date: Wednesday, August 19th, 12:00pm ET
The average days to collect cash in the AEC industry is between 60 to 120 days. In this web training we will examine the complete project lifecycle to understand how cash flow can be increased when the economy is uncertain. Participants will gain valuable tips to improve cash flow by improving timesheet practices, reducing the billing cycle, and improving client relationships and collection practices.
More From the Find the Lost Dollars Blog...
The world is in turmoil and the current state of the world will quickly cause financial losses. You may already be seeing signs of an early decline. In times of uncertainty, business often slows to a crawl. Business owners and their clients don’t make decisions in...
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...
As a design and construction professional you know that a building is only as strong as its foundation. Without a strong foundation, a building will move and settle over time and have lots of problems. The same principles apply to your business. Processes and...