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 this year with the goal of understanding why some are average and others are excelling financially. While in the past the biggest hurdle to growth was winning work, we identified the biggest constraint to their growth this last year has been the shortage of experienced technical staff in the middle level. At the current pace, this problem will be exacerbated by increases in retirement of our most experienced staff. Thousands of baby boomers are preparing to retire in the next few years creating a much larger gap in experienced architects, engineers and environmental consultants.
This constraint is causing many issues including:
- Firms have more work than people, causing them to have to settle for less talented staff and being forced to raise salaries to retain staff and get new ones.
- A shortage of experienced staff to manage projects, causing them to have to quickly train and put in place less experienced Project Managers.
- As firms grow, there is a shortage of leaders with adequate business experience and skill to lead offices, business units and prepare to succeed current leaders that are retiring.
We have seen these issues growing over the last few years and have been working on solutions to these constraints that not only address these problems, but also reduce the chaos of fast growth and increase employee performance and profits at the same time.
We have found that the solution to these labor and experience shortages is to get more from every employee…to accelerate the pace of employee development and grow all current employees into high performing business leaders. When you can get your staff performing at their top level, you will be able to maximize project performance and increase profit margins substantially (usually 3-5% in less than a year). This approach also requires making critical improvements to processes and systems that lead to better employee efficiency, productivity and revenue per person.
Our approach to addressing these difficult challenges to growth include:
- Educating and working with PMs who don’t understand business and struggle with managing the scope and budget on their projects. It’s not their fault – they have never been taught to make money!
- Addressing ineffective processes and systems that are slowing down your employees instead of guiding them to be most productive. Part of the reason for this is the difficulty of working in silos and inconsistency due to employees that have developed their own way of doing things.
- Transforming your culture that is mostly focused on delivering high quality projects and doing whatever it takes to keep clients happy, and not business best practices.
While these are difficult challenges, with the amount of work available right now, there is a great opportunity to become a top tier firm. With just a 2% to 5% improvement per year in your people, processes and systems, you can elevate your firm to the top of the industry.
We know you are busy and don’t want to take your valuable staff away from their projects. That is why we knew that whatever solutions we developed for our clients, we had to focus on making it convenient and easy to implement.
We also know that you have tried many things before, and it has been impossible to get employees to change their bad habits. Our approach is proven to change behavior, improve profits, and be cost-effective to implement.
Our turnkey program will enable you to develop key staff and even all employees, to get the most out of them every hour that they work. They can work smarter, not just harder, to help the firm succeed. In fact, our program ensures they will be more engaged and motivated to help the firm increase financial results.
Here are some examples of how we can accomplish these increases in key performance metrics and help employees to be more successful:
1. Marketing, Business Development & Sales
If your win rate is in the 30% to 40% range (industry average) for competitive bids, you are wasting 60-70% of your marketing dollars going after projects you don’t win. Increasing this just 5% is usually hundreds of thousands of dollars every year. (You can calculate yourself using our Find the Lost Dollars Calculator Tool). Our program teaches employees how to go after the right projects and manage opportunities better to help you win more work and help your seller-doers to be more successful.
2. Proposal Preparation
Many firms have inefficient proposal processes that cause some proposals to slip through the cracks, take too long or miss deadlines. We help you identify where proposal preparation can be streamlined to give you a competitive advantage.
The reason that many projects go over budget is because of unclear scopes, underestimating, using bad rates, or not having a clear process that captures your clients’ expectations and requirements. With a clearer focus and process, PMs and others preparing estimates can create much more accurate estimates and set expectations to ensure client success.
4. Project Management
Most PMs are focused on project execution and not project profitability. They do not understand how projects make a profit. Add to this a lack of clear structure around project management and everyone doing things their own way, and you will have project budget overruns, write-offs, and inconsistent work products and client service. When PMs understand how to deliver profitable projects and everyone is following project management best practices, significant increases in project profit margins can be achieved.
5. Scope Creep
Because of PMs and employees focused on keeping clients happy, they commonly ignore the scope and are afraid to ask clients for money, worried that they will create conflict. Many firms are losing 5%, 10% or more in extra services that are never billed and recovered. Your staff need a framework of understanding how this hurts your firm and a new way of behaving that focuses on better client communication and valuing the work your firm does.
6. Resource Management
Getting all of your employees working on the right projects at the right time can be very challenging. Without a good process and system, your managers are probably all doing this differently and with mixed results. Small increases in utilization can add up fast and setting your team up for success to maximize resource utilization is one key to becoming a top tier firm.
7. Timesheet Accuracy
If your employees are filling their timesheets out without clear guidelines about how to charge their time accurately, you will have lost hours and revenue and lots of errors that must be fixed at month-end, slowing down cash flow. Most employees don’t understand the connection between their timesheet and their paycheck and armed with a better understanding of the importance of time management and timesheet accuracy, you can increase revenue and cash flow substantially. Just one tenth of an hour per day lost (6 minutes) equals about $2,350 per year per employee and $117,500 for a 50-person firm or office.
8. Client Retention and Relationships
Most employees want to please clients but may be doing it to the detriment of your firm’s finances. Focusing on your best clients and having clear processes for getting more work and retaining key clients is a more strategic way to grow your business and achieve top tier status.
What if taking all these areas of focus above, and applying them to your staff in an effective way could dramatically change their behavior and have them motivated to improve their daily habits and help the firm develop better processes?
Imagine if…employees understood the why behind all of your business best practices and even help develop better ones!
Imagine if…your culture was transformed to focus on business financial success!
Imagine if…PMs understood how to manage project scopes and budgets and were not afraid to talk with clients about money!
Imagine if…you could eliminate commodity projects and get better, high fee clients.
Imagine if…all employees performed at their top level and even younger staff were developed faster.
Our Find the Lost Dollars Program is specifically designed to change mindset and behavior. It is a combination of high quality, interactive online courses covering all aspects of business management in an A&E firm, and group discussions with done-for-you agendas so you can facilitate on your own (or you can choose to use facilitation from one of our experienced Senior Industry Experts).
Find the Lost Dollars has proven to quickly deliver 5x to 10x ROI from changes in employee behavior and improved business processes because it focuses on how your firm can be better while engaging your staff to rise to new levels of business leadership.
Through our research and analysis over the last four years, we have learned that the only way training changes behavior is if it is done in a group with a structured process designed to engage the employees to explore new and better ways of working every day.
How many times have you had your PMs or staff attend a conference, seminar or bootcamp, or in-house training and were not able to see or measure any improvements or changes in their behavior or in your company’s practices? This is probably because the training was not designed to change behavior and doing it by yourself did not enable you to engage others or find new solutions to improve business processes.
We have worked with so many A&E firms through our Find the Lost Dollars Program that we are confident that any A&E firm can see marked improvements in 3-6 months by following our structured approach and methodology. We provide you everything you need to be successful, and because we are so confident in our program’s ability to pay for itself quickly, we are able to offer a full money back guarantee if implemented according to our simple plan.
Our program challenges each of your employees to find at least $10k in lost dollars in just 10 weeks, and many find way more than that!
In addition, by implementing just a few of the great business improvements recommended by your staff, you can see massive increases in productivity, reductions in scope creep and write-offs, and more profitable projects due to improved project management oversight.
The program also creates massive culture change by encouraging your team to pursue better clients, focus on retaining your best clients, and refusing to accept low fees, offer discounts or do work for free.
Our mission is to help your firm rise above the average in the industry and achieve far greater results than your competitors. Depending on where you are now, within a year to 3 years, you can rise to be a top tier firm with profits in the top 20 percent in the industry.
Our approach is radically different than any other program you have tried before. If you have invested lots of money into expensive consultants that don’t offer any guarantees, or training programs that don’t deliver any results, then we can see how you might be skeptical.If your firm is great at setting goals but struggles to execute them, we can help.
Our goal is to ensure that transforming your teams and culture and massively improving your business operations to accelerate you to a top tier firm is Simple, Fast, Convenient and Affordable.
If you would like more information about our training program or would like to schedule a 15-minute call to determine if it makes sense to evaluate further, please reach out to LeAnn Nowak at 877-356-9420 x700 or firstname.lastname@example.org
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.
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