6 myths limiting architecture and engineering practice growth
September 21st, 2018
Are you managing your practice growth or does your practice manage you? How do you feel about your business — do you find you’re hitting a brick wall and feeling out of control with excessive hours and no work-life balance? Or perhaps you feel like you’re chasing the business and it’s running away from you, rather than leading it forward?
As directors and business leaders — not simply architects and engineers — you need time to focus on strategic decision-making for practice growth, not just chasing your tail.
Over 20 years of developing software designed to help architectural, engineering and construction design businesses improve their effectiveness and efficiency in project delivery, Total Synergy CEO Scott Osborne has encountered many myths and misconceptions that typically limit practice growth and progress. Here, he breaks down a few for you to consider in your business.
My business runs on great design
The first common myth is that your business runs on great design. Is the purpose of your business to make a profit or is the purpose to come up with great design? This is a conundrum for designers.
There’s no future for your practice if you don’t invest in growth. Growth means doing profitable work, not just more work. Investing in growth also affords you critical time to focus resources on research, concept development or continuing professional development. Furthermore, in built environment design, you must ensure your business can weather the inevitable peaks and troughs tied to various economic cycles that affect construction. Or, more simply, it’s no good working in a business where you can’t pay wages.
Profit is key to all of these things and, if not for anything else, to buffer your business against change. No matter your beliefs or ideals about design, running a business is always about cash flow and staff, so you need to make sure that’s covered by tracking your projects and ensuring ideals don’t override common sense.
I don’t have time to learn new technology
Progress is important in business and technological progress is all around us. A key driver of change in all businesses and industries over the last few years — and one that has been researched and documented for the global built environment design industry in particular — is the shift to cloud computing. Moving to the cloud is inevitable.
The delay in small businesses moving to the cloud is often underpinned by fear, uncertainty and doubt. The reality is, cloud-based systems are inherently more secure than a typical on-premises setup. From reducing your hardware overheads to having all your data backed up with georedundancy (in more than one place around the world), the cloud is all managed for you and reduces your overall IT overhead significantly, resulting in a lower cost of ownership.
With the cloud comes new opportunities to adopt new, more efficient systems and approaches. Granted, with that comes a planning, training and learning overhead, but systems are only as good as what you put into them. To gain the efficiencies of new systems there’s nothing more you can do than understand why you need them, then knuckle down and learn them. The investment in time will pay off tenfold (assuming you’re investing in the right system for the planned outcome).
We’ve seen this in both the architectural and engineering side of the industry. For example, structural engineers who invested early in developing BIM capabilities find themselves winning better jobs with the best architectural firms because their teams all work in the same environment, speak the same language and collaborate effectively. That investment is paying off now, but the customers didn’t necessarily demand that upskilling, it was a strategic investment in growth within those forward-thinking businesses.
Fixed fee jobs don’t need budgets
Another misconception we hear time and again is that you don’t need to budget fixed fee jobs. Whether fees are fixed price, percentage of construction value, or hourly charge, they’re all still simply recovering professional services charges. Fixed fee jobs are usually always based on the effort expended on the job. Successful firms don’t just pin their fees through an hourly rate, they look at value-based fees, and that gives them some ability to create higher value projects.
That’s why it’s crucial to budget your projects and track actual costs against the budget — to ensure your team knows what’s expected of them on an ongoing basis. Without measuring a budget, regardless of fee type, you don’t know what a project cost your business and whether it’s a good one to win or avoid in future.
The business will adapt to changing workloads
As your business grows, you need to know both that you have enough staff to do the work that you’re forecasting, and that you have enough work for the staff you have on hand. Unless you can estimate how much work is coming up and see how that’s panning out with win/loss ratios and with expected billings, you’ve got a real issue with how you’re going to plan headcount for the future, and how you’re going to pay the staff you’ve got.
The market sets my rates
When I compare the different professional services industries, I see such similarities but also comparative differences. When I look at what architects charge as hourly rates and I compare it to accountants and lawyers, and even engineers, I see a profession that is highly educated and highly technical, but just not confident enough to charge the deserved fees. That comes back to understanding how your fees are put together and having confidence that they should be higher, not lower. Understanding your rates, understanding your costs, is very important in knowing the base.
To improve your ability to charge what you’re worth, you have to differentiate and demonstrate it in your specific expertise. Are you an expert in a particular field? Do you have a portfolio of projects in a sector that adds to the value you offer? Do you provide unique services, design innovation, or work with specialised materials? Can you deliver projects faster because of your technology investments? You need to find a way to demonstrate your value and why you’re worth a particular fee.
I can’t afford to spend more on technology
20 years ago, there was probably a ratio of four draftsmen to one architect. Now, through the use of CAD and BIM, we’ve seen that drop down to a one-to-one ratio or lower. If you’re like me, you’d like to grow your business two or three-fold, but if you could do that without more staff, that would be an ideal situation. Investing in the right systems — and the right governance framework to use them correctly — enables your team to be more effective and efficient.
In summary, these are only some of the myths limiting growth in design businesses today. It’s ok, even necessary, to be idealistic about the value of design, but you can only practice that belief if you run your business effectively and efficiently, to make a profit, and grow.