Part 2

Project management for built environment businesses — Proper portfolio planning

Welcome to part two of our series on project management. In this five-part series, we’re focusing on the key challenges architecture, engineering and construction design (AEC) businesses face when managing design projects for the built environment.

Here we’re zooming out to take a look at the importance of portfolio planning to your project management. We’re going macro to see its impact on the micro, and how actually, you can’t understand one properly without the other. Especially when it comes to AEC industry projects.

If you like it, sign up to download the PDF whitepaper and we’ll send you the next one when it’s out. If you haven’t read the first in the series click here to have a look.

Scroll down to read the whitepaper in full or download a free PDF.

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What’s in the whitepaper?


The importance of single-point system how disparate, unlinked systems play havoc with your AEC business and project management, and what to do about it.



Opportunity mapping — what it is, why you need it to effectively manage your business and projects, and how to do it. 




Knowing cost to realise profit — the importance of knowing your specific staff costs in order to predict your profit.  



The vital link between planning and forecasting — how your systems need to respond to each other in order to cope with reality that AEC projects change. All the time. 


Generally speaking, as your practice grows, you need to employ systems to keep track of what’s happening. Once you hit a threshold of, typically, around 15 people, you start to deploy hierarchical structures within the business. Now, this means various levels of that structure will develop and contain different information on different projects — but (and it’s quite the ‘but’) you, as the practice owner and/or director, still need to have the same feel for the business that you did when there were four people in it.

And here, friends, is where proper portfolio planning becomes an essential part of your built environment business’s project management. That is, if you want to manage properly and, let’s be real, profitably.

The thing to be aware of is that the need for good portfolio planning just grows as your practice grows. In some cases, it can grow exponentially relatively quickly (happy days!) and you can find yourself in a position where you’re quite distant from the work that’s happening on the ground. That means you may not be across how projects are developing — and because your whole business is projects, you really need to have some mechanism to monitor a number of facets of your practice. Again, just like you did when there were four of you.

The success in succession planning

The advantages of having some sort of systems for this in place are many:

  • You don’t have to remember everything anymore, which is probably what you were doing when you started
  • A system is less prone to error
  • A system gives you inherent succession planning (if there’s no one else who knows it all except you, if you get hit by a bus, so does all the practice knowledge)
  • A system mitigates the risk of the above for your practice

The clever kids start pretty early. Everyone finds themselves having to find some solution, as I said, at about 15 people. However, by the time you’ve got that many staff, you’re often in a bind because the reason you’re looking for a system is that you’re more than flat out.

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No system, big mess, wasted time

You’re now getting into the office at four and going home at eight. You’re likely newly single as a result. So, one tends to rush into things using available resources and the thing that’s typically readily to hand is a product like Excel. People start to keep those spreadsheets.

Maybe you’ve got your spreadsheets sitting on a file server somewhere and everyone gets access to them. Handy enough, and no one here’s knocking Excel. The problem with those systems (or lack thereof) is that as soon as you start, you find you want to keep different types of information.

As a result, what happens is you end up with multiple data sets, typically in disparate systems. You’ve got some data in your financial system, you’ve got the project stuff, drawings, emails, your trusty Excel data. A lot of the other stuff is just sitting in the project folders. Now there’s more than one place to go look for the information you need. And when you’re already busy, that’s frustrating.

Keeping track from a single point

The need arises pretty quickly to try and find a single-point solution for all of those files and all that data. From a portfolio perspective, what you’re trying to do is keep track of the work you have potentially coming in. Because that gives you the ability to understand a few critical things:

  • If you have enough people for the work coming up
  • If you have enough work for the people you have
  • How those two influences can change how you look at potential jobs

With a system that allows you to understand these things, you may find that projects you might otherwise scratch for, you don’t even tender for if you can see that you have ample work or ample opportunity for work coming out for your staff. You don’t need to grab everything. And again, if you’ve got ample work into the future, you can start to do things like perhaps raise your prices — because you don’t mind if you lose another two out of 10 proposals — the eight that you win, they’re going to be priced higher. Therefore, you’re probably going to make more profit anyway, and be less busy. Which has a nice ring to it, right?!

Single-point systems mean better business decisions [informed]

The problem you find with people with disparate systems is they’re making decisions on a bit of a whim because they really don’t have the available information — particularly if the company is growing — to make properly informed ones. That’s because some of that information is now at lower levels of the business hierarchy.

What you need is to have it all in one spot and be able to quickly map the different influences on your practice. You want to have some sort of facility where you can map out what we call in the biz an ‘opportunity’.

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Opportunity mapping

Maybe it’s a bit of a whisper. It might be through someone you regularly do work with. It’s not really confirmed. There are all sorts of indications that, if this project comes off, then it’ll be yours.

Now this is important because if you’ve got 10 of those and they all come off, you’re in a pickle. So, what you have to be able to do is put those opportunities (plus more formal work that you’re proposing or tendering for) into some sort of format where you can assess:

  • Whether in fact, you’ve hit your capacity limit
  • Whether in fact, it’s realistic for you to envisage hiring more staff
  • If you need to start some alliances with other practices because you’ll have some overflows that you’d like to subcontract for
  • Et cetera

So, you definitely need somewhere in your management system to plug in an opportunity. You need to be able to weight that opportunity by the likelihood you feel you have of winning it. The other thing you have to do is not only reflect it from a financial point of view, you also need some sort of projection of the possible workloads to be undertaken in order to complete that project.

That’s got to be really quick and easy to do. You’re likely not overly fussed by how accurate that loading is (given that an opportunity is normally a distant hope). It’s often distant timewise, and it’s often distant likelihood-wise. You’re generally talking five percent, maybe 10 percent likelihood, which goes up as more information comes in. And you certainly need a system that lets you enter more accurate labor loads as you learn more about the job.

So, that initial set up needs to be easily done. And in all those areas, you need to be able to look at your current agreed load — what your clients have currently said yes to — and you need to append onto that a weighted percentage of winning jobs.

No knowing profit without knowing cost

One problem arises for you in your portfolio planning because, often, you’re using some average number (as a sort of placeholder) to represent your staff costs. That number you’re using tends to be worthless to estimate profit — because you have to know your cost to know your profit. I know you know that.

Look at the problem as it relates to portfolio planning like this — let’s say you can see:

  • You need three architects for a particular job
  • That job will last two months

Good — this is great info. However, you pay your architects anywhere between $72,000 and $143,000. Not so great — the profit you’re going to make on that job is going to vary substantially depending on who you get to do that work.

We’re not kidding ourselves here, we know it becomes very difficult to get that granular about predictions, but you’ve certainly got to be able to have some sort of forecast/trending there (that you can add to your gut feel for the business) or you’re flying blind. And you’re holding your hands over the eyes of the project while you’re at it.

You need your gut and your forecasting information when portfolio planning in order to know what direction to take your practice in.

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Forecasting for billing in your portfolio planning

Need another reason why proper portfolio planning is so important? Just think about it from the perspective of your clients (otherwise affectionately known as ‘the ones that pay you’).

You need to have the ability to forecast the revenue you’ve got, particularly where you have agreed invoicing schedules with clients, which happens when numbers start to get substantial to the client.

In some cases, the stage will need to be worth $200,000 for your client to get a bit shaky about getting a big bill. In others, if it’s a smaller client, they’ll get shaky at about $12,000. It’s a matter of scale. In both cases, the handy thing would be to have a projected term of the respective stages of work and just divide the fee by the number of months. ‘I’ll bill you $10,000 a month for the next 10 months for that $100,000 fee, as opposed to giving you a $30,000 bill, and a $52,000 bill, and a $18,000 bill!’

Right? If you bill in the latter fashion, two of those three bills will cause a heart murmur on the part of your client. Guaranteed. So, you have to be able to forecast your expectations of revenue (or cashflow, if you prefer that term) in some detail, and that forecasting has to be able to respond to the changes that happen with your project as it goes along.

The vital link between planning and forecasting

So, if your project (or a particular stage of it) suddenly gets pushed back for a couple of months, for whatever reason, or in fact, if it gets brought forward — your forecasting has to be able to adapt to that change. And that means those two systems have to be interlinked. If you’ve got your forecasting in one Excel spreadsheet and you’ve got your project planning in Microsoft Project, you’re kind of screwed.

It’s also important, from a planning point of view, to get both macro and micro views. In the previous whitepaper, when we were talking about the whole portfolio, that was a very macro look at what’s happening with your company. You also need the ability to be able to drill into one of those jobs and plan with much more detail where it’s efficient to do so, right?

As an example, there’s no point planning for the fact that Alice is going to work in the first week of concept design 12 months from now. Why? Because it’s not the fact that Alice won’t work the first week that’s in dispute, it’s the question of, ‘how do you actually know concept design is going to start in that week?’ That’s the problem. It’s a problem built environment design bods know all about.

For that reason, it is important where necessary to have both views of the organization (macro and micro) so you can look at the practice holistically and yet be able to drill into a project (or a part of a project) to examine what’s happening at a more granular level.

This is particularly true if you have proposals in the system (which we all agree you should, right?!) and you’re being advised that it’s more and more likely you’re going to be the one that gets the job — then you’ll have to start treating the project as if you’re going to win it. Otherwise, you get caught with your pants down. Which is problematic in many ways, but importantly, it’s problematic for you.

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Righteous reporting — single-point style

I know, I know, I’ve mentioned the word ‘reporting’ and some of you may want to take a nap as a result but stick with me. Even though reporting is somewhat mundane — it’s not nice and graphical and aesthetically appealing — it is extremely good for giving you different insights into what’s happening across various sectors of your business. You need to do it. I’m sorry, but it’s true.

The problem is that reporting is quite difficult to do in most datasets. And of course, depending on how you want to do that reporting — whether you want to do it from a numerical point of view because you’re quite happy to work with numbers, or you’d rather see it in a dashboard set up — both of those options have to be available to you to utilise, and/or there needs to be avenues to create those viewing platforms.

In short, you need a portfolio planning system that lets you translate your datasets into information. Products such as Microsoft BI are equally useful with simple or complex datasets. If you have at your fingertips the elements that are in play, coupled with projections of future elements and analysis of work to date and associated trends – then informed decision making is at hand – “Which market sectors need promotion ?”, “which types of projects are more profitable” etcetera. The cumulative gain from data across your practice is available.

Your system obviously needs to allow you to invoice. You obviously need to be able to report and analyze. And that gets easier if (again) it’s all coming from a single source.

Whether it’s your current jobs or your proposed jobs, you’ve got to have some flexibility and adaptability in how you approach those. You need a platform that’s strictly built for your industry but is flexible enough to handle the specifics of your particular projects and the ways they change and evolve.

Made-to-measure built environment portfolio planning

Now, I don’t want to get all boast-y about it, but all the things I’ve described are actually available in Synergy software. The features are all responsively linked and real-time ready.

Well, alright, I did want to boast a bit, but the larger point is this — the ability to use the information you have (about your proposals, your projects, your business as whole) to better inform the decisions you make, is the difference between your practice rising or failing. Analyzing that information means everything to your success. It’s that simple.

I’ve met with companies that have six people who do analysis like they’re BHP Billiton, and I’ve seen companies of 150 people who pretty much act like they’re still running in a garage. One of those examples is intriguing, the other one’s terrifying.

In the next part of the series, we’ll be focusing on project setup to cure our built environment project woes. If you haven’t already, sign up to our newsletter to get it as soon as it comes out.

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Read part 1 of this series:

Project management for built environment businesses — The 4 pains (and how to cure them)

The nature of the AEC industry is that it’s one driven entirely by projects — very detailed, very complex projects at that. We check out the four big pain points of managing built environment projects, and what’s needed to ease them.

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Read part 3 of this series:

Project management for built environment businesses — Project setup requirements

In the third instalment of our series on the key challenges AEC businesses face when managing projects for the built environment, Greg Hill, covers all things project setup. He’ll show you the importance of doing it properly for the successful management of both your projects and your business as a whole.

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