Inside The Minds
The following excerpt from the book “Inside the Minds” Section “The Business of Engineering” Chapter “The Engineer as Advisor: Delivering Government Infrastructure Projects” Written by; John W. Brand, P.E., President Butler, Fairman and Seufert, Civil Engineers.
Our engineering firm delivers infrastructure projects, primarily for
government unit clients. The pace of work on these government-related
projects is varied as compared to projects conducted on behalf of private
entity clients, largely because we must deal with obtaining a number of
oversight and regulatory agency approvals. For example, a large publicly
funded transportation project can require up to six separate review events
by the oversight agency during project development. If the project requires
acquisition of land, then multiple public meetings, environmental
compliance, and acquisition of the land in conformance with the Uniform
Relocation Act is quite involved. Conversely, a small water main extension
for a town within the existing road right-of-way can be completed in several
months. The process of obtaining approvals from a governmental unit or a
municipal board of works before you are able to move forward on a project
generally takes much longer than getting over-the-phone approvals from a
private industry client, CEO, or project manager.
Engineers who work in this practice area strive to be viewed as trusted
advisors to their clients, much like accountants or attorneys. We want to
become a valued member of our client’s team, someone they can trust to
give them good advice with respect to whether they should move forward
with a specific project and how to make it happen. We have to be good
listeners in order to define and understand the project-related issues that
need to be addressed; only then can we correctly advise the owner on the
things that they need to do, and the things that we need to do. The owner
needs to provide input on the available funding and desired timing for the
project. A common understanding of schedule and budget is key as the
project is initiated. In every infrastructure project there are a number of
issues that are out of the owner’s or engineer’s control, and we have to
understand what critical paths must be followed as we work to deliver a
project. Examples of these issues include acquisition of land from land
owners who may not be supportive of the project or relocation of private
utilities. In each case, the owner cannot solely dictate the cost and schedule
impacts. The engineer, in managing the project, must anticipate and
forecast the outcome of these types of issues.
Profit-Making Strategies
One of the unique strategies that our engineering firm has used to increase
our profits and grow successfully is assigning seven people on our payroll
exclusively to client service. These staff members contact potential and
existing clients in order to develop new work; and they also stay in touch
with our repeat clients in order to make sure that we are successfully
addressing their needs. These staff members are chosen not for their
technical skills, but for their ability to develop a good rapport with our
clients, and their ability to find out how we are doing in terms of delivering
on our clients’ projects.
Another profit-making strategy that we utilize involves trying to identify, on
a yearly basis, at least two or three new markets where we need to expand,
in terms of either geographic area or specialty services. Once we have
identified those markets, we will incorporate them into our annual business
plan and over the next twelve months we will make a concerted effort to
pursue those opportunities. A year later, we will reevaluate our strategies
and decide whether we wish to continue operating in those markets.
In order to determine whether we are performing successfully, we utilize
the extensive client feedback that we receive from our seven client service
representatives. We also conduct annual client surveys in order to find out
how satisfied our clients are with our service and to determine what services
our clients are looking for that we do not currently provide. If we find that
a significant number of clients is desiring services in a certain area we will
dedicate some of our staff to those projects; but if at the end of a year we
find that one of our services is not in demand, we will abandon that idea
and find a new project area to pursue. Examples of new markets we have
been successful in starting up are trail and greenway projects and database
management.
Developing a Leadership Plan
Our leadership plan for this company is based on the premise that our
management team always tries to let our employees take the primary
responsibility for delivering on projects. We believe that if we do not
interfere in our employees’ work and give them ample opportunities to
grow on the job, they will stay here for a long time. It is also rare for us to
hire any high level employees for our company; we generally hire entry level
employees and then promote from within the firm.
We also encourage cross training between different departments of our firm
in order to give our people a broader understanding of what we do. If as a
result of this training one of our road engineers decides that they would be
well suited to work in another area of the company, we would not hesitate
to move them over to that area, especially if they have strong leadership
skills. We do not pigeonhole people in a particular area because we do not
want our employees to get stale and the understanding of several disciplines
increases their value to the company and the client. We believe that if we
encourage our people to gain expertise in several different areas and
disciplines, their abilities will benefit our company and our clients over the
long term.
Achieving Long-Term Success
In order for an engineering firm to achieve long-term success in this
practice area, we believe that its people need to spend most of their time
taking care of their existing clients in order to retain and maximize the
firm’s repeat work; 15 to 20 percent of their remaining efforts can be
devoted to developing new clients. We have found that this division of
focus has proved to be the right mix to enable our company to grow and
prosper. We believe that it is also important to develop strong personal
relationships with your clients, which we try to do through the efforts of
our seven client service representatives.
Long-term success is also better assured if you hire and promote from
within your company; employees are more likely to stay with a firm if they
feel as if they have an opportunity to advance in their career. Our
engineering firm employs 150 workers, and we spend a lot of time and
effort in promoting a family atmosphere at our company—I send every
employee a card when their employment anniversary comes up; one of the
other principals sends out birthday e-mails; and we host a number of social
events that help to promote a close family-type atmosphere even as our
firm continues to grow.
Marketing is another important element in an engineering company’s longterm
success strategies. We have found that face-to-face marketing through
our client service representatives is most effective; they visit with our
project owners and potential clients on a regular basis. We also make
presentations at technical conferences that allow us to demonstrate our
expertise in various areas of the engineering field.
Working on Federal and Locally Funded Projects
Even though we work primarily for government units, our projects are
quite varied, depending on how they are funded. For example, a two to five
year process is typically required to develop a federally funded
transportation project. Multiple reviews by the state transportation
department, a land acquisition process including appraising and buying,
public hearings and input, and a public process to obtain funds all
contribute to a multi-year project schedule. It is important to communicate
to the owner during the lifespan of such a project so we will send the client
monthly written project status reports in order to keep them up to date on
how we are proceeding with their project. Locally funded projects, such as
municipal utility projects, generally proceed much more quickly;
consequently, there is more informal communication between the various
parties during the course of these projects. However, it is still important to
provide monthly project status reports to the owner.
Because of the many different and varied disciplines that are involved in our
work, we do not utilize one specific companywide process in order to
deliver projects for our clients. Our airport division, for example, is entirely
different from our transportation division with respect to what it takes to
deliver a project. Airport projects have much less state agency oversight, as
most of the technical and budget oversight is provided by the FAA.
Whereas, federally funded transportation project oversight is provided by
the state transportation department and we have no involvement with the
Federal Highway Administration. A municipal water or wastewater project,
with local funding, requires a different project development path than a
municipal water or wastewater project with state or federal funding
participation. Therefore, we have five or six different processes that we use
to deliver on our projects, depending on the funding and the client.
We have found that most clients want to know how long it is going to take
to complete their project, and how much it is going to cost, and it is
important to set that benchmark at the outset of the project. It is also
essential to communicate with the client as soon as you find that you are
out of bounds with respect to the project schedule or budget—they always
want to know that information early on. If the project is getting slowed
down because of a regulatory issue such as a Section 106 historic building
or regulated wetland, the client probably does not want to hear every single
detail of why the slowdown is occurring—they just want to know that you
are on top of the problem, and that you are going to find a way to meet
their schedule. If you cannot maintain the schedule, it is important to
communicate the reason for the change in schedule—and that
communication cannot be a highly technical explanation.
Assessing the Client’s Business Model
In order to succeed on a client project, it is essential to correctly assess the
client’s business model, or in the case of units of government, their
development plan or capital project plan—and the only way to achieve that
goal is by really listening to what the client is saying. You need to
understand what the client’s expectations are; you cannot go into a project
with preconceived notions, or a belief that a new project is going to be
exactly like a project that you worked on two counties away, and therefore
you can deliver it by using the same process. If you do a good job of
listening to the client’s goals for a project then you will understand what
really matters to that client—is it time, money, public involvement, or a
combination of these things?
We work with various units of government, from executive bodies to
county commissioners and department heads; therefore, it is important for
us to determine who the client’s primary decision maker is. In most cases,
we are dealing with two or three different levels of people on the owner’s
side of the project, and we need to know who is really making the major
project-related decisions so that we can communicate with those individuals
at the right time.
Goal-Setting Strategies
Our project managers and department managers monitor our revenues and
profits by department and project on a monthly basis, and over the years we
have found that large projects and those that have an expedited schedule—
i.e., projects that require our services to be done in a short period of time—
are the most profitable and the most successful. Expedited schedules bring
a sense of urgency from the owner and regulatory agencies that allow less
time and thought for owner scope changes and require quicker funding
acquisition. Large projects also bring a level of notoriety and sense of
accomplishment for the owner that exceeds a smaller project.
Whatever the size of the project, it is important for the members of our
management team to set short- and long-term goals with respect to the
project. Listening to the owner to determine the proposed project scope is
imperative. After we have developed a good understanding of the project
scope with the owner, we will then make a judgment of how many staff
hours are required for the project, and then apply the labor rates that go
along with that schedule of staff hours. Depending on the magnitude of the
project, there are certain rules of thumb, such as percent of construction
cost, which we will use in order to determine professional service fees. In
addition, accounting and financial software provides historical information
with respect to certain project categories; such software lets you review
labor rates and number of man hours that were required on projects that
may be similar to the one you are currently working on—information that
can be very useful in the goal-setting process. A final determination of cost
of services will consider our estimate for the particular project, historical
similar project data, and percent of construction cost fee curves.
Gaining Market Share
We are always selective with respect to what projects we choose to
pursue—we are not a “one size fits all” engineering firm. If a government
agency is only looking to deliver a project at the lowest engineering cost, we
cannot always meet their expectations. We use our expertise and years of
experience to deliver value-added work—we do not focus on completing
projects at the lowest possible price.
In addition, not every client is a good one. Some clients may not desire
personalized service or a long-term relationship. If they view engineering
services as a commodity based upon the lowest cost, rather than value
provided, we are better served to pursue other opportunities. Therefore, we
are selective in terms of choosing potential clients, and we always take the
time to establish a personal relationship with each of our clients. If we
identify a new target area of service or a potential new client we will
typically pursue the opportunity for a twelve-month period and at the end
of that period we will make a decision as to whether we should continue to
pursue that target, or drop it in favor of another area of interest. However,
making that decision successfully depends on investing a substantial
amount of time in getting to know the client.
The Importance of Client Service and Feedback
We work in a service industry; therefore, having a strong client focus is very
important to the long-term success of our company. We constantly remind
our personnel that good service leads to repeat business, and it is important
to put ourselves in the client’s position with respect to the type of service
they are looking for. For example, clients typically want an immediate
response to their questions; they do not want to have their phone calls or emails
to be returned in three days—they want them to be returned on the
same day.
In order to measure how we are doing in terms of client service we assign a
client liaison to every client that we have. Unlike the project manager, who
is trained to understand the technical nuances of what it takes to deliver a
project, the client liaison’s primary focus is to get feedback from the client
and ask them how we are doing on their project—are we giving them the
service that they need? If we are working on a project for a repeat client, we
will always ask the client if they would like to have a particular project
manager assigned to their project, rather than making that decision on our
own without their input.
We solicit client feedback on a regular basis in two ways. First, our client
service representatives constantly obtain feedback from repeat customers.
Secondly, we enlist the services of an outside firm to conduct telephone
interviews with one-third of our clients on an annual basis. Therefore, we
can typically obtain independent feedback from every one of our clients
within a period of no longer than three years. As a result of these surveys,
we are able to provide our employees with a yearly numerical indicator of
our customers’ view of our service, and we use that indicator to determine
whether our service is the same, better, or worse than the year before.
The consultant that conducts this open-ended survey obtains information
from our clients on a confidential basis; we receive a summarized report
without individual client names. Therefore, we have been able to learn
many things through this confidential customer survey process that we
would not be able to obtain through the feedback that our employees
receive during the course of their project work. For example, if a problem is
occurring with a particular employee on a project due to a personality
conflict with the owner’s representative, the survey may uncover this issue,
particularly if the owner representative was reluctant to not get an employee
in trouble by sharing their concern with the firm. The customer survey has
been helpful in determining how we are doing on non-technical issues such
as communication, responsiveness, and resolving problems. These issues
are not the typical technical project evaluators which engineers are
accustomed to being evaluated.
Benchmarking Success
In order to measure how well our company is doing, we utilize four
benchmarking categories that have meaning to all of our employees. First
and foremost, we measure the amount of new work that we bring in on a
quarterly basis, and we then discuss those results with our marketing
personnel and other employees. Using our accounting and financial
software, we also measure our total revenues and department revenues on a
monthly basis.
In addition, we regularly analyze the customer satisfaction responses that
we obtain from our outside interviews with clients, and we share that
information with all of our employees. We also communicate our profit
numbers in our year-end letter to all employees—data that determines our
profit sharing policies and discretionary bonuses.
Value-Added Growth Strategies
In order for an engineering firm to succeed over the long haul it must
ensure that it has a good plan of succession with respect to its ownership.
Both clients and employees need to feel as if their engineering firm has a
vision and a well thought-out plan for the future, beyond that of the current
president or CEO. Many professional services engineering firms do very
well under the leadership of one key person, but if the firm does not
develop a good succession plan it may fail, or not do as well once that key
person departs.
Secondly, it is important that any profits and other good things that happen
within the company be shared with its employees. For example, if your
company is experiencing a profitable and successful year, your employees
need to know that you will be sharing those profits with them. Conversely,
if the company is experiencing a bad year, you must be able to provide your
employees with an explanation as to why you have not been successful.
A third strategy for adding value to a company is to ensure that you are
using a prudent and conservative fiscal approach to growth. Careful
decisions must be made at the end of the year with respect to how much
money should be invested in new programs and equipment for your
company, the amount of profits shared with employees, and how much of
the profits to be distributed to the owners. It is important to make regular
and well-planned investments in your business by creating new training
programs; making new equipment purchases; opening up new offices; or by
providing new services that can add value to your company and give it an
opportunity to grow.
We believe that it is especially important to invest in training programs for
your employees. In order to bring new ideas into your company, you must
be willing to send your people to continuing education courses that will
enable them to develop their skills as industry leaders. In addition, it is
important to keep in mind that the technology in this field continually
changes, and investing in the right equipment at the right time can help to
ensure that you will continue to provide state-of-the-art services.
Computers, CAD software, GPS survey equipment, and robotic survey
equipment, for example, allow our technicians and surveyors to be more
productive. Therefore, making investments in such technology actually
allows us to keep our costs down over the long term and stay innovative.
Recent Industry Trends and Upcoming Growth Areas
One of the biggest trends that engineering firms have had to adjust to in
recent years is the speed at which we are expected to deliver projects. In
most cases, if you have worked for a project owner in the past, they expect
you to deliver the next project quicker than the last one you delivered. All
areas of the business world are continuing to produce at greater rates. For
infrastructure projects, if you can expedite the project, say six to twelve
months, then you can save the owner a significant amount of money by
avoiding escalation of construction costs for that time period. For a
$5,000,000 project the owner can save $250,000 to $500,000 of
construction cost escalation by the project being moved forward six to
twelve months.
In addition, more engineering projects and competitors extend beyond
specific state and national borders these days; therefore, there is much more
competition in this field than there was five or ten years ago. Our firm, for
example, has always worked exclusively in the state of Indiana; however, we
now need to provide services and grow our business into some adjacent
states in order to compete successfully in this market. Many competitors are
encroaching on the Indiana market so we need to pursue other
opportunities to ensure the growth of the company. We have purchased
several firms in the Indiana market in the past to grow our firm.
In terms of upcoming growth areas, working on projects for governmental
clients is giving engineering firms such as ours an opportunity to handle
some areas of database infrastructure management that are not true
engineering functions. Government clients have large databases and a lot of
information to manage, and a number of those clients have looked at the
success of our Information Technology (IT) and database capabilities and
have asked us to provide that service for them as well. Therefore, we are
spinning that database management service into a new department at our
company, and while it does not involve engineering, it is a function that
provides some nice growth potential for our firm.
Golden Rules of the Engineering Business
I believe that the first golden rule for succeeding as an engineering firm is
to always communicate who you are and what you are about to your clients
and employees. You have to make your values clear, and when you say that
you are going to do something, it is important to make sure that you do it.
In this particular business, the reputation and character of a company and
its leaders are very important; therefore, it is important to clearly
communicate company values to your employees and your clients and be
sure that you are honest, considerate, accountable, and professional in all of
your business practices.
The second golden rule for growing a successful engineering firm is to
promote from within, and reward your employees on a regular basis. If you
want to keep your people with your company for a long period of time, you
must make sure that you appreciate and recognize their particular
contributions, and let them know that they are not taken for granted. We
also want our employees to know that they have the opportunity to grow
with our company, and that they have the chance to apply for any new
position that comes along. Ultimately, our employees need to grow in terms
of responsibilities and capabilities, or our company will not be able to move
forward. To that end, we provide regular training opportunities, and we
monitor our employees’ progress in those areas. We encourage and give our
employees the responsibility to grow, and then we stay out of their way.
A third golden rule for success in this field applies to an engineering firm’s
hiring practices. Technical competence is a given in the engineering field; if
someone has a four-year engineering degree we know that they are
technically competent. However, it is equally important to be sure that new
employees hold a similar set of values to others in your firm, and that they
are able to fit in and work well with others. The employees that stay with
our company for a long period really desire to work in a team environment,
rather than be a “Lone Ranger” and work on their own. Therefore, our
hiring model typically focuses on a potential employee’s character traits as
much as their technical competence. We also look for good communicators
and people that ultimately want to be leaders, although that is not an easy
assessment to make when you go through the interviewing process.
Lastly, I believe that it is important to take advantage of opportunities to be
viewed as a trusted advisor to your clients. If you do a good job for your
clients, they will give you repeat business.
Final Thoughts
One of the biggest misconceptions about professional services businesses
such as engineering is that you bid for your work, and in our case that is not
true. Most governmental units select their engineering firm though a
qualification-based process; they consider credentials, innovation, and
experience in order to assign projects, much as you would choose an
attorney, financial advisor, or doctor. Simply put, engineers in the
government sector do not bid on projects the way contractors do.
Another misconception about the engineering business is that while an
engineer needs to be technically competent, he or she does not necessarily
have to be a good communicator. I believe that it is very important that our
technical personnel know how to communicate effectively with clients and
boil down technical issues into terms that a laymen can understand. Indeed,
as you develop in your engineering career you will be less involved in the
technical aspects of the job, and you will be spending more of your time
interacting with employees or clients—and you have to be a good
communicator and a good listener to do that effectively.
Therefore, I believe that the engineering curriculum should include a
greater emphasis on the importance of being a good communicator. While
it is important to be technically competent, what really separates the true
leaders in this field is their ability to communicate and develop a good
rapport with clients. In most cases, engineering firms are not selected by
clients on the basis of price; we are selected on the basis of whether our
clients trust us and enjoy working with our team. Simply put, an engineering
firm’s ability to establish good rapport with its client base will often trump
its technical capabilities, even though we are in a technical field.
Finally, the best piece of advice I have ever received with respect to this
industry is to always remember that the project that you are working on
belongs to the owner, not to you. Many times in your career you will start
to feel as if a project belongs to you and you should be able to do whatever
you think is best; however, you must constantly remember that it is the
owner’s project, and you have been hired to fulfill what they want to
accomplish. Therefore, you must always make sure that you have the
owner’s objectives in mind while working on a project, rather than the
company’s or your own individual objectives.