WHAT’S NEW
MANAGEMENT FOR DESIGN Autumn 2014
Costly design business mistakes With changing market conditions, maintaining a successful design firm can be challenging. The industry has become more competitive, cost pressures are coming left, right and centre and there are any number of practices that have become more innovative in the way they deliver their services. In difficult times many firms adopt bad habits which in the long run limit their ability to increase their profit margins.
The most common business management mistakes design firms make are: 1. Not embracing change Constant change and improvement is necessary for growth and enables firms to be more competitive. 2. Inappropriate senior appointments This is a big one and can have far reaching and long lasting consequences. If you are nodding and in this situation then ask for help — don’t sit on it!! 3. Inadequate spending on marketing In a difficult climate marketing is often one of the first expenses to be cut. This can have a significant effect on a firm’s ability to recover when opportunities return. The fastest growing firms spend more on marketing during tougher economic conditions. 4. Inadequate accountability This needs to start at the top and flow down through the organization. Responsibilities should be clearly articulated and you need to set people up to succeed (if you want them to!). 5. Poor recruitment decisions This doesn’t only mean recruiting the wrong person but includes recruiting at the wrong time and with the wrong employment conditions. 6.
Not investing in the business and its systems This goes out the window when cost pressures arise. Well guess what — you won’t have a successful business if you don’t!
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Lack of financial management expertise Having an expert in financial management available to assist with business decisions is essential — this is not a book-keeper or office manager!
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Poor cash flow management Managing cash flow is essential in order to be prepared to deal with any potential highs and lows. Effective invoicing and collection will allow you to impact cash flow and you need to have accurate forecasts so that any potential shortages can be dealt with in advance.
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Not sharing financial data Many businesses are hesitant about sharing financial data with project managers, however if project managers don’t receive the necessary information they are unable to make informed decisions and this can impact profit margins.
10. Not training project managers Most project managers never receive complete training for all the different facets of their roles. Good training is essential. 11. Antiquated systems Many firms are still using outdated software and are therefore missing out on the competitive advantage newer technology provides. New technology should be viewed as a strategic advantage.
12. Not planning for succession Companies should prepare for ownership transition at least 5 years in advance. Think about it from the moment you set-up your business. It’s not an afterthought.
Integrate your Business Management Systems 1.
Increase your productivity What are the keys to productivity? Effective forecasting, planning, implementation and monitoring of projects and resources combined with a timely means of reporting. Get more done with less effort!!!
Utilizing an integrated business management system enables businesses to: •
Centralize revenue, resource and cash flow information and compare this to budget and forecasts and initiate the appropriate corrective action.
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M anage the flow of information from prospect to submission to project and client.
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M aintain critical data in a central location and extend the information flow from the accounting department, through to senior management and project managers.
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G ain immediate enterprise-wide access to accurate, timely information thereby expanding the knowledge base and make it actionable.
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F acilitate remote work stations via the web.
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R eport whenever and wherever on financial and project information and metrics earlier.
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Reduce non-value adding activity A well-implemented, effective business management system will reduce costs and improve the bottom line right across the business. In our experience we have seen innumerable processes that can be reduced or eliminated by working in an integrated Business Management System. Some of these include: •
A reduction in the time it takes to produce financial management reports.
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Automation of both the accounts payable and invoicing processes.
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Elimination of the time consuming double-entries that most businesses encounter.
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Reduction in the need for spread sheets and cross-checking of accuracy of data.
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Reduce administrative costs by eliminating redundant processes and data entry.
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Increased accuracy in time collection and billing and less checking.
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Increased project profitability by reducing budget overruns.
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Increased resource utilization.
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Reduction in the support required to support disparate systems and to manage the flow of information.
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Decreased time in managing marketing campaigns and email mailouts.
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More informed strategic decision making.
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Decrease in time to integrate numerous desktop tools such as Outlook, Word and PowerPoint.
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Automation of the creation of proposals and project setup.
Increase the value of your business The value of your business is built on clients, projects, intellectual property and strong and stable business management systems. What do you have in place and what are you building? Have you created a business that relies on you to generate the work and design and manage the project delivery through your own hard work? If so, you have not created an asset — you have created a job!! With the next decade posing as the most demographically challenging for firms looking at potential ownership transitions, this becomes even more critical; putting strong financial and business management systems in place now is an important ingredient to ensuring that your firm has a successful foundation for sustained success. Success-minded firms require a laser-like focus on strong project and financial management practices — the kind that can carry their long-term growth goals to fruition.
Strong business management systems used to require deep pockets and be the domain of large practices of 100 people plus. This is no longer the case. Small and medium practices CAN now get the type of functionality that used to be available only to firms with deep pockets. In fact, it’s now quite easy to implement a Business Management System that not only addresses the accounting function, but also facilitates the firm’s core processes and way of doing business.
Managing your client relationships A CRM system is not just an MS Outlook repository for client and prospect contact details. One of the primary goals of a CRM system should be maintaining and increasing revenue. This is accomplished by leveraging many aspects of an effective system, the most important of which are: •
Communication
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Collaboration
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Enabling follow-up
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Reporting
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Predicting
An effective CRM System should: •
Be the corporate Client Database
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Track and measure Business Development efforts
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Remind you to follow-up in a couple of days, weeks, or years
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Become a central repository for notes and information on a given client or lead
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Manage qualified leads and keep them from falling off the radar
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Manage and track outstanding fee proposals, including forecasting revenue
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Manage prospect customer interactions
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Identify Business Development Tasks that need to happen and whether they are actually happening
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Notify Client Managers about interactions everyone else in the company is having with their client
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Provide feedback on projected revenues and actual revenues
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Report projected revenues by group/department/company
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Increase collaboration between groups and departments through information sharing
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Alert Client Managers and management when revenue is declining for a given client
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Provide a historic record of projects and submissions for the client and prospect
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Be a central repository of information on other firms, e.g. architects that are winning hospitality work that we can team with to pursue future work
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Report on Business Development activities: “That which is measured is improved”
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Manage conferences — costs, exhibiting, attending — and relate it back to specific employees
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Answer the question: what happens to someone’s contacts when they leave?
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Provide historic Information on prospects, marketing events, e-mag distributions, lunches, relationships, and more
A Great CRM should do all of the above and more including: •
Integrate with existing project and client data, allowing for cross reporting related to current revenues and past revenues and how these relate to future revenues
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Identify opportunities that aren’t moving/progressing
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Report on the effectiveness of the Business Development staff
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Identify who and what efforts result in new work
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Integrate with a Client Retention Program (e.g.: survey feedback loop to measure success)
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Become a measurable part of the employee review process
The right people on your team Successful businesses — without exception — want team members who will work together not only to achieve the objectives that the business has set, but to make everyone else on the team better than they are individually. In particular, they want team members who will challenge management, who will enable the business to be at its best, and who will work hard to ensure that the principles and mission are shared throughout the team.
What kind of energy do they have? A great team player never thinks or speaks in terms of “can’t,” only in terms of “can,” as in “How can we?” Such team players are filled with energy. They light up a room with their excitement and enthusiasm, their calmness and focus, and their strength and confidence. Their energy will permeate everything we do. It will be the fount of resourcefulness and connectedness with others, and it will enliven your team with positive feelings that increase your speed and expand your possibilities. Do they want to be the best? One of the primary rules for success is that you must have an undying desire to challenge yourself to grow and be the best. Some people just want to do a good job, to be liked, to be comfortable, and to be part of an enjoyable team, and that’s all fine. Are they willing to put in the time and energy that being the best takes? Of course, even with the most talented and most committed people you can find, you won’t necessarily achieve this all of the time. But a key ingredient to success is at least trying — “going for it” 100% of the time. And to do that, all of your team members need to be willing to do whatever it takes to be the best.
Are they willing to let someone else in the team be the best? This might seem like a contradiction of what we just stated, but it’s really not. Having a desire to be the best is outwardly focused. Being willing to let someone else be the best is inwardly focused. Stated simply, being on your team means that you put aside your desire for immediate personal gain and are willing to support others. It means you don’t always get to be the star. You have to be just as enthusiastic about being in the background for a time as you are being the centre of attention. Are they personally responsible? Another essential quality for anyone who wants to be part of your team is being willing to take responsibility for one’s own decisions and actions. We don’t want someone on your team who has trouble accepting responsibility or who points fingers at others. That only breeds distrust and can undermine or even destroy a team. Instead, we want someone who is comfortable enough with himself or herself to say, “I made a mistake, but I learned from it,” or, “Here’s how I would do things differently next time.” Do they have unique talent or ability? Ideally, each person on your team should bring unique talents or abilities to your business. Not everyone needs to be a ‘superstar’ in all facets of the business. What we need are people who are superstars in at least one critical aspect of your business, people who can complement one another and whose talents add value to those of other team members. Are they willing to adhere to your principles? This is the most important point: the principles and rules that govern how your team members interact with one another. Your business will rise or fall on the strength of the behaviours of your people. It’s imperative that each of your team members — willingly and enthusiastically — subscribe to your principles and rules. If they can’t or won’t, that’s OK. It’s their choice. But then they should join another team and not yours. Your team’s success ultimately will depend on the success of your principles and rules, and that success will turn on the commitment and compliance of those who are asked to live by it.
WHAT’S NEW
MANAGEMENT FOR DESIGN Winter 2014
Is your Strategic Plan sitting in the top drawer? Here are 12 reasons why strategic plans fail: •
Not understanding the environment
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Partial or minimal commitment
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Too much focus and activity on the day-to-day
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Not having the right people involved
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Writing the plan and putting it in the top drawer
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Unwillingness or inability to change
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Having the wrong people in leadership positions
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Ignoring marketplace reality, facts, and assumptions.
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No accountability or follow through
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No clear execution plan
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Unrealistic goals
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Lack of investment or resources.
And that’s not all of them! By avoiding these and other pitfalls, you can create an effective planning process, build a realistic business direction for the future, and greatly improve the chances for successful implementation of your strategy. We have worked in strategy development and business planning for over 15 years and successful strategy is no accident. In our experience the three most critical factors are: •
Business leaders with drive and ambition
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Having clear actionable and measurable objectives
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Considering execution before you start
Management for Design have developed a unique approach to strategy development and execution that if implemented effectively ensures results. At the core is a methodology and system to ensure successful execution that involves the key people in the business. If you are struggling with your business direction and can’t get the traction and results you need to improve your business then don’t sit on it! If you want to be set on new path and have the tools to make it happen please contact David Somerville or Rob Peake at 03 9645 8834. Here’s our website: www.m4d.com.au
World Business Forum 2014 We recently attended the World Business Forum held in Sydney in May. The forum is held annually and is an opportunity to hear and discuss the ideas, trends and innovations that are shaping the global business landscape. Among the speakers were a range of business ‘gurus’ including Michael Porter (Professor, Harvard Business School), Lyn Heward (CEO, Cirque du Soleil), Gary Hamel (London Business School and author of What Matters Now), Randi Zucherberg (Zucherberg Media), George Kohlreiser (author of Hostage at the Table), and Kevin Roberts (CEO, Saatchi & Saatchi). Among the topics of discussion were: •
Creativity in Business
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Creative Leadership
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Strategy
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Management Innovation
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Big Data
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Execution
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The Power of Social Media
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Leadership
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The Global Economic Future
Michael Porter spoke about the significant change that is occurring in how businesses are thinking about corporate and social responsibility. Businesses have realised that social responsibility is no longer a cost to the business but is in fact a driver of profitability. Business leaders need to consider their businesses products and services and the role they play in society. Businesses create wealth by meeting important needs at a profit. The more we do in business to contribute to society and community — create shared value — the more profit we are able to generate. Think about how you can align your business values with the client’s and with society, because how you create shared value can be at the centre of your business strategy. Business has the greatest power to change the world!
Kevin Roberts’ presented on how to drive creativity in your business. According to Kevin we now live in the age of the idea — a VUCA World. That is a world that is Vibrant, Unreal, Crazy and Astounding. The businesses that will win have lots of good ideas, not necessarily the big idea, and cultures with the most ideas will be the cultures that thrive and win. We need to change our cultures from roles and responsibilities to learning, excitement and joy. The key role of the business leader today is to allow ideas to flourish; it’s not about information — we are drowning in it — it’s about inspiration! Your language is what gets people to change/join revolutions. The three keys to business success are strategy, execution and IDEAS. Take those ideas and turn them
into solutions; that is the essence of creativity. His thoughts on execution? Eliminate unproductive activity — emails, meetings, travel — and focus on making things happen rather than on getting things done and measuring results. As Winston Churchill said, “Success is the ability to move from one failure to another without the loss of enthusiasm”. We have attached the link to the website if you are interested to delve deeper. Or we can provide an overview for you at some time in the future, get in touch for a chat. World Business Forum is held annually. Let us know if you’re interested in attending next year! World Business Forum: www.wbfsydney.com
Reviewing your HR needs If your business can’t afford a dedicated Human Resources (HR) department, perhaps it’s time to find one elsewhere. As Adam Turner MYOB says “Of all the growing pains experienced by businesses, dealing with HR issues can be some of the most frustrating ones. Finding, managing and retaining good staff involves dealing with a myriad of contracts, policies and government regulations, not to mention the finer points of payroll tax, superannuation and other financial issues. Don’t make the mistake of thinking these problems only affect big businesses. Even the smallest businesses need to be familiar with the National Employment Standards and how these entitlements relate to flexible work conditions” .
Chances are, staff-related issues aren’t your area of expertise. And unfortunately these issues can become overwhelming long before your business is large enough to justify maintaining an in-house HR team. In any case, you should be focussing on your areas of expertise — design, project delivery and building and sustaining client relationships. If HR challenges are impacting adversely on your business then look for outside assistance.
Manangement for Design is well positioned to provide quality, in-depth and compliant HR advice and guidance to your business. The first step is for Management for Design to conduct an HR ‘health check’ of your current people, systems, processes and activities. This enables us to conduct a review of your company’s current HR ‘back of house’, including any supporting HR materials, documentation, policies, processes and activities. This will be achieved by: (a) M4D reviewing all required HR information in the business, as well as any face-to-face discussions to further ascertain the current HR state of play across the business. This includes any unwritten HR processes and activities in place for your business presently. (b) M4D will then provide your business with a summary HR ‘health check’ report of HR findings arising from this process to confirm areas of current HR strength and further clarifying opportunities for further improvement. There are a number of automated tools and templates designed to walk you through creating policies, procedures and documentation. They should be designed to ensure your business is compliant with workplace laws, such as Australia’s Fair Work Act. Choose with care, as many online HR tools offer templates based on US or UK workplace laws. The next step up from fully automated tools is HR consulting services, which often combine online HR tools with a hands-on appraisal of your HR needs. Rather than simply generating forms and policies, such services often assist you with managing the entire employee lifecycle from recruitment and orientation to performance reviews, personal development, ongoing training, and termination and exit interviews. Please give Rob Peake or Adam Kreuzer a call 03 9645 8834 if your business would benefit from specialist review of your HR activity.
Cloud-based business systems Much has been written about the cloud and its impact on how business is conducted today. But is the cloud really that significant? In a word, yes! The cloud is the great equalizer. The cloud offers everyone (businesses and individual consumers) the ability to obtain products and services from literally anywhere, anytime in the world on a device of their choosing. That is the power of the cloud. A consistent experience that is always available and appears to the consumer as something that is indistinguishable — large or small companies, local or global, morning or middle of the night, simple to extremely complex — it’s all there, all the time. But… The cloud is only a method by which we all obtain our experience. The experience is, and has always been, controlled and delivered by the business
utilizing a combination of exceptional people and exceptional solutions. This is a critical point. The best cloud in the world won’t transform a bad experience into a good one. The cloud does not know if your information is accurate or not. It is up to you to embrace your clients and prospects and give them an experience that will have them coming back time and again. So how are you using your Business Management Systems? IT and Systems Managers surveyed told CIO Magazine that their core Business Management System modules were used chiefly for accounting and financial applications (96%); project management and resource scheduling (78%); CRM/ Marketing and proposals (64%); and HR management and payroll functions (55%).
When asked in which areas of their business the systems worked best, respondents overwhelmingly cited the financial side of the house (70%). But what is really disturbing is that the majority of firms said that they are only using a small percentage of the capabilities of their system. This is a waste of money, and makes it harder to implement automation and processes that enable the firm to grow quickly. Business systems now have the capability to not only hold and retrieve information but to slice and dice the information on the spot to enable immediate decision making. In an age where all business technology applications should provide some competitive advantage, 76% of IT chiefs said operational efficiency was the goal of their organisation’s business management systems, followed by support of global business (12%); growth (5%) and IT cost reduction (4%). Just 4% of IT leaders said their business management system offered their companies competitive differentiation or advantage.
The future To be competitive at all (forget competitive advantage), businesses are going to have to begin utilizing their business management systems — that ultimate repository of almost all corporate data — in a much more integrated, intelligent, dynamic and client-centric fashion. What does that mean for tomorrow’s business: Decision making needs to happen at the time of accessing the information — not three meetings later! •
Access to information needs to be anywhere and anytime, utilizing the tools that people understand and prefer, and with the device they want to use.
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All of the information must remain accurate, up-to-date and easy to find.
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Security, platform, bandwidth, e-commerce, and other technical issues are as important today as ever.
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Your internal systems must also interface and interact with an external and ever expanding ‘social’ world.
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All of this must be seamless, simple, always on and presenting your brand in the most professional manner possible.
Where does all the corporate information reside? The vast majority is found within your internal financial and project management systems. Few businesses these days have business management systems that integrate all of their data and processes, and manage the entire project lifecycle in one system. Never, in the history of automated accounting solutions, has this played a more important role for every company regardless of their size. Because the cost of computing is so low, it is expected that your systems will provide all of the information they need. How can small businesses compete with global giants? Enter the cloud.
WHAT’S NEW
MANAGEMENT FOR DESIGN Spring 2014
Top financial mistakes faced by design firms Most designers will agree that financial acumen is not their strong suit. However, when it comes to business success, financial know-how can make or break your business strategy. Is your design business making financial mistakes?
The top 5 financial mistakes made by design businesses are listed below: 1.
Failure to plan is your biggest foe. Budgeting and forecasting regularly will help to even out cash flow and by being aware of upcoming project costs, businesses can better prepare for months when money will be tight. By planning ahead, measures can be put in place to ease the financial strain of project-based workflows, allowing businesses a clear picture of individual project finances as well as the big picture business forecast.
2.
Stay on top of cash flow and accounts receivables. With multiple projects running simultaneously and with different payment milestones, it can
be difficult for architecture and engineering businesses to maintain a balanced cash flow throughout the year. A successful business will always be aware of current cash flow and accounts receivables to enable regular distributions and dividend payments. Invoicing systems and clear payment terms can both help to ensure prompt payment from clients. Our clients operate with 14 to 30 day payment terms 3.
Lack of reliable systems. A financial management system can be a significant asset in understanding the strengths and weaknesses of your business. Strong reliable and up-to-date systems can help you to clearly see your incomings and expenses so that you can react to issues before they arise. Your business will also benefit from the ability to quickly filter financial data by revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business management systems can significantly ease the administrative burden through automation and efficiency.
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Reducing costs rather than increasing revenues: the ebb and flow of a project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look at your business development strategies and only cut once you have analysed what is and isn’t working for your business.
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Big picture thinking. Profit for the sake of it is all good and well, but sometimes a small profit gain can get in the way of long-term business success. Always think about the big picture and long-term goals of your business — with that financial forecasting you’ve done in mind — before saying yes to projects that will bring in money in the short-term, but that may ultimately but obstructive to future progress.
How embracing change can boost your business Global financial markets are in constant fluctuation, businesses are increasingly operating on a global rather than local scale, and the world around us is a world of pixels, with everything going digital. Your ability to cope with and thrive in a changing marketplace can be the factor that sets your business apart. The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that attitude to change has on company performance.
Results of the survey reinforces our view that businesses that are excelling and positioning themselves as market leaders, are also the businesses that are most adept at managing and embracing change. Three main tenants of successful change management are: 1.
Leaders setting the tone of the business. In design businesses change is driven from the top! Architects and engineers are so focussed on project activity that unless your people are given unqualified support and direction to embrace innovation and challenge the status quo it just won’t happen. The IBM survey showed that achieving this was 50% more successful in organisations that use collaborative tools and who interact with staff via a number of communication channels.
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Make change matter: change for the sake of it isn’t going to do your business any favours. Make sure that new initiatives have purpose and that they fit in with your strategic plan. If everyone in the company can see that change will lead to the delivery of your business objectives then change will have purpose and direction.
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Build the muscle: in-house design teams don’t always have the skills required to implement business change effectively. This can mean the end of an initiative before it even begins. If you don’t have the time or resources to develop the skills internally, bring in expert help to strategically manage your project and to keep change on track and within the context of your overarching business objectives.
If you need assistance implementing your strategic plan, Management for Design can help. Contact us to discuss your needs.
Defining your business strategy When it comes to business forecasting, a clearly planned and documented strategy is key to success. Having ideas about where you want your business to go without putting it down in writing often leaves design businesses missing the mark and going down tangential roads that lead away from the original strategic objectives.
Below are our tips on keeping strategic goals within your sights: 1.
Strategic objectives should stretch the limits of your business capabilities, making them exciting to achieve, without being impossible to accomplish. Unrealistic objectives can conversely have a negative impact on morale as well as being an inefficient use of your valuable resources.
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Set longer term 3–5 year objectives and action these in into realistic milestones of 3 months and 12 months.
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Your strategic plan should be visible to your key people so that they understand and embrace where you are heading and work with you to deliver clear outcomes. Businesses with clearly defined goals and transparent internal communication are more likely to succeed as your key people are encouraged to think strategically, share ideas, and put in the effort required to make business goals a reality.
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Know thyself: a strategic plan should closely mirror the ethos of your company. In design, most businesses have aspirations far loftier than just making money. While profit is obviously necessary for company survival, it is
not financial gain that defines who you are or what you do. Think about your mission statement and you value proposition. Why do you do what you do? And apply this to your strategic plan to ensure that your business objectives stay true to the company. This will ensure the plan remains genuine, achievable and something all members of your team can believe in. 5.
What does the future hold? A short-term strategic plan may define your cash flow and financial objectives for the coming year, but what about the years beyond that? How do you want your business to grow, and what environmental, financial and industry factors might need to be considered in line with your long-term plans?
Keeping on top of your business strategy can be daunting. If your strategic plan needs an overhaul, get in touch for some advice.
The future of the industry — architecture and engineering Management for Design continues to receive great feedback on the Business Insight networking event held at Melbourne’s popular Eureka 89, in July. For those who were unable to attend, business leaders Ian Hopkins, CEO at Norman Disney & Young, Leone Lorrimer, CEO at dwp|suters, and Tony Battersby, Director at SJB Architects, discussed some of the key challenges facing the architecture and engineering industry.
The panellists discussed what their distinct practices are doing now to ensure their businesses thrive into the future. The key points raised included strategic alliances to broaden skillsets without stretching resources, fostering and nurturing creative talent and the need for an international mindset. Leone
Lorrimer talked about the alliance between dwp and suters as an opportunity to diversify into new and exciting areas through leveraging skills on both sides of the partnership. Tony Battersby said that outsourcing business services to Management for Design has enabled SJB Architects to focus on the design talent they have in-house. With the specialists at M4D taking care of business, SJB can get on with what they do best — design. Ian Hopkins noted that geographical spread is important to maintain stability through local peaks and troughs, and that in today’s global market, an international outlook both in business location as well as in mindset in essential. When discussing what the future holds, Tony Battersby said the key to future success at SJB Architects will be to further hone the specialist skills they have in-house in order to provide a unique design offering to their clients. Leone Lorrimer said that a long-term strategic plan — and dwp|suters has just used Foresight to imagine alternate futures to develop a strategic plan to 2040 — is what allows her business to look ahead. By planning for the future dwp|suters are able to respond to change quickly, having already scoped out the solutions available to them. Ian Hopkins said there is scope for Norman Disney & Young to grow by up to 30%, but to get there the focus will be on nurturing quality staff. The company employs one graduate for every 20 staff each year and is committed to training the next generation of business leaders. Business leaders in the audience had the opportunity to ask questions throughout the discussion, leading to a conversation about pricing and the strategies dwp|suters, SJB Architects and Norman Disney & Young employ when it comes to today’s competitive fee market. Ian Hopkins commented that everyone thought the bottom had fallen out of the market over a decade ago, but it’s kept falling since — generating a requirement to continually increase efficiency. Both Leone Lorrimer and Tony Battersby said that their firms aim not to compete on price. For SJB Architects, customers know that they provide a premium service and are willing to pay for the privilege. Tony Battersby noted, however, that sometimes that meant losing a client, so you’ve got to be in a position to take that risk. Projects that are innovative or unusual — Tony Battersby used the example of an SJB project in Asia set to house half a million people, “how often do you get the chance to design a city?”, he said — that will provide inspiration and creative growth for staff, are instances where price might be negotiated more than usual. Attendees praised the event as “an incredibly valuable experience” with the opportunity to meet other business leaders, make new contacts and to reestablish connections with former colleagues and business contacts. The event is part of the Management for Design Business Insights event series. Keep an eye out for the next event to be held in December 2014, the conversation is sure to be inspiring. We look forward to seeing you there.
WHAT’S NEW
MANAGEMENT FOR DESIGN Summer eMag Spring 2014
Top financial mistakes faced Business Intelligence by design firms for the profession
Most designers agreeare that financial acumen isthe notrelease their strong Management forwill Design excited to announce of oursuit. However, when it comes totools business success, financialfor know-how can make or new Business Intelligence specifically designed Architects, Engineers break your business strategy. and designers. Like most businesses you are probably used to seeing a variety of reports that track how your business is performing. These typically Is your design business making financial mistakes? will include your profit and loss statement, balance sheet, your cash flow statements, and perhaps project specific reports. Drawing on our extensive experience and expertise working with professional services businesses our Business Intelligence tool allows you to access, view and analyse your business performance at anytime from anywhere. Not only can we provide the ability to interrogate the information on the spot but we also forecast your business performance into the future from any financial system.
The top 5 financial mistakes made by design businesses are listed below: 1.
Failure to plan is your biggest foe. Budgeting and forecasting regularly will help to even out cash flow and by being aware of upcoming project costs, businesses can better prepare for months when money will be tight. By planning ahead, measures can be put in place to ease the financial strain of project-based workflows, allowing businesses a clear picture of individual project finances as well as the big picture business forecast.
2.
Stay on top of cash flow and accounts receivables. With multiple projects running simultaneously and with different payment milestones, it can
regular distributions and dividend payments. Invoicing systems and clear payment terms can both help to ensure prompt payment from clients. Our clients operate with 14 to 30 day payment terms Lack of reliable systems. A financial management system can be a significant asset in understanding the strengths and weaknesses of your beour difficult for Management architecture and engineering businesses tohave maintain Using inherent for Design methodologies we also business. Strong and up-to-date systems can help you to clearly developed a sophisticated Performance Assessment (KPA) across the critical a balanced cash reliable flow Key throughout the year. A successful business will your incomings and expenses so that you can react to issues areassee of your always bebusiness: aware of current cash flow and accounts receivables tobefore enable they arise. Your business also benefit fromInvoicing the abilitysystems to quickly regular distributions andwill dividend payments. andfilter clear • Profitability financial data by revenue stream so that you can quickly see which areas payment terms can both help to ensure prompt payment from clients. Our • Liquidity of the business are and aren’t making money. Financial and business clients operate with 14 to 30 day payment terms • Resourcing management systems can significantly ease the administrative burden •3. Project Lack of Efficiency reliable systems. A financial management system can be a through automation and efficiency. • Business Development significant asset in understanding the strengths and weaknesses of your 4. Reducing costs rather than increasing revenues: of a Strong reliable systemsthe canebb helpand youflow to clearly that business. let you know quickly howand youup-to-date are performing. project-based workflow mean so fluctuations between gain see your incomings and can expenses that you can react tofinancial issues before So what’s the benefit to your business? and strain. It’s easy rush to cutfrom costs in ability times of but theyfinancial arise. Your business willto also benefit the to difficulty, quickly filter be careful not by to spreadsheets cut off valuable revenue streams and / or people the • No more data ad-hoc and financial revenue stream socalculations that you can quickly see whichatareas same time. If money is being spent to stimulate growth then the revenue • Information is accessed directly and available any-time, of the business are and aren’t making money. at Financial andanywhere business • Forecast where your business is heading as well as where it is now generated from spending could be far more valuable. Have a good look management systems can significantly ease the administrative burden • Graphical representation your information rathercut than numbers at your business development strategies and only once you have through automation and of efficiency. • Make decisions at the time analysed what is and isn’t working for your business. Reducing costs rather than increasing the ebb and flow of a •4. Productivity improvements across the revenues: finance team 5. Big picture thinking. Profit for the sake of it is all good and well, but project-based workflow can mean between financial gain • R eduction in report generation andfluctuations more time on business analysis and sometimes a small profit gain can get in the way of long-term business and financial strain. It’s easy to rush to cut costs in times of difficulty, but decision making. success. Always about the big picture and long-term goals ofatyour be careful not tothink cut off valuable revenue streams and / or people the If you are ready to move your business performance analysis to — thebefore next business — with that financial forecasting you’ve done in mind same time. If money is being spent to stimulate growth then the revenue generation then pleasethat contact us and we will demonstrate the value it saying yes to projects will bring in more money in the short-term, butlook that generated from spending could be far valuable. Have a good will bring to your business. may ultimately obstructivestrategies to future progress. at your businessbut development and only cut once you have analysed what is and isn’t working for your business. 3.
How embracing can boost sometimes a small profit gain canchange get in the way of long-term business Top business tips for 2015 success. Always think about the big picture and long-term goals of your your — with for that2015 financial you’ve done in mind — before The businessbusiness climate looksforecasting set to be tough once again as the 5.
Big picture thinking. Profit for the sake of it is all good and well, but
Australian continues from being by mining to the sayingeconomy yes to projects that its willtransition bring in money in thedriven short-term, but that Global financial markets are in constant fluctuation, areout increasingly services and construction industries. is progress. a lot ofbusinesses uncertainty there as may ultimately but obstructive toThere future operating on will a global rather local and the world around us is a world to how 2015 unfold. Onethan thing thatscale, is certain however, is that businesses going into theeverything year with agoing strongdigital. strategic with will in a of pixels, with Yourplan ability toclear copeobjectives with and thrive perform than those restfactor on their changingbetter marketplace canwho be the thatlaurels. sets your business apart.
How embracing change can boost The IBM Institute for Business Value recently published the results of their your business Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that markets attitude are to change has on companybusinesses performance. Global financial in constant fluctuation, are increasingly operating on a global rather than local scale, and the world around us is a world of pixels, with everything going digital. Your ability to cope with and thrive in a changing marketplace can be the factor that sets your business apart.
The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that attitude to change has on company performance.
Management recently conducted ourbusinesses annual Business Conditions be difficultFor forDesign architecture and engineering to maintain Survey, which highlights key issuesthe for year. owners and seniorbusiness executives a balanced cash flowthe throughout A successful will looking intobe 2015. Youofcan viewcash the full results here. always aware current flow and accounts receivables to enable regular and dividend payments. systems Below are 5 distributions top tips to help your business prepareInvoicing for the year ahead.and clear payment terms can both help ensure prompt payment clients. Our be difficult forto architecture andtoengineering businesses tofrom maintain 1. Use Big Data your advantage clients operate to 30 day payment a balanced cashwith flow14throughout year.itterms A business will a Big data is everywhere whether wethe realise orsuccessful not. Almost every action always of current flow and accounts receivables to aenable 3. business Lack ofbe reliable systems. A cash financial management system be oraware consumer takes these days leaves a record. Yourcan business should regular distributions andofdividend payments. Invoicing systems and clear significant asset in understanding strengths and weaknesses ofclient your at least have a database historicalthe information detailing how your payment terms can both help to ensure prompt payment from clients. business. Strong reliable and up-to-date systems can help you to clearly base behaves in terms of project frequency, size and type. Information Our clients operate with 14 toexpenses 30 day payment terms see your incomings and so conditions that you can reactalso to issues before about prospective clients and market should be collected they arise. Your business will also from ability quickly filter — to be drawn on to benefit enhance yourthe advantages in any 3. and Lackcollated of reliable systems. A financial management systemtocan be asituation. financial data byin revenue stream sothe that you canand quickly see which significant asset understanding strengths weaknesses ofareas your 2. Embrace mobile of the business are and aren’t making money. Financial and business business. Stronghas reliable up-to-date can help you to clearly If your business yet toand fully realise thesystems potential behind mobile management systems can significantly ease the administrative burden technology it is pastand time you did. so Mobile technology enables businesses see your incomings expenses that you can react to issues before through automation and efficiency. to have unprecedented of connectivity clients, suppliers, they arise. Your businesslevels will also benefit frombetween the ability to quickly filter management and thought leaders. can provide instant situational financial revenue so Itthat you canthe quickly which Reducingdata costsby rather thanstream increasing revenues: ebb see and flow ofareas a awareness and enable your business to act on or react to market of the businessworkflow are and aren’t making money. Financial business project-based can mean fluctuations betweenand financial gain conditions or potential problems while projects are in those crucial management systems can significantly ease the administrative burden and financial strain. It’s easy to rush to cut costs in times of difficulty, but early stages. through automation andvaluable efficiency. be careful not to cut off revenue streams and / or people at the same time. Ifservice money isthan being spent 3. your the bestincreasing it can to bestimulate 4. Make Reducing costs rather revenues:growth the ebbthen and the flowrevenue of a generated from spending could be far more valuable. Have a good look One of the key findings from our Annual Business Conditions Survey project-based workflow can mean fluctuations between financial gain at your development and only once youbiggest have but was thatbusiness businesses seeeasy improving services ascut one of and financial strain. It’s to strategies rushtheir to cut costs in times ofthe difficulty, analysed what is and isn’t working for your business. priorities for 2015. Take a good hard and — importantly — unbiased look be careful not to cut off valuable revenue streams and / or people at the at thetime. features and benefits of your to offering, plus that ofthen yourthe competitors If money is being stimulate revenue 5. same Big picture thinking. Profit forspent the sake of it is allgrowth good and well, but and see what can be done to create advantage. generated spending could farinmore valuable. Have a good look sometimesfrom a small profit gain canbeget the way of long-term business 4. Communicate collaborate at your business development and only cut oncegoals you have success. Alwaysand think about thestrategies big picture and long-term of your Ask your management, your peers, clients and employees what they analysed what is and working for youryou’ve business. business — with that isn’t financial forecasting done in mind — before think can be improved. Create an environment that isshort-term, conducive but to yes to projectsProfit that will bring in money in the 5. saying Big picture thinking. for the sake of it is all good and well, but that collaboration between stakeholders — sometimes people can be reticent may ultimately butprofit obstructive to future progress. sometimes a small gain can get in the way of long-term business to speak up or ask that all important question ‘why do we do it like this?’ success. Always think about the big picture and long-term goals of your 5. Act on your findings business — with that financial forecasting you’ve done in mind — before Last and importantly, whileinthe iron is because youbut canthat rest saying yes to projects act. thatStrike will bring money inhot, the short-term, assured that your competition is not sitting still! may ultimately but obstructive to future progress. 4.
How embracing change can boost your business
Global financial markets are in constantchange fluctuation, businesses increasingly How embracing canareboost Business for operating on a global objectives rather than local scale, and the world around us is a world of pixels, with everything going digital. Your ability to cope with and thrive in a your business the year ahead changing marketplace can be the factor that sets your business apart. Now is the time markets to be looking at where you want your businessare to be in 12 Global are inValue constant fluctuation, businesses increasingly The IBMfinancial Institute for Business recently published the results of their months time and it is important to compile a clear set of objectives and operating on a global local scale, and 1,400 the world around us is a world Making Change Work rather study. than The study surveyed business professionals in milestones to get you there. The process of setting objectives can be as simple of pixels, with everything going digital. Your ability to cope with and thrive in a 48 as countries closerit look thekey waything change is met within business and or difficultto asget youawant to be.atThe to remember is that simple, changing marketplace can be the factor that sets your business apart. the impact that attitude to change haslikely on company performance. easily understood objectives are more to be achieved. The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that attitude to change has on company performance.
1. Where are for we architecture now? be difficult and engineering businesses to maintain The first aspect setting objectives to understand where your will business a balanced cashofflow throughout theisyear. A successful business is now. be Take the time to carefully review business and to discover always aware of current cash flow andyour accounts receivables to enable what you are doing well, needs to be improved, what is holding you regular distributions and what dividend payments. Invoicing systems and clear back and what needs to be removed completely from your horizon. payment terms can both help to ensure prompt payment from clients. Our operate with 14 to 30 day payment Onceclients you have gained awareness of where youterms stand now you can look to where you want to be. 3. Lack of reliable systems. A financial management system can be a significant asset in understanding the strengths and weaknesses of your business. Strong reliable and up-to-date systems can help you to clearly see your incomings and expenses so that you can react to issues before they arise. Your business will also benefit from the ability to quickly filter financial data by revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business management systems can significantly ease the administrative burden through automation and efficiency. 4.
Reducing costs rather than increasing revenues: the ebb and flow of a project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look at your business development strategies and only cut once you have analysed what is and isn’t working for your business.
5. Big picture thinking. Profit for the sake of it is all good and well, but 2. Where do we wantprofit to go? sometimes a small gain can get in the way of long-term business Almost all business leaders their business be respected to success. Always think aboutwant the big picture andto long-term goalsand of your grow. These are great aims to aspire to but you’ve in themselves far— toobefore vague. business — with that financial forecasting done inare mind Get specific or you are doomed to not achieve anything. saying yes to projects that will bring in money in the short-term, but that may ultimately obstructive to future progress. Some examplesbut of specific objectives include: • • • • •
Expand your revenue by 20% Reduce your employee attrition rate Expand into the health sector Source external advice to help your business develop a new service line Upgrade your key business management systems
How embracing change can boost your business Take the time to get your wish list down and take even more time to be Global financial markets are constant fluctuation, businesses are increasingly sure these wishes are asinconcise as possible. operating on a global rather than local scale, and the world around us is a world 3. How will we get there? of pixels, with everything goingunless digital.you Your ability to cope andit. thrive An objective is just a wish plan an action towith achieve This in a changing can be the factor that sets your is the marketplace stage that is easy to overcomplicate. Start bybusiness breakingapart. down your objectives into parts. Talk to stakeholders them tell you The IBM Institute forsmaller Business Value recently publishedand theask results ofto their the Change key elements will surveyed help you achieve your objectives — bein Making Work they study.believe The study 1,400 business professionals sure to tell them not to overcomplicate as well! 48 countries to get a closer look at the way change is met within business and The next step is to look at the hard numbers. Areperformance. you adequately the impact that attitude to change has on company resourced and can you afford to chase this objective? If not, what do you need to do to free up what is necessary? As you can see, even objectives need planning!
management systems can significantly ease the administrative burden through automation and efficiency. 4.
Reducing costs rather than increasing revenues: the ebb and flow of a project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but 4. Make difficult a commitment for to architecture and engineering businesses be careful not cut off valuable revenue streams and / to or maintain people at the One oftime. the main reasons businesses their objectives is that a balanced flowisthroughout year.achieve A successful business will same Ifcash money being spentthe todon’t stimulate growth then the revenue they don’t commit to them. Placing your objectives under the scrutiny always be aware of current cash flow and accounts receivables to enable generated from spending could be far more valuable. Have a good look of key people within yourdividend business puts them out there in ayou wayhave thatclear regular distributions and payments. Invoicing systems and at your business development strategies and only cut once encourages action. payment what termsiscan to ensure prompt payment from clients. Our analysed andboth isn’thelp working for your business. clients operateand withget 14to to 30 day payment terms 5. 5. Be Bigtenacious picture thinking. Profitwork! for the sake of it is all good and well, but Ensure that all stakeholders know their in the plan and 3. sometimes Lack of reliable systems. A financial management canthat be athey talk a small profit gain can get inplace the way ofsystem long-term business to each other. There isabout no room fiefdoms! Never sight of where significant asset in understanding strengths andlose weaknesses ofyour your success. Always think thefor bigthe picture and long-term goals of you want to be. Use situational awareness and mobile technology to keep business.— Strong and up-to-date systems help you to business with reliable that financial forecasting you’ve can done in mind —clearly before track ofyes your soexpenses if will necessary you can your onthat see your incomings and soin that you adjust can react toplanning issues but before saying to progress projects that bring money in the short-term, the Communicate, communicate, communicate! theyfly. arise. Your but business will also from the ability to quickly filter may ultimately obstructive tobenefit future progress. financial data by revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business management systems can significantly ease the administrative burden through automation and efficiency.
Howtop embracing boost The financialchange tips forcan 2015 4. Reducing costs rather than increasing revenues: theatebb andpoint flowin of a your business All signs point to there being a shift in monetary policy some
workflow fluctuations 2015project-based and interest rates have can beenmean sitting at historic between lows for afinancial very longgain time. and financial strain. easy toasrush to cut lending costsbusinesses in market times ofslows difficulty, Competition is fierce for It’s business thefluctuation, home downbut and Global financial markets are in constant are increasingly be careful not to cut off valuable revenue streams and / or people at the new sources revenue are hunted. A cursory look international markets will operating onof a global rather than local scale, and theatworld around us is a world same time. If money is being spent to stimulate growth then the revenue tell you things are starting to heat up in the USA and the Fed will most likely of pixels, with everything going digital. Your ability to cope with and thrive in a generated spending could be economy far more Have a good look raise rates marketplace later from this year. ThebeAustralian isn’t tied to apart. the US as it changing can the factor that setsvaluable. youras business your business development strategies and onlyrates cut once you have onceatwas but historically speaking where US interest go others follow! The IBM Institute forisBusiness recently published the results of their analysed what and isn’tValue working for your business. Making Change Work study. The study surveyed 1,400 business professionals in 5. Big picture thinking. Profit the way sakechange of it is all goodwithin and well, but and 48 countries to get a closer lookfor at the is met business sometimes a small profit gain can get in the way of long-term business the impact that attitude to change has on company performance. success. Always think about the big picture and long-term goals of your business — with that financial forecasting you’ve done in mind — before saying yes to projects that will bring in money in the short-term, but that may ultimately but obstructive to future progress.
How embracing change can boost your business Global financial markets are in constant fluctuation, businesses are increasingly operating on a global rather than local scale, and the world around us is a world of pixels, with everything going digital. Your ability to cope with and thrive in a changing marketplace can be the factor that sets your business apart. The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that attitude to change has on company performance. Read on for our top tips to see you through the economic shifts on the horizon for 2015.
business. Strong reliable and up-to-date systems can help you to clearly see your incomings and expenses so that you can react to issues before they arise. Your business will also benefit from the ability to quickly filter financial data by revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business 1. Simplicity be difficult is forkey architecture and engineering to maintain management systems can significantly ease businesses the administrative burden In his 2014 shareholders letter Warren Buffet commented that “if you athrough balanced cash flow throughout the year. A successful business will don’t automation and efficiency. invest know, you’re just and gambling”. Businesses should invest alwaysinbethings awareyou of current cash flow accounts receivables to enable 4. within Reducing costs rather than increasing revenues: the ebb and flow of azone. knowledge and avoid risks outside of their comfort regulartheir distributions andbase dividend payments. Invoicing systems and clear project-based workflow can mean fluctuations between financial gain payment can both help to ensure prompt payment from clients. Our 2. Get back terms to basics and financial strain. It’s easy to rush to cut costs in times of difficulty, but clients what operate with 14 to 30 day payment terms Assess budgetary reductions are within your control, leaving aside be careful not to cut off valuable revenue streams and / or people at the for now those that aren’t. Every dollar saved is a dollar thatcan canbe beaused to 3. same Lack of reliable systems. A financial system time. If money is being spent tomanagement stimulate growth then the revenue reduce yourasset company’s liabilities. the strengths and weaknesses of your significant in understanding generated from spending could be far more valuable. Have a good look business. reliable and up-to-date systems clearly 3. Get outbusiness ofStrong debt or consolidate what you have at your development strategies and onlycan cuthelp onceyou youtohave see your incomings expenses so you can issues before Take a good hard at your business’s budget andreact maketo the decisions that analysed what is look andand isn’t working forthat your business. theyhelp arise. Your also from the ability filter will clear thebusiness balancewill sheet. Forbenefit most businesses this is to by quickly no means an 5. Big picture thinking. Profit for the sake of it is all good and well, but financial byincomes revenuefor stream that you can quickly which areas easy task,data where manyso have suffered during thesee latest slowdown. sometimes a small profit gain can get in the way of long-term business of the business are and aren’t making money. Financial and business 4. Invest your people success.inAlways think about the big picture and long-term goals of your management systems can of significantly ease to theensure administrative burden Investing from within one theforecasting easiest ways financial uplift business — with thatisfinancial you’ve done in mind — before through and efficiency. in 2015.yes Ifautomation businesses invest promoting enhancing talent the business will saying to projects thatinwill bring in and money in the short-term, but that in correspondence withincreasing an engaged, inspired and workforce. 4. grow Reducing costs but rather than revenues: the rewarded ebb and flow of a may ultimately obstructive to future progress. project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look Management for Design are pleased strategies to advise that have at your business development andwe only cutpartnered once youwith haveConsult Australia to undertake the Consult Australia Performance Survey (PPS). analysed what is and isn’t working forPractice your business. Global financial markets are in constant fluctuation, businesses areuser-friendly, increasingly Consult Australia’s Practice Performance Survey is a secure, 5. Big picture thinking. Profit for the sake of it(PPS) is all good and well, but operating on a global rather local scale, and the world around us is a world automated survey tool. Withthan more thanget 40in metrics available, it allows firms sometimes a small profit gain can the way of long-term business of pixels, with everything going digital. Your ability toand cope with and thrive in a to benchmark their performance against their peers competitors and success. Always think about the big picture and long-term goals of your changing marketplace can be the factor that sets your business apart. to select KPIs based tailored segmentation. includes: business — withon that financial forecasting This you’ve done ingeographical mind — before regions; revenues; number of employees; utilisation; gross margins; profits; The IBM Institute for Business Value recently published the results ofnet their saying yes to projects that will bring in money in the short-term, but that and working capital investment days. Making Work study. The study surveyed 1,400 business professionals in mayChange ultimately but obstructive to future progress. The PPS also to highlights operational inefficiencies and identifies 48 countries get a closer look at the way change is met withinexpense business and and performance indicators, which are shown in concise graphs. This the impact that attitude to change has on company performance. assists management to strategically plan the growth of their business and take corrective action, if necessary, to address areas where performance has fallen behind the industry average.
How embracing can boost Consult Australiachange benchmarking your business
How embracing change can boost your business To participate in the Consult Australia PPS, your firm must be a member of Consult Australia. Global financial markets are in constant fluctuation, businesses are increasingly For more information on thethan Consult PPS, hereusoriscontact operating on a global rather localAustralia scale, and theplease worldclick around a world Rob Peake or Gordana Milosevska at Management forcope Design. of pixels, with everything going digital. Your ability to with and thrive in a changing marketplace can be the factor that sets your business apart. Consult Australia website www.consultaustralia.com.au
The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in Management for Design provides integrated business 48 countries to get a closer look at the way change is met within business and systems and services to the design industry across the impact that attitudeStrategy, to change has on Information company performance. Finance, Technology, Human MANAGEMENT
FOR DESIGN
Resource Management and Business Systems.
By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Autumn 2015
Managing your business performance Do you still receive monthly management reports on how your business is performing? And is this a combination of MS Excel reports and graphs, Profit and Loss reports and Balance Sheets? You may not realise it but historical business and financial performance reporting is a thing of the past. Although the AEC industry is typically 2–3 years behind modern management approaches and sometimes doesn’t get there at all there are some elements that are embraced. One area that is currently being actively embraced by the profession is the application of Business Intelligence Tools to more intuitively provide businesses the information they require to access and analyse corporate information to assist in decision making. Management for Design have been overwhelmed with the response to our Business intelligence software that is enabling our clients to access information in real-time to reveal insights to help their business make faster and more accurate decisions. The software typically integrates data from across the business and provides key decision makers with self-service reporting and analysis. Why the positive response? •
F or a start the information is presented graphically rather than in rows and tables of data.
•
S econdly there are patterns in the information and design leaders are great at understanding patterns of information that interrelate.
•
nd thirdly, just like analysing design problems — the solution is not A black and white and design firm leaders are great at interrogating and looking at issues from all angles.
A key component of Business Performance Management is being able to quickly see how your business is performing but just as importantly to forecast your business performance into the future. How do you do that? By drawing on our extensive experience and expertise, working with professional services businesses
and utilising intelligent Business Management principles Management for Design can identify how your business will perform going forward across:
3.
•be difficult Profitability for architecture and engineering businesses to maintain cash flow throughout the year. A successful business will •a balanced Liquidity always be aware of current cash flow and accounts receivables to enable • Workflow regular distributions and dividend payments. Invoicing systems and clear •payment Resourcing terms can both help to ensure prompt payment from clients. Our clients operate with 14 to 30 day payment terms • Project Performance Lack of reliable systems. A financial management system can be a • Business Development significant asset in understanding the strengths and weaknesses of your business. Strong reliable and up-to-date systems can help you to clearly see your incomings and expenses so that you can react to issues before they arise. Your business will also benefit from the ability to quickly filter financial data by revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business management systems can significantly ease the administrative burden through automation and efficiency.
4.
Reducing costs rather than increasing revenues: the ebb and flow of a project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look Embrace business intellignece at your business development strategies and only cut once you have analysed what and isn’t fortoyour business. So why should youismove yourworking business Intelligent Business software? 5.
thinking. for the sake of it is all good and well, but •Big picture No more ad-hoc Profit spreadsheets and calculations sometimes a small profit gain can get in the way of long-term business • Graphical representation of your information rather than numbers success. Always think about the big picture and long-term goals of your •business Single of information (the truth!) —source with that financial forecasting you’ve done in mind — before yes to projects that will in money in the short-term, but that •saying Information is available atbring any-time, anywhere may ultimately but obstructive to future progress. • Forecast “where your business is heading” as well as “where it is now” •
“What if” analysis and immediate decision making
• Productivity improvements change can boost How embracing • R eduction in report generation and more time on business analysis your business and decision making Global financial markets are in constant fluctuation, businesses are increasingly operating on a global rather than local scale, and the world around us is a world of pixels, with everything going digital. Your ability to cope with and thrive in a changing marketplace can be the factor that sets your business apart. The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that attitude to change has on company performance.
If you would like to see how some of our clients are utilising sophisticated business performance analysis then please contact us and we will demonstrate the value it will bring to your business. be difficult for architecture and engineering businesses to maintain a balanced cash flow throughout the year. A successful business will always be aware of current cash flow and accounts receivables to enable regular distributions and dividend payments. Invoicing systems and clear payment terms can both help to ensure prompt payment from clients. Our clients operate with 14 to 30 day payment terms
Staff retention — top tips on protecting your greatest assets 3. Lack of reliable systems. A financial management system can be a
significant asset in understanding the strengths and weaknesses of your business. Strong reliable and up-to-date systems can help you to clearly see your incomings and expenses so that you can react to issues before they arise. Your business will also benefit from the ability to quickly filter financial data by revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business management systems can significantly ease the administrative burden through automation and efficiency. 4.
Reducing costs rather than increasing revenues: the ebb and flow of a project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look at your business development strategies and only cut once you have analysed what is and isn’t working for your business.
Big picture thinking. Profit for the sake of it is all good and well, but sometimes a small profit gain can get in the way of long-term business Competition for the best staff in the creative/engineering industries is getting success. Always think about the big picture and long-term goals of your stronger every year. Retaining your most talented and hardest working business — with that financial forecasting you’ve done in mind — before employees is crucial for the long term success of your organisation. saying yes to projects that will bring in money in the short-term, but that may ultimately butmany obstructive future Losing key staff places kinds ofto strain onprogress. a business, from the obvious 5.
financial strains of staff replacement and recruitment fees, to those more difficult to quantify. These include time and money spent training new staff in your systems, developing both internal and external relationships, workplace culture and perhaps worst of all in the creative and technical industries, knowledge drain.
How embracing change can boost your business Five key staff retention strategies: 1. Track and recordare staff Global financial markets in retention constant fluctuation, businesses are increasingly Conduct exit interviews inlocal a completely confidential yet friendly operating on a global rather than scale, and the world around us ismanner a world — encourage exiting staff to open up on exactly why they are leaving. of pixels, with everything going digital. Your ability to cope with and thrive in a A database of when andthe why staffthat leave willyour be an invaluable resource. changing marketplace can be factor sets business apart. It enables an organisation to compare how it is performing against the The IBMcompetition Institute for and Business Valuewhich recently published results their highlights managers maythe need extraofrelationship Making training. Change Work study. The study surveyed 1,400 business professionals Retaining good employees can be difficult to achieve unless in 48 countries to get a closer at the way change metorganisation. within business and you understand whylook people choose to leaveisyour the impact that attitude to change has on company performance. 2. Get the right people to begin with As difficult as it may be, recruit for cultural fit and attitude first and then skills. Typically your future leaders will embrace your cultural values and have the skills needed for the delivery of key projects.
3. Create a fulfilling environment People who have chosen a career in design or engineering are both creative and inquisitive by nature. An environment where they are able be difficult for architecture and engineering businesses to maintain to express their creativity and increase their knowledge is key to job a balanced cash flow throughout the year. A successful business will satisfaction — it can even be more important than financial gain. always be aware of current cash flow and accounts receivables to enable regular distributions and dividend payments. Invoicing systems and clear 4. Increase workplace flexibility payment terms can both help to ensure prompt payment from clients. Our Not only does this mean remote working arrangements but also clients operate with non-work 14 to 30 day payment terms accommodating needs and responsibilities of employees. a staff member to attend a lecture, pick up their 3. LackDoes of reliable systems.want A financial management system canchildren be a from school or regular sporting event? Look at ways to cater to of thisyour need significant asset in understanding the strengths and weaknesses and they will be extremely grateful. Overly rigidcan conditions drive business. Strong reliable and up-to-date systems help youcan to clearly to greener pastures.so that you can react to issues before see employees your incomings and expenses theyStay arise. will also benefit from the ability to quickly filter 5. onYour top business of your employees’ moods. financial data by revenue so that you can which areas Nobody likes working stream in an environment withquickly undue see stress, educate of the business are and aren’t making money. Financial and business your managers to look for indicators of stress amongst staff and in management systems can significantly ease the administrative burden ways to diffuse potential conflict situations. through automation and efficiency. Always remember, a job isn’t just a salary. Sometimes you will need to increase 4. Reducing costs rather than increasing revenues: the ebb and flow of a an employee’s package to retain them but time spent understanding an project-based workflow can mean fluctuations between financial gain employee’s needs and career aspirations will pay true long-term dividends. and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look at your business development strategies and only cut once you have analysed what is and isn’t working for your business.
Business continuity — are you ready?
Big picture thinking. Profit for the sake of it is all good and well, but sometimes a smallsuccess, profit gain way ofthe long-term business In times of operational it cancan be get easyintothe overlook need to plan for the success. Always think about the big picture and long-term goals of your next downturn. Businesses that don’t take time to predict and plan for this lose — with that financial forecasting you’ve done in mind before profitbusiness and clients. Reduction in workload due to economic changes will— lead to saying yes to projects that will bring in money in the short-term, but that resourcing challenges. The loss of sensitive information due to an IT or systems may ultimately but obstructive to future progress. failure can lead to lengthy lawsuits, not to mention a serious case of losing face. 5.
The list of potential disasters for which a business should be prepared for is extensive.
How embracing change can boost your business Global financial markets are in constant fluctuation, businesses are increasingly operating on a global rather than local scale, and the world around us is a world of pixels, with everything going digital. Your ability to cope with and thrive in a changing marketplace can be the factor that sets your business apart. The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in 48 countries to get a closer look at the way change is met within business and the impact that attitude to change has on company performance.
There are three main elements to business continuity: 1. Resilience be difficult architecture and and critical engineering businesses to maintain Businessfor infrastructure functions are engineered or a balanced flow throughout the year. A successful will form designedcash to be unaffected by most disruptions. This business can take the always be aware of current cash flow and accounts receivables to enable of redundancy and additional capacity. regular distributions and dividend payments. Invoicing systems and clear 2. Recovery payment terms can both help to ensure prompt payment from clients. Our Have systems in place to ensure critical and less critical business functions clients operate with 14 to 30 day payment terms can return to normal operation soon after an incident with minimal or no 3. Lackloss of of reliable systems. A financial management system can be a function. significant asset in understanding the strengths and weaknesses of your 3. Contingency business. Strong reliable and up-to-date systems can help you to clearly the last-resort Contingency plans arereact to betoemployed only if see This yourisincomings andoption. expenses so that you can issues before and Recovery planning has either or not adequately protect theyResilience arise. Your business will also benefit fromfailed the ability to quickly filter the business the disaster. financial data byfrom revenue stream so that you can quickly see which areas of the business are and aren’t making money. Financial and business Make the time to analyse your business operations and liabilities to see where management systems can significantly ease the administrative burden your critical weaknesses lie. If you are unsure where to begin, speak with a Rob through automation and efficiency. Filonzi (M4D). Plan for the worst; hopefully it will just be an academic exercise, but not, if trouble you’ll be prepared. 4. ifReducing costs does rathercome than calling, increasing revenues: the ebb and flow of a project-based workflow can mean fluctuations between financial gain and financial strain. It’s easy to rush to cut costs in times of difficulty, but be careful not to cut off valuable revenue streams and / or people at the same time. If money is being spent to stimulate growth then the revenue generated from spending could be far more valuable. Have a good look at your business development strategies and only cut once you have analysed what is and isn’t working for your business. PSMJ is one of the world’s leading authorities and publishers of effective 5. Big picture thinking.for Profit for the sake of it is all good and well, but management techniques architectural sometimes a small profit gain can get in the way of long-term business and engineering firms. They have freely Always think the big picture and long-term goals of your madesuccess. available a number ofabout informative business — with that financial forecasting you’ve done in mind — before and up-to-date e-books for download. saying to projectsforthat will bring in money in the short-term, but that The team at yes Management Design may ultimately but obstructive to future progress. strongly advise business leaders to exploit
Free e-books for business leaders from PSMJ
this fantastic resource.
How embracing change can boost your business
The first e-book is The A/E Business Development Bible. This book is written by PSMJ’s expert business development and marketing team and provides real-life solutions and advice on: Global financial markets are in constant fluctuation, businesses are increasingly • Creating a long-term client operating on a global rather than local scale, and the world around us is a world capture plan of pixels, with everything going digital. Your ability to cope with and thrive in a • Dmarketplace eveloping a realistic changing can be the factor that sets your business apart. businessdevelopment budget The IBM Institute for Business Value recently published the results of their • Change CreatingWork an effective annual development plan Making study. The studybusiness surveyed 1,400 business professionals in 48 countries to gethow a closer look atyour the way change is met within business and • Learning to expand market the impact that attitude to change has on company performance. • Determining why your best clients are jumping ship — and how to focus on your quality clients And much more!
Along with the eBook, PSMJ will also be sharing the results from their latest Fees and Pricing Survey. With this resource you can see how your firm’s fees stack up against the competition. be difficult for architecture and engineering businesses to maintain balanced cash flow A successful business will Clickahere to download yourthroughout copy of Thethe A/Eyear. Business Development Bible. always be aware of current cash flow and accounts receivables to enable Recomended reading from Management for Design regular distributions and dividend payments. Invoicing systems and clear payment terms can both help ensure prompt paymenteMag, from clients. Starting from the Winter edition ofto Management for Design’s we’ll beOur clients operate to most 30 dayrelevant payment terms recommending the with latest14 and management books for business leaders inof the architecture, design and engineering industries. 3. Lack reliable systems. A financial management system Keep can beana eye out for the Winter issue. significant asset in understanding the strengths and weaknesses of your business. Strong reliable and up-to-date systems can help you to clearly see your incomings and expenses so that you can react to issues before they arise. Your business will also benefit from the ability to quickly filter financial data by revenue stream so that you can quickly see which areas of thegiven business aren’t on making money. Financial and business Although oneare day,and 8 March, the international calendar, International management systemsacan significantly easeon the administrative burden Women’s Day has created month of reflection the role of women in through automation andsecond efficiency. business as we approach the quarter of the year.
International Women’s Day
4. Thursday Reducing5costs rather than increasing revenues: the ebb and flow of a On March, Management for Design attended the annual project-based workflow can mean between gain International Women’s Day breakfast atfluctuations The Palladium, Crown,financial Southbank, and financial strain. It’s easy to rush toof cut costs in times but along with a number of our guests, ahead the global eventof fordifficulty, International be careful not to cut off valuable revenue streams and / or people at the Women’s Day on Sunday 8 March. All around the world, International Women’s time.the If money is being spentand to stimulate growth thenofthe revenue Day same celebrates economic, political social achievements women, from spending be far valuable. Have a goodthat look whilegenerated focusing world attentioncould on areas stillmore requiring action to ensure at your business development strategiesinand only cutofonce women’s equality is gained and maintained all aspects life. you have analysed what is and isn’t working for your business. The theme for this year’s breakfast tied in with this year’s global ‘Make it 5. Big picture thinking. Profit for the sake of it is all good and well, but Happen’ theme, with the title ‘Does Gender Equality Benefit Us All?’ Panellists sometimes a small profit gain can get in the way of long-term business discussed insights and ideas for action and change, with distinguished success. Always think about the big picture and long-term goals of your speakers including Geraldine Doogue and Judge Frances Millane. The event business — with that financial forecasting you’ve done in mind — before provided a terrific networking opportunity among Melbourne’s business saying yes to projects that will bring in money in the short-term, but that leaders and an opportunity for reflection and engagement surrounding the may ultimately but obstructive to future progress. role of women in business today. The buzz at this year’s breakfast reinforced what Management for Design already know — that with female business leaders on the rise, that glass ceiling is starting to crack. Management for Design is one of a growing number of businesses in Australia with female staff in leadership positions and with a female Director, Gordana Milosevska, at the helm on equal footing with her male counterpart, Robert Peake. Global financial markets are in constant fluctuation, businesses are increasingly At Management for Design believe that business success is amplified operating on a global ratherwe than local scale, and the world around us is a when world men and with women are working together. Working into tandem we have at our in a of pixels, everything going digital. Your ability cope with and thrive disposal of opinion, of your ideasbusiness and a broader changingdiversity marketplace can beincreased the factorvolume that sets apart. skill set for more effective management of all of our service offerings. The IBM Institute for Business Value recently published the results of their Making Change Work study. The study surveyed 1,400 business professionals in Management for Design provides integrated business 48 countries to get a closer look at the way change is met within business and systems and services to the design industry across the impact that attitudeStrategy, to change has on Information company performance. Finance, Technology, Human MANAGEMENT
How embracing change can boost your business
FOR DESIGN
Resource Management and Business Systems.
By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Winter 2015
Are your business systems maximising your potential?
Most organisations use multiple business management applications to run their business. If you are an architect or engineer you use applications to design and deliver your projects, plan and manage projects and people, monitor and report financial performance. As the business grows applications are added that get the job done but don’t necessarily talk to each other. While an integrated system may manage most of your activity, rarely will it handle the industry specific operations. What can and should be integrated, how do you make the integration decision, what systems do you use and at what point do you deliver a return on your investment? How can the functionality sufficiently meet the requirements of the organization? And how do you measure this?
To begin the process of deciding what’s right for your business, answer the following questions: •
Should your finance department share client, contact and project data with business development?
•
Is it a requirement to forecast income and profitability?
•
Does your time keeping system talk with your payroll system or your invoicing system?
•
Is your project life cycle process streamlined?
•
Should your executives have real-time visibility to financial metrics?
•
Do you know if your employees are under or over utilised?
•
Do you know if you have enough work to sustain your firm for 6 months?
•
Do you have a clear understanding of what your business will be like in 12 months?
Then ask yourself these questions and you will get closer to where you are and what you need: •
Are your project leaders required to plan and monitor their project performance?
•
Does the performance of individual projects matter to you?
•
Do you want to attract and retain the best people?
•
Do you use studio wide resource planning and are you still doing this in ad-hoc spreadsheets?
•
Should you record and track your business development activity?
•
Do you need to accurately forecast your future income and costs?
•
Should you have only one place where you keep client and project information?
It’s not that difficult to make the decision about what is right for your business. But do you have the willingness and drive to embed in your business a culture of ‘great business management’? How important is it to: •
Put in place solid business foundations?
•
Maximise the financial performance of your business?
•
Ensure that all of your projects are managed well?
•
Know that your Project Leaders are using proper project management tools?
•
Ensure that you are maximising the potential capacity of your people?
We are often surprised at the level of indifference to — or lack of knowledge of — what the critical business management principles are. Ask yourself: ‘are you running a business’ or ‘are you delivering projects’? It’s a fundamental question that all business leaders need to ask themselves. Where do you sit on a scale of 1–10 with your business foundations? One of the key principles of a great business is great business management systems. Systems that enable you to control and build a sustainable business. So what does your business system look like? Your business systems need to: 1.
Be designed for project based businesses
2.
Integrate the key business information into a ‘single source of truth’
3.
Provide real time visibility and analytics on demand
4.
Enable great project management
5.
Optimise resource utilisation for profitability
6.
Adapt to changing business requirements
7.
Adhere to government reporting requirements
8.
Provide an executive-level view of project and company health
9.
Allow for seamless transfer of information.
Do your systems tell you where you are heading not just where you have been?
Ideally, your business systems will have a positive impact on every aspect of your business, from business development to project control, forecasting and invoicing. Your systems should allow Customer Relationship Management
(CRM) data to seamlessly integrate into project planning and contract management. Collaborative project management and tracking tools should work in tandem with back office support applications such as accounting, communication management and financial management. A strong industry-specific Business Management System should give you the tools you need to make better decisions through improved visibility, insight and control across all components of your projects and the business as a whole.
Business health check in 3 easy steps The end of the financial year is not only a time to get your business accounts in order, it’s also a time to take stock of your business and to give it a thorough health check. It’s a time to bring out the microscope and have a close look at what is and isn’t working. From staff to processes, the end of the financial year is a good time to evaluate how your business is holding up.
1.
Look at your numbers — and your number crunchers Financial statements and accounting reports are all very good and well, but on their own they don’t tell you all that much about your business. Sure, you can see what’s going in and what’s coming out, but where’s the context?
It is crucial for any design and engineering business to benefit from the skills of a qualified and experienced Chief Financial Officer and they should be more than just a number cruncher. This is an integral part of your business that should be provided by someone with the strategic skills and intelligence to do more than just accounting. To really contribute to the business, your CFO should be able to contextualise the financial information and to make an informative analysis to aid senior decision makers. What do your numbers look like? Are they telling a story beyond the numbers in a financial report? Is your CFO able to interpret the data in a way that provides value to the business? If the answer is no, then this is a good time to review the usefulness of the data available to you and to make changes to ensure that your numbers are more than just numbers. 2.
Invest in high performing employees Nurturing employees with a good cultural fit with your business’s aims is integral to success. If your staff aren’t 100% behind what the business is trying to do then they will not make good long-term assets and they will possibly not last long anyway. Trying to convert an illfitting person into a loyal employee can be a waste of effort on both sides for a goal that will never come to fruition. Your first impulse should not be to hire an extra person to fill in the gaps left by an underperforming staff member. An underperformer left in place can damage an otherwise thriving business — a problem that places project-based design and architecture firms at increased exposure to risk. Culling cultural misfits will allow you to spend more time focusing on the development of employees who show initiative, interest and who will be long-term assets for the business. Identify your best employees early and reward them. It is also worth having a look at the level at which each employee is performing. Identify areas for improvement and ways in which you can get the most out of each member of your team. Knowing where everyone stands will aid decision making around staff retention and staff cuts.
3.
Business processes — dotting the ‘i’s and crossing the ‘t’s An evaluation of your business processes doesn’t have to mean throwing out existing processes and starting again. Look at your systems and workflows and make tweaks to optimize processes already in place. Small changes over time will make a big difference to business performance without having to reinvent the wheel. Get you team involved so that the people doing the work take ownership for the streamlining process. This will motivate and involve staff as well as increasing efficiencies.
Successful Business Succession
“ ”
The vast majority of design and engineering practices have no succession plan in place whatsoever. Management for Design routinely finds that only one in 10 businesses have a plan in place.
Planning for succession is just the first step in a chain of events that culminates in new leaders embracing a key leadership role within the business. There is no one formula for succession, but the goals of any leadership change are similar — to retain the core values of the business, to retain and build on your client base and skills capability, and to keep the business operating smoothly according to its original vision. Having said that, if you aren’t clear on who your next leaders will be — who will sustain your design values and capability, who will nurture your clients and who will drive the business going forward — you are not on your own! The vast majority of design and engineering practices have no succession plan in place whatsoever. Management for Design routinely finds that only one in 10 businesses have a plan in place. Of those that do, execution typically occurs in an ad-hoc and spasmodic manner. No amount of management advice will change this but, in our experience, those businesses that have successfully transferred the leadership to new principals and directors have spent many years building and cultivating a culture that enables succession to occur seamlessly. Leadership transition is an evolution. In our latest Business Journal, Robert Peake outlines the key issues and strategies, and warns of problems you may encounter. Read more at: http://bit.ly/1HwVOPb.
Scheduling tips for architecture & engineering businesses Accurate scheduling is a delicate balance, which when it goes wrong, can have a negative impact on the perception of your business. Have you struggled with projects falling behind schedule and over budget? Do you have systems in place to accurately predict scheduling needs? Are you applying scheduling logic to your processes? We’ve summarised the main points you need to know to ensure that your projects complete on time and within budget.
Scheduling fundamentals: 1.
Start from the finish: this is the most obvious point for project-based workflows. For architecture and engineering businesses, projects will usually have a prescribed finish date rather than a prescribed start date. All scheduling must be done backwards from the finish date to ensure that deadlines will be met.
2.
Chart out the project elements in detail: break the project down into its component parts so that no element is forgotten. Don’t worry about getting into detail here, every stage of the project should be documented for both schedule and budget forecasting, however don’t let the detail get in the way of the big picture — ensure that detail is broken down in a logical and consistent pattern and that the overall project goals are always in sight.
3.
Track actual timeframes: keeping track of how long each project stage actually takes in comparison with your scheduling estimates will make it easier to accurately predict the required lead time for future projects. This means recording all time-related data for each project and being able to access data quickly for immediate analysis both on a project-by-project basis and also in comparison with all projects in your system so that your business has intelligent and reliable data to call on when needed.
4.
Assess analytics regularly: it’s one thing to track all of this data, but if you don’t do anything with it, it’s just numbers in a machine. Make a commitment to reviewing project scheduling data across all business projects and measure against business objectives.
5.
Utilise business systems to take the headache out of the number crunching. Scheduling systems should be linked to other systems within your business. Integration of systems makes them more likely to be used and also increases the usefulness of the data collected.
If you business needs help with scheduling projects and people, send us an email at info@m4d.com.au for advice.
READING LIST Each issue, Management for Design selects reading material that may be of interest to design businesses. Our winter issue selection follows: The Business of Design: Balancing Creativity and Profitability Keith Granet Keith Granet debunks the myth that business sense and creative talent are mutually exclusive. This book provides all of the necessary tools to create and run a thriving design business — from billing and human resources to branding and project management to marketing and licensing — in one easy-to-use guide.
The Goal: A Process of Ongoing Improvement Eliyahu M. Goldratt and Jeff Cox Written in a fast-paced thriller style, The Goal contains a serious message for all managers in industry and explains the ideas which underline the Theory of Constraints developed by the author.
Lean In: Women, Work, and the Will to Lead Sheryl Sandberg Written with both humor and wisdom, Sandberg’s book is an inspiring call to action and a blueprint for individual growth. Lean In is destined to change the conversation from what women can’t do to what they can.
30 Lessons for Living: Tried and True Advice from the Wisest Americans Karl Pillemer After a chance encounter with a remarkable ninetyyear-old woman, renowned gerontologist Karl Pillemer decided to find out what older people know about life that the rest of us don’t.
The Naked CEO Alex Malley Gain insights from a successful CEO who’s lived a big life. Learn how to dream big and have the courage to pursue your passions and be willing to fail in that quest. Take the practical tips and apply them to your own career.
A Brief History of Time Stephen Hawking Was there a beginning of time? Could time run backwards? Is the universe infinite or does it have boundaries? These are just some of the questions considered in an internationally acclaimed masterpiece by one of the world’s greatest thinkers.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Spring 2015
Outsourcing your HR needs
If your business can’t afford the luxury of a dedicated Human Resources (HR) department, perhaps it is time to find one elsewhere. Of all the growing pains experienced by businesses, dealing with HR issues can be some of the most frustrating ones. Finding, managing and retaining good people involves dealing with a myriad of contracts, policies and government regulations, not to mention the finer points of payroll tax, superannuation and other financial issues.
ACA The next ACA Business of Architecture webinar series will be held on Wednesday 11th November. For more details visit the ACA website: http://bit.ly/1P1zznx.
Don’t make the mistake of thinking these problems only affect big businesses. Even the smallest businesses need to be familiar with the National Employment Standards and how these entitlements relate to flexible work conditions. If you’re a business owner, driven by a passion for what you do best, then chances are these people-related issues aren’t your area of expertise. Unfortunately these issues can become overwhelming long before your business is large enough to justify maintaining an in-house HR team. If HR challenges are threatening to impact on your business, then it’s time to get help.
Where to start The Federal government’s FairWork.gov.au and New South Wales’ Small Business portal make good starting points for businesses investigating key HR issues, but there’s no one-size-fits-all solution. The right tools will depend on your budget, your business and the specific challenges you face. The simplest online HR solutions are automated tools and templates designed to walk you through creating policies, procedures and documentation. They should be designed to ensure your business is compliant with workplace laws, such as Australia’s Fair Work Act. Choose with care, as many online HR tools offer templates based on US or UK workplace laws. Legal challenges Of course, laws and regulations can change, so it’s not a set-and-forget process. Look for HR tools that are designed to keep you up to date with legislative changes and other issues that might impact your relationship with your people. Organisations such as Victorian Employers’ Chamber of Commerce and Industry (VECCI) send out regular emails and updates on important legislation changes, particularly relating to the National Employment Standards. Also look for tools that are flexible and designed to grow with your business, perhaps integrating with payroll and other key systems. Compliance requirements While addressing your HR requirements it might also be useful to consider your Occupational Health and Safety needs, as many online services cover both HR and OH&S. Both are key compliance issues, which should be part of your business’ risk management strategy, regardless of how big or small you are. Victoria’s WorkSafe offers online tools and documents for OH&S management, and other states offer similar WorkSafe or WorkCover websites. HR Consulting Services The next step up from fully automated tools is HR consulting services, which often combine online HR tools with a hands-on appraisal of your HR needs. Rather than simply generating forms and policies, such services often assist you with managing the entire employee lifecycle from recruitment and orientation to performance reviews, personal development, ongoing training, termination and exit interviews. Need help? At Management for Design, for example, we provide the full complement of HR services to a number of our clients. This includes HR Strategy and planning, Succession Planning, Industrial and Employee relations, employee engagement and Employee Performance Management. With some of our clients we look after the complete performance review cycle including working with the client to review performance, develop quarterly performance objectives and to implement salary adjustments. This relationship allows our clients to tap into our expertise and to free up their time to focus on what they
do best — nurturing new and existing client relationships and designing and delivering projects. Look for web-based HR services that incorporate self-service features, letting people manage their own routine tasks where possible — such as printing forms, updating personal details and managing annual leave. You might even expand this to cover ongoing training and personal development. A good selfservice component of your HR system lets people resolve issues quickly while also reducing the paperwork load on managers — letting everyone get on with what they do best.
Does having the right systems make my business great?
Many times I have heard businesses say that “it is important to get the right people” or “we are looking for the right system”. Regardless of the industry, these are common problems at some point in a business’ lifecycle, but what is ‘right’? Having the right people is only the start of developing a great business. The key is to have these people in the correct positions and have their roles working effectively by implementing and using the systems and processes provided by the business. Your people need to know what the ‘chain of command’ is regardless of the structure you use. How decisions are made and communicated must be made clear to everyone inside the business. Not only will having a clear leadership structure assist the business with standardising processes, but it makes the lines of responsibility clear. Too many times we have heard people say “draw a
line in the sand”. These lines eventually wash away, so ensure yours are slightly more permanent!! Having leaders in your business that can drive enhancement and improvement in the business is a must. From this, selecting the right systems for a business becomes easier as these people will help drive the selection of key systems and identify processes that need improvement. It is critical that you select and implement the correct business systems for your business. The beginning of this process should be to start talking internally about what issues you have with your current processes and systems — what’s working, what’s not working, what’s missing, what other systems have your people used and would recommend etc. The next step involves documenting in a clear and concise manner these discussions. This then forms a basic requirements document for you to provide to vendors. The major pitfall most businesses get into is “but we want to do it our way”. This is the biggest mistake we see across any systems implementation. When going through an implementation ensure that your vendor has sufficient local knowledge in your market and a demonstrated history of effective implementation. Then allow your vendor to guide you through the implementation process and merge your current processes with the vendor’s experience. A typical selection process will run through three stages: 1.
Ask your vendors to match their system with your requirements brief
2.
Have 3 vendors present their products, then reduce to 2 vendors,
3.
Have both remaining vendors spend a minimum of 1–2 hours with teams inside your business to gain a greater understanding of how the product will fit your business.
4.
Select a preferred vendor and present to the decision makers.
The next step is critical, and that is selecting the right team from within your business to take ownership of the implementation. This team should consist of your biggest critics and your biggest supporters. This team will work with your selected vendor to drive the implementation process and help manage change within your business. Then the journey really begins!! A key responsibility for every business owner is to systematise your business. It’s not something you can dwell on. Your Business Systems are one of the key foundations of your business and it is only from having effective systems that you can control and build your business. Your systems should run your business and people must follow your systems. It’s only through having strong business systems in place that will allow you to take time away from your business, knowing that everything is under control, knowing that your team of great people that you trust are following the approved systems in your business and knowing that your team has everything in place to drive the success of the business.
Designing a great business
The business of running an architectural practice requires ongoing focus from business leaders, yet is often neglected in the process of servicing clients and delivering projects. Management for Design is addressing these issues in a series of monthly webinars for the Association of Consulting Architects. In the September and October ACAs – Insight National Webinar, Rob Peake investigates the main elements that make up an architectural business. Looking at people, strategy, business and financial management, legal, brand, systems and delivery, Rob simplified the complexities of business management. The 10 foundations to building a successful architecture practice are: 1.
Purpose and Plan
2.
Leadership
3.
Team
4.
Management
5.
Systems
6.
Financial Control and Profitability
7.
Managing Risk
8.
Marketing, Communications and Brand
9.
Design and Delivery
10. Succession
“ ”
People buy why you do it, not what you do
Rob covered the first two of these, Purpose and Plan and Leadership in the September Seminar. For those who missed it, here’s a recap of those first two foundations: 1. Purpose and Plan A business is the vehicle that enables you to shape and control your destiny, both in life and in your career. As such, running a business has the potential to be incredibly empowering if you have a strong sense of purpose and a clear plan and direction. There are a number of questions that business leaders should ask themselves and get clarity on to create a truly successful architecture business: •
Why do you do what you do? As Simon Simek said in his widelyshared TED talk (https://www.youtube.com/watch?v=IPYeCltXpxw), “people buy why you do it, not what you do”. If you can convey your purpose and what really drives your business, those elements will infuse the how and the what of what you do to build a stronger and more engaged company.
•
What is your vision? Consider what type of work and architecture you want to do. What type of clients do you want to work with? What are the places you want to be and the people you want to work with? What do you want your work–life balance to look like?
•
Does your business match with a gap in the market? Your business needs to fill a need that your clients are demanding.
•
What sort of business are you building? Is it sustainable or reliant? How will you balance creativity and profitability, and where do you sit on the spectrum?
Not all businesses need a business plan, a strategic plan, strategic objectives, or even a clear direction. In fact, 95% of design businesses don’t have any of these. It is important to understand that there is a difference between a business plan and a strategic plan. Leaping straight to a strategic plan can help to clarify your business goals. Our research shows that 70% of design businesses do minimal or no strategic planning. Yet a strategic plan takes the core objectives of your business and is the roadmap that will enable you to reach your vision and achieve your goals. Five critical elements need to be in place to make strategy happen: •
Leadership needs to drive the process
•
A level of excitement
•
It has to be concise with definitive timeframes
•
It needs to be flexible
•
Consider execution before you the start
Develop measurable objectives — typically over 3–4 years — and specific milestones to achieve these strategic objectives, for example steps to develop a global presence, and assign responsibility from within your team to make these objectives happen. Objectives should be strongly linked to a tangible result, for example receiving unsolicited CVs as an indication that you have achieved the objective of being a great place to work. Have a look at the slides from this session for examples of the sorts of objectives that you might want to set: http://bit.ly/1F5L9w3. Arguably, the leading cause of business failure is the lack of a well-executed strategy. If you are committed to true business success then you need to dedicate the resources to make your strategy a reality. In our experience, execution is what matters, with a focus on the following points: •
Involve the key people
•
How will you reward them?
•
How will you track progress?
•
How will you keep people up to date?
•
Where will you find the time?
•
Will you share your strategy with everyone?
•
How often will you review?
•
What support/resources will you need?
•
How much are you prepared to invest?
2. Leadership Leaders establish the culture of the business. How important are sound business principles in your business? How do you demonstrate and drive this? Do you have a culture of empowerment? Culture filters down from the top and it is up the business leaders to set the tone. Enthusiasm for your vision, clear strategic objectives that filter through to every aspect of the business and empowered staff will drive your business forward. What are the priorities for your business and how do you communicate these to your team? Talk about what you believe, and address those values in phrases that are inclusive of the collective whole of your staff, using the tone ‘this is important to us’. Great leaders exhibit the following qualities: •
Knowing and challenging your people
•
Being realistic (self assessment)
•
Keeping to clear and actionable goals and priorities
•
Following up and creating energy
•
Rewarding those that contribute
•
Knowing yourself and setting the example
•
Focus on what will make a difference
Typically leaders are in charge of getting things done by running the three core business processes: 1.
Setting the direction and priorities
2.
Engaging the right people
3.
Regularly monitoring progress
In most architectural businesses leaders are in charge of generating work, client relationships and design — and they should be great at this. But what about all the areas of the business? For a design business to be successful, contribution is needed across strategy; rainmaking; design, delivery and Innovation; operations; human resources; and financial control. None of this comes to you overnight. It comes through time and experience, a well-constructed plan and your team. To get to a point where all of the areas of the business are covered, you need to balance the time you spend ‘in the business’ and ‘on the business’, often with a split of time across the leadership team to enable this. Business leaders need time out from project-related activities to make this happen. Leaders need to be aligned with where the business is heading and have the ability to communicate this to staff. The most successful leaders will be able to empower their staff, hand over control and give some of the responsibility for fulfilling objectives to others. Your project managers are leaders. Set them up to succeed and push authority ‘down’. The following questions should be asked of your project managers: •
Are they trained?
•
How much responsibility and accountability do they have?
•
Are they responsible for performance (project deliverables)
•
Do they have the information and tools they need
•
Are they financially literate?
•
Do they embrace technology?
Refer to a copy of the seminar slides for examples of contribution criteria aligned with business objectives. The latest ACA webinar was held on Wednesday 14 October 2015. You can view or download the slides from this session, from the Management for Design website: http://bit.ly/1KBLTED. You can also view or download the slides from session 1, held on 2 September 2015, from the Management for Design website: http://bit.ly/1F5L9w3.
The next ACA Business of Architecture webinar series will be held on Wednesday 11 November 2015. For more details about this next event, keep an eye out on the ACA website: http://bit.ly/1P1zznx.
Business Conditions Survey
Each year Management for Design conducts a Business Conditions Survey. The aim of this survey is to assess the prevailing economic and business climate and to drive thinking and decision making. In turn the results assist businesses to work through current circumstances and deliver sustainable growth. This year’s Business Conditions Survey has now closed. We are compiling the results so stay tuned for our insights on the industry — coming soon.
Director Obligations Like any business, architecture and engineering firms are obliged to adhere to strict rules and guidelines related to the legal obligations of a company. In this article, we cover the main points that you need to be on top of to ensure that your business is operating in line with your legal obligations. From the moment your company is registered and you have obtained your ACN from ASIC, you must remain completely up-to-date on what your company is doing, and may need external professional advice to understand the fine print and make informed decisions. Always keep financial records and reports, so you can monitor your company’s monetary position and performance for tax purposes. Keep some financial records electronically (and make regular backup copies of them), but
remember you must be able to convert them into hard copy so that you can provide them to anyone entitled to inspect them. It is only natural that things evolve, but you must keep ASIC informed of changes in your company’s details, such as: •
Change of name (205);
•
Change of registered office (form 484);
•
Resignation of director or secretary (form 370);
•
Change of officeholders or their details (form 484);
•
Change of place you keep registers (form 909);
•
Change of company review date (form 488),
•
Issue of new shares (form 484);
•
Negative solvency resolution (form 485);
•
And many other changes.
The Corporations Act requires you to tell ASIC about these changes within a certain time period. If you tell them after this time, you may have to pay a late fee. Personally, this is what the law expects from you: •
Be honest and careful in your dealings at all times.
•
Know what your company is doing.
•
Take extra care if your company is operating a business because you may be handling other people’s money.
•
Make sure that your company keeps proper financial records and can pay its debts on time.
•
Act in the company’s best interests, even if this may not be in your own interests, and even though you may have set up the company just for personal or taxation reasons.
•
Avoid using any information you obtain through your position to gain, directly or indirectly, an advantage for yourself or for any other person, or to harm the company; this may be a crime or may expose you to other claims. This information need not be confidential; if you use it the wrong way and dishonestly, it may still be a crime.
As the director of a business, you can become personally liable for decisions made in your
capacity managing your business. Therefore, it is critical that you understand all legal obligations imposed on your role. In order to limit your potential exposure to personal liability, you should obtain proper advice in respect of the primary legislation that applies to the activities of the company and the obligations that are imposed by the legislation on both the business and the directors. You are unlikely to get in trouble if you are careful in dealing with the business and on its behalf to others. If you ensure that proper procedures exist and are followed in time; keep yourself informed about the financial position; give the interests of the company, its shareholders and its creditors top priority; understand your legal obligations and get professional advice when in doubt. Please note this article does not cover the whole of the relevant law regarding your obligations as a director of a small business. Obtaining appropriate legal advice is recommended in respect of the matters set out in this publication. More information can be obtained from www.asic.gov.au.
Improve project planning and optimise your profit margins For architecture and engineering firms it is difficult to protect margins. Some expected revenue gets lost in the project planning stage, compromising the profitability of future tasks. So what can we do to improve project planning and manage margins? Top challenges Many firms struggle to protect their margins; some of the main reasons are: •
Lack of visibility into information: some firms end up having more than three systems to manage projects.
•
Inefficient or inaccurate tracking and reporting: leads to costly mistakes and overspending in unidentified places.
•
Managing delivery to meet customer expectations: this becomes especially tricky when dealing with constant project scope changes.
Top performers in architecture and engineering industries rely on a combination of technologies and improved processes to deliver projects to deadline and below budget. At the same time, they have to manage back of house processes that are very time consuming.
Achieve the profitable project There is plenty that can be done to manage margins successfully and make projects profitable: •
Strive for better visibility: the right people should have access to the right information at the right time in order to create an accurate plan. A centralised, integrated and consolidated system helps achieve the right information flow. It also helps businesses learn from previous projects and mistakes by having old projects easily archived and accessible.
•
Keep track of finances: protect your margins by, first of all, knowing them. Then stick to budgets and timescales that have been correctly planned.
•
Timely project delivery: with cross-departmental visibility, all employees are more likely to get involved, so project delivery is not just the firm’s or the project manager’s responsibility.
A successful project lifecycle should connect business development, project management and bookkeeping. M4D can help you improve your visibility and automate your firm’s admin with a single and unified business system. This will avoid future costly mistakes by improving your processes and planning.
Onsite health checks for your IT systems
Do you feel your IT systems are falling behind your business needs? Data volumes have exploded in the design, planning and engineering industries. Information in itself has become a commodity and staying in full control of your business’s information resources is essential. Your business systems should be in sync with continuity plans. They should include cost-effective data and phone plans — an area where many businesses are overspending — and should ensure license compliance to protect your business. Management for Design deliver IT Services to support and protect your business, ensure your IT strategy is aligned with your commercial objectives and bring savings to your bottom line. We provide onsite checks to assess your current IT Systems in line with best practice and industry standards and include: 1.
Systems review
2.
Business continuity review
3.
Phone and Data costs review
A thorough check of your system will allow you to discover imminent risks to your systems and your business, discover opportunities for improvement in productivity, learn about the perception of IT in your organisation, and gain an indication of where your business can save money. If you are interested in getting an IT Health Check for your business, we are offering a limited number of free and obligation-free checks, although we would be delighted if we could assist in any way to ensure the ongoing success of your IT Systems and, therefore, your business in any capacity. IT Health Check Get in touch for further information: info@m4d.com.au.
READING LIST Each issue, Management for Design selects reading material that may be of interest to design businesses. Our spring issue selection follows: The E myth Architect Michael Gerber / Norbert C. Lemermeyer Liberate yourself from the predictable and often overwhelming tyranny of unprofitable, unproductive, and time-consuming routines. Transform yourself from a successful architectural technician into a successful architect-manager-entrepreneur and rethink your practice, shifting from tactical to strategic thinking.
How to work a room Susan Roane How To Work A Room lays down the fundamentals for savvy socializing, whether at a party, a conference, or even communicating online. Roane shows how to overcome the five roadblocks that keep most people from making new contacts.
The ABC of XYZ Mark McCrindle Understanding the Global Generations is designed for educators, business managers and parents who want a short and lively introduction to Australia’s living generations. The book explores what a generation is, how its definition has changed over the years, and the trends that are emerging for the future.
Into thin air Jon Krakouer This updated trade paperback edition of Into Thin Air includes an extensive new postscript that sheds fascinating light on the acrimonious debate that flared between Krakauer and Everest guide Anatoli Boukreev in the wake of the 1996 Mount Everest tragedy.
Drive Daniel H. Pink In this provocative and persuasive new book, Pink asserts that the secret to high performance and satisfaction-at work, at school, and at home—is the deeply human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Summer 2016
10 truths and myths about design businesses It’s easy to make assumptions in the day-to-day of running a business. Business leaders are busy doing and don’t often have time to reflect on what is and isn’t true. Sometimes we’re deluding ourselves that a piece of software is great because we don’t want to have to accept that it’s made no impact despite a large spend. The company line may be that the client is always right, yet in reality the team are constantly bemoaning difficult clients.
MYTH
VS
TRUTH
In this article we highlight 10 myths common to architecture and engineering firms and reveal the truths of each of them. Some say that truth hurts, but in business the truth can open your eyes to problem areas as well as to opportunities that are being missed.
1
MYTH MYTH
We are unique
Your offer is rarely unique! Someone out there is doing exactly TRUTH TRUTH what you are doing, except better!!
2
MYTH MYTH
We will create efficiencies in our business so that we can increase our profitability
We will pass on all the efficiencies we have created by reducing TRUTH TRUTH our fees!
3
4
5
6
7
8
9
MYTH MYTH
Revit and BIM enables us to work more effectively
TRUTH TRUTH
We really don’t know if the application of BIM has improved the way we work
MYTH MYTH
We are highly organised and our internal processes are second to none
TRUTH TRUTH
We will never get to a meeting on-time unless it’s with the client!
MYTH MYTH
We offer a comprehensive service across design and delivery
TRUTH TRUTH
We will happily give up on providing a comprehensive service offering until we are reduced to be a supplier to the head contractor / builder
MYTH MYTH
We are excited about the calibre of our people
TRUTH TRUTH
The capability of graduates is diminishing and they have to be trained on how to be an architect when they arrive
MYTH MYTH
The client is always right
TRUTH TRUTH
The client is not always right — just don’t tell them that!
MYTH MYTH
Project Managers are a waste of time and money
TRUTH TRUTH
The lack of project management training and capability in design businesses has created a whole new role on the project
MYTH MYTH
It was better in the old days when we had yellow trace and drawing boards
TRUTH TRUTH
Technology has provided design businesses with profound changes that enhance the way design businesses work
10 MYTH MYTH TRUTH TRUTH
No one can ever do a task as well as I can You can’t do everything and delegation is the key to you focussing on what you do best
Measuring and understanding productivity
For those who missed it, Management for Design were mentioned by PSMJ in relation to the productivity insights gleaned from our Business Conditions Survey. Data shows that many firms don’t have a true understanding of what productivity means or of the most effective ways of achieving it. Getting to grips with how you define and measure productivity in your business can present real opportunities for productivity growth. What is productivity? 39% of architecture and engineering firms surveyed are not measuring productivity in line with this ratio. These businesses are either unable to define productivity or think that productivity is derived from sales and growth, but that’s putting the cart before the horse. As PSMJ point out, cost reduction (indicated by 6% of respondents) rarely increases productivity, and we think cost reduction in and of itself is not a clear way of defining productivity as cost reduction may actually be an indication of staff attrition or a number of other significant factors that have potentially contributed to a decrease of productivity within the business. How do you measure productivity?
3% 6%
More with less/same
39% 33%
Sales and growth More capability Unable to define
19%
Cost reduction
Respondents who identified more capability (19%) as a measurement for productivity were closer to the money and the 39% of respondents who measured productivity as a way of doing more with less or the same resources are ahead of the curve. These businesses recognise that productivity and — as a direct result — profitability, are best measured by analysing the balance between output volume and input volume. These firms incorporate productivity into their business analytics, where data can have a real impact on strategic plans and growth strategies. Measuring productivity Firms who are failing to accurately measure productivity are missing out on huge business insights and growth opportunities, allowing competing firms to out run you. These insights present an opportunity for architecture and engineering firms to take a closer look at how productivity is measured, how it should be measured, and how to maximise the potential for productivity gains and financial growth. PSMJ define productivity “as the ratio of output volume to input volume”. Firms should be measuring billable and non-billable hours alongside actual client billings. Productivity growth is best achieved when more hours are billed for less staff time, e.g. fees/hours worked. Many firms don’t measure non-billable hours. We think this is an oversight. All hours spent on client work should be logged. This includes rework and out-ofscope tasks that often don’t end up charged to the client. Measuring all areas of input is the first step to ensuring that your analytics are truly meaningful. Once that stat is captured you can measure it with output and compare this ratio over time to get an accurate picture of productivity gains and losses in your organisation. Improving productivity Our annual Business Conditions Survey always asks business leaders to let us know how they plan to improve productivity in the year ahead. Looking at the most popular responses can help your firm gain insight into what competitors are doing to enhance productivity and what options you should consider to keep up and remain competitive in the market. What are your plans to improve productivity in the next 12 months? Improve client relationships Improve utilisation of resources
18% 14%
14%
Investment in training and development
14%
Implement improved management systems
11%
More accountability for performance
9%
9% 6%
Identify and reduce inefficient work practices
5%
Outsourcing Align organisational structure More flexible workforce
The main strategies for improving productivity identified in our latest survey include: 1.
More accountability for performance:
2.
Implement improved management systems:
3.
Improve utilization of resources:
4.
Identify and reduce inefficient work practices:
If business leaders implement these four strategies over the next 12 months, productivity will increase and useful insights will be gained into how to maintain and improve productivity in your architecture and engineering firm into the future.
Onsite health checks for your IT systems
Do you feel your IT systems are falling behind your business needs? Data volumes have exploded in the design, planning and engineering industries. Information in itself has become a commodity and staying in full control of your business’s information resources is essential. Your business systems should be in sync with continuity plans. They should include cost-effective data and phone plans — an area where many businesses are overspending — and should ensure license compliance to protect your business.
Management for Design deliver IT Services to support and protect your business, ensure your IT strategy is aligned with your commercial objectives and bring savings to your bottom line. We provide onsite checks to assess your current IT Systems in line with best practice and industry standards and include: 1.
Systems review
2.
Business continuity review
3.
Phone and Data costs review
A thorough check of your system will allow you to discover imminent risks to your systems and your business, discover opportunities for improvement in productivity, learn about the perception of IT in your organisation, and gain an indication of where your business can save money. If you are interested in getting an IT Health Check for your business, we are offering a limited number of free and obligation-free checks, although we would be delighted if we could assist in any way to ensure the ongoing success of your IT Systems and, therefore, your business in any capacity. IT Health Check Get in touch for further information: info@m4d.com.au.
The Business of Design The business of running an architectural practice requires ongoing focus from business leaders, yet is often neglected in the process of servicing clients and delivering projects. Management for Design addressed these issues recently in a series of monthly webinars for the Association of Consulting Architects. Rob Peake investigated the main elements that make up an architectural business. Rob simplified the complexities of business management across people, strategy, business and financial management, legal, brand, systems and delivery. The webinars were presented as a 3 part series and we covered the first two foundations to building a successful architecture practice in the Spring issue of this eMag. We’ll continue to deliver content from the webinars throughout the year, encouraging business leaders to take a closer look at the foundations of their businesses and to implement some of these insights on an ongoing basis. Links to the webinar slides are available at the end of this article.
The 10 foundations to building a successful architecture practice are: 1. PURPOSE & PLAN
2. LEADERSHIP
6. MANAGEMENT
!
7. MANAGING RISK
3. SYSTEMS
8. MARKETING, COMMUNICATIONS & BRAND
4. FINANCIAL CONTROL & PROFITABILITY
9. DESIGN & DELIVERY
5. TEAM
10. SUCCESSION!
Let’s take a look at Sessions 3 and 4 Session 3: Systems Your business is a set of inter-dependent systems and your systems are “how we manage around here”. Regardless of the size and the state of your business you will currently have processes for handling most of the following operations: •
How do we manage our time?
•
How do we ensure we deliver great design?
•
How do ensure we deliver our scope and make a profit?
•
How do we manage our projects?
•
How do we ensure we are developing our people?
•
How do we ensure we get paid on time?
•
How do we keep track of clients, prospects and contacts?
•
How do we ensure our people are fully utilised?
•
How do we ensure our people and suppliers are paid on time?
•
How do we manage our internal and external communications?
•
How do we manage our submissions and tenders?
•
How do we manage our financials?
As a business leader, you need to make a decision on what type of business you want to build — are you building yourself a business or creating yourself a job?! The effectiveness of your business systems will determine how your business is managed and controlled and how sustainable it is. Work out ways to get things done effectively through systems. Try to think of your business as the real product of your work! Don’t only design your projects but design your business and deliver great business outcomes along with great project outcomes.
The more you grow, the more your business will rely on systems — they are a foundation for your business and how well your practice works is directly proportional to the effectiveness of the systems you put in place. What are the essential systems to control and build your business? Systems that: •
Align your strategic objectives
•
Manage multiple marketing activities to generate work
•
Attract, retain and regularly communicate with clients
•
Control financials and monitor performance
•
Manage projects and resources efficiently
•
Keep track of clients, prospects and contacts
•
Manage your business operations
•
Facilitate the design and delivery of quality work
•
Manage the numbers with regular reporting
Systems are the key to making your business stand out from other architectural practices you see everywhere. Prosperity, happiness, having a life outside your business depends on how well your practice functions. And as Principals — you need to set the example — you can’t delegate this to an ‘office manager’. There is an up-front time commitment involved in setting up your business systems. Without committing the time to systems, your business will struggle to grow and has the potential to quickly move away from your key business objectives.
How do you start? The systems required for your business can easily be identified by breaking your business into comprehensible parts, for example leadership, management, financials, business development, communications, design, delivery etc. Ask yourself how things should be done. What is our ‘way’? And develop the systems around this: the rules, the how to’s, the processes. Involve your key people throughout this process to ensure that the entire team understands the purpose behind your systems. Remember that you don’t have to re-invent the wheel. Take advantage of a number of systems that will handle project control, financial management, client management, document control, resource management and other key processes to make your life easier. Benefits that can be achieved: •
Work is more consistent
•
Less re-work
•
Less time/on time
•
Improved profitability with increased efficiency and scope control
•
Less frustration
•
More attractive and more likely to retain great people
•
More effectively manage and assess performance of projects and people
•
Systems create time for the leaders to be entrepreneurs
•
Allows others to take responsibility for different components of the business
•
Improved and consistent client management
•
This is where you build the primary value in your business
Session 4: Financial Control and Profitability How well is your business controlled? Profitability is a great indicator of success and 20% profit margin should be the minimum benchmark. Strong financial management and performance gives the business the ability to say no, to attract the best people, and also the ability to invest in marketing, technology, growth, training and other areas that contribute to faster business success. At Management for Design, we have worked with businesses that implement this strategy and achieve sustained profit greater than 40%. The ability to understand a company from financial statements is one of the primary differences between small and large businesses. Think about how and where you will attain this capability? As a minimum you need the minimum financial controls — income statement, balance sheet and cash flow statement, and all of these need to be reviewed regularly. Business and Project Financial Control are equally important — one leads to the other. Surround yourself with experience and expertise and review your financials on a monthly basis — get into a routine and make your director meetings non-negotiable. Your business MUST have a project costing/accounting system. The system you choose can be basic or sophisticated, but you need to know fees, costs and profit by project and monitor this regularly. Plan your projects by stage with resourcing and monitor and report your performance on a regular basis. Project Managers, today, want to take responsibility for the financial performance of their projects — fees and resources — so develop and implement a system for this and train your staff to use the system. If you want focus — then measure it! Winning work with low fees places significant pressure on profitability, quality and cash flows and ultimately on the ‘brand’ — don’t put yourself or your business in that position. Work generated and ‘opportunity pipeline’ are great indicators of future workload. Here are some sample Key Performance Indicators we track at Management for Design: •
% Profit
•
Expenses/revenue as a proportion of revenue, e.g. technical salaries, IT, marketing, plant and equipment
•
Cash at Bank/Safety Bank Balance
•
Debtor Days
•
Staff Utilisation
•
Fees/Chargeable Hour
•
Direct Labour Multiplier
•
Revenue Growth
•
Revenue per technical person
•
Work Generated
•
% time on Submissions
•
Backlog (Work in Hand)
Downloads You can download full slide decks from the webinar series at the following links: Webinar 1 (foundations 1 and 2): http://bit.ly/1F5L9w3 Webinar 2 (foundations 3, 4 and 5): http://bit.ly/1KBLTED Webinar 3 (foundations 6–10): http://bit.ly/1SLkWHZ
READING LIST Each issue, Management for Design selects reading material that may be of interest to design businesses. Our summer issue selection follows: Best Practices in Strategic Planning for A/E Firms David Burstein, P.E. Designed to help you conduct better strategic planning, this book provides you with the results of a survey that PSMJ did with 75 firms on how they conduct strategic planning including data analysis on what works and what doesn’t.
Start with Why Simon Sinek In studying the leaders who’ve had the greatest influence in the world, Simon Sinek discovered that they all think, act, and communicate in the exact same way-and it’s the complete opposite of what everyone else does.
Business Model Generation Alexander Osterwald and Yves Pigneur A handbook for visionaries, game changers, and challengers striving to defy outmoded business models and design tomorrow’s enterprises. The book takes powerful strategic ideas and tools, and makes them easy to implement in your organisation.
The New IT: How Technology Leaders are Enabling Business Strategy in the Digital Age Jill Dyche The new IT equips you with the tools you need to succeed in reframing the IT conversation and propelling your business forward.
The Scorecard Solution: Measure What Matters and Drive Sustainable Growth Dan E. King The Scorecard Solution helps companies chart a course for rapid change — and outperform the competition every time.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Autumn 2016
Making management reporting work for your business
At Management for Design, we talk to many architecture, engineering and design firms that find management reporting a difficult task. Not only do businesses find it time-consuming, but they find it hard to uncover even the most essential reporting on business performance. These include: •
Employee productivity
•
Business development costs
•
Company, department/cost centre or client profitability
•
Financial growth
•
Staff and salary growth
•
Employee utilisation
•
Projects delivered on time
•
Budget vs actual costs on projects in real time.
“
Knowing how to address the problems and improve the effectiveness of management reporting systems will ensure alignment with your KPIs and will keep you on track for enhanced performance and business growth.
”
Key performance indicators, as outlined above, provide a meaningful way to measure business growth. If firms don’t take advantage of implementing these often within the daily running of their business they will struggle to control and grow their business. Being able to accurately assess your business is paramount to forecasting and planning for success. If the business management systems aren’t effective for an architecture or engineering business, firms will ultimately struggle to grow. Knowing how to address the problems and improve the effectiveness of management reporting will ensure alignment with your KPIs and will keep you on track for enhanced performance and business growth. Five signs that management reporting isn’t working 1. Incorrect data Incorrect data may be entered into your systems for a number of reasons including mis-keyed data or disjointed data communication between various systems. Problems like these can easily be avoided if a single management reporting software is used to obtain and report data. 2. Unavailable data Storing all collated data in one place by taking advantage of centralised management reporting software is key to ensuring required data is immediately available and reports can be accessed accurately without difficulty. 3. Data duplication and inconsistency If your business operates from many different data stores and applications, you are at much greater risk of creating duplicate reports. Other negative implications caused by this error can include an increase in the cost of storage and the hours taken by staff to fix duplication errors. Problems like these will impact the running of your business and performance will decline. Data duplication can be avoided by replacing your isolated business systems with a single authoritative enterprise resource planning (ERP) system and taking
the time to train staff so they are familiar with the standards expected for data input. If your business uses multiple systems to enter data, inconsistencies can easily occur that ultimately impact the reliability of your information. Staff training, automated data collection and the use of a single ERP system or management reporting software can all help to reduce inconsistencies and enhance the accuracy of your data. 4. Inaccurate results While it may be tempting to alter metrics to make the business look good, adjusting some metrics in the system can inadvertently have a negative impact on others. How will you know where to look for problems in the business if they aren’t accurately reported? It is important to ensure your statistics present your business performance accurately and that results aren’t tweaked. Business leaders need to be able to act quickly when issues do arise to avert what may otherwise become a disaster if left unnoticed. By reviewing the numbers regularly, setting up system rules to detect data tweaks and establishing a policy of transparent reporting, you can avoid encountering problems and any knock-on effects that inaccurate reports could have on your business. In summary The more you grow, the more your business will rely on business systems. The difficulties that many firms experience are directly linked to the systems they have in place. Systems are the key to giving your business an edge on the competition. Ensuring your systems align efficiently with your KPIs is essential in order to assess your business performance and make your life a whole lot easier. Taking the time to get the system right will make a world of difference to the overall success and growth of your firm.
The power of business intelligence software Business intelligence software has become a must-have tool across all business sectors in Australia, with increasing integration into AEC firms. Taking advantage of such software provides insight into your business, providing a pathway to innovation and growth. Following the overwhelming response to the launch of Management for Design’s business intelligence software last year, we continue to develop our intelligence toolkit to offer architecture, engineering and design firms greater levels of visibility, control and insight into their business. The ability to access
information graphically and in real-time enables our clients to analyse their business in more depth, consequently providing: •
Faster comprehension of the numbers
•
Quicker decision making
•
Detailed views of business performance.
Taking advantage of business intelligence software transforms businesses by enabling fast, interactive reporting. By applying a single approach to analysing all key performance of your business data analysis is now far more accurate and reliable than traditional methods of analysis. Management for Design’s business intelligence software has been listed as a leader in 2016 The Magic Quadrant Business Intelligence and Analytics Platform Report for the fourth year in a row. The 2016 Report, reflects a transformational shift to modern analytics. The progression of analytics tools are continually expanding, with innovative methods to analyse business data at the forefront of development. More than ever before, our clients are demanding products that are easier to use, that require little to no IT support and, most importantly, can be easily integrated with existing systems. At Management for Design, we strive to provide clients with a tool that offers flexibility and variety when it comes to analysing your data — helping you make the best informed decisions for your business and stay ahead in your industry. If you would like to see how our clients are utilising sophisticated business performance analysis then please contact us and we will demonstrate the value it will bring to your business. Call us to discuss our latest intelligence software and how it can help your business.
10 truths and myths about design businesses In our Summer eMag, we gave you 10 myths common to architecture and engineering firms and revealed the truths of each of them. We received some great feedback from these so have devised a further 10 myths that we have highlighted in this article.
MYTH
VS
TRUTH
It’s easy to make assumptions in the day-today of running a business. Business leaders are busy doing and don’t often have time to reflect on what is and isn’t true. Sometimes we’re deluding ourselves that a piece of software is great because we don’t want to have to accept that it’s made no impact despite a large spend. The company line may be that the client is always right, yet in reality the team are constantly bemoaning difficult clients. Some say that truth hurts, but in business the truth can open your eyes to problem areas as well as to opportunities that are being missed.
1
2
3
MYTH MYTH
We effectively control the amount of time we spend on the project
TRUTH TRUTH
Work expands to use up the entire fixed fee and we will do whatever it takes to get the “best” design outcome
MYTH MYTH
We’ve agreed on the deadline
TRUTH TRUTH
The minute you agree on a deadline something will change
MYTH MYTH
Our fees are competitive in the market place
TRUTH TRUTH
There is always another firm that will do it for a lower fee
4
5
6
7
8
9
MYTH MYTH
Our business is all about our people
TRUTH TRUTH
Management has far less to do with people than you’ve been led to believe. Architects (and most people) are almost impossible to manage
MYTH MYTH
Our principals set an example about how we do things around here
TRUTH TRUTH
Principals never complete timesheets on time
MYTH MYTH
There is NEVER enough time to do proposals correctly
TRUTH TRUTH
We don’t have an effective process for managing our proposals
MYTH MYTH
Our meetings start on time
TRUTH TRUTH
Meetings always start 10–15 minutes after the start time and not everyone will get there unless it is with the client
MYTH MYTH
We price our services accordingly
TRUTH TRUTH
We really would work for nothing
MYTH MYTH
We can handle anything at anytime
TRUTH TRUTH
We’re not experts in everything and need to learn how to say ‘no’ and I’m/ We’re not the best person / business to do that
10 MYTH MYTH TRUTH TRUTH
We capture the extra work that we do and bill accordingly We’ve never had an effective way of capturing and charging for scope of services variations. We will absorb this in our fixed fee
Technical innovations transforming the AEC industry Management for Design attended a recent industry event on Tuesday 5 April that shone a spotlight on innovation in architecture, engineering and construction. The event was hosted by Friends of the industry in Sydney. The evening included presentations from three tech startups innovating in the AEC sector, followed by a Q&A and networking. Historically, innovation is something the AEC industry hasn’t been great at. However, in the past three years this has started to change and we are noticing a rapid innovation shift and a call for novel solutions to old and longstanding problems. Business leaders in architecture and engineering firms are starting to see the strategic benefits of innovation. Innovation is at the centre of new government policy and technologists are taking ideas from industry and innovating to create better ways of doing things. ‘Innovation’ is the buzz word du jour. Sam Carigliano from SkyCiv Engineering presented a demo of his online engineering software platform used to design structures. The software offers deflection and stress analysis, reporting and rendering, along with a full 3D structural design. Sam showed a range of different projects that are being built using his software, including that of a user building an aeroplane. The site also includes free beam, truss, frame and moment of inertia calculators.
SkyCiv’s Sam Carigliano demonstrated his structural design software.
Paul Wintour from BVN Architecture discussed design computation. Paul’s work focuses on rapid prototyping through parametric variations, analysis and simulation. He gave a great demo showing rapid simulation of building volume, as might be useful when discussing a site’s potential with council or developers. Paul also discusses tools that can be used to automate workflows, such as the Dynamo Package Manager that can be used with Revit. Some of the tools available in Dynamo include nodes that automatically number all rooms and doorways on a plan sequentially, and nodes that automatically place all room numbers in the centre of a room. All of these tools provide huge time savings when drawing up plans, as well as savings in site time due to increased clarity.
Paul Wintour from BVN Architecture discussed workflow automation tools, such as Dynamo plugins that work with Revit.
Nick Smith from Tiny+ talked about relationship management and the necessity to move to new technologies that accurately meet the need of AEC firms. Nick pointed out that most client relationship management software is created by sales people, for sales people. At Management for Design, our business management system utilising the Deltek Vision ERP solution has been created specifically for project-based businesses. The software is continually developed with AEC businesses front of mind. There is a massive trend moving towards online software. The cloud industry is currently valued at $106 billion, up from $20 billion in 2010. The benefits of the cloud are many — no installation, no arduous updates, reduced downtime, access any time, anywhere, and simple licensing. The M4D business management solution takes full advantage of the cloud, allowing users to access and update data on the go. In the cloud means that you never miss an opportunity with a potential client, can update project status from your iPad, and fill in your timesheet on your smartphone. Our software uses innovation to streamlines business with IT to make AEC businesses more efficient.
Vision on multiple devices One point the speakers were keen to make clear is that innovation is happening in a big way right here in Australia. We don’t have to wait for things to happen overseas, and can instead get ahead of the game and start taking advantage of the innovation shift happening locally.
The Business of Architecture The business of running an architectural practice requires ongoing focus from business leaders, yet is often neglected in the process of servicing clients and delivering projects. Management for Design addressed these issues in a series of monthly webinars for the Association of Consulting Architects. Rob Peake investigated the main elements that make up an architectural business. Looking at people, strategy, business and financial management, legal, brand, systems and delivery, Rob simplified the complexities of business management. The webinars were presented as a 3 part series — we covered the first two foundations to building a successful architecture practice in the Spring issue of this eMag and the third and fourth foundations in the Summer issue earlier this year. We’ll continue to deliver content from the webinars throughout the year, encouraging business leaders to take a closer look at the foundations of their businesses and to implement some of these insights on an ongoing basis. Links to the webinar slides are available at the end of this article.
The 10 foundations to building a successful architecture practice are:
1. PURPOSE & PLAN
2. LEADERSHIP
6. MANAGEMENT
!
7. MANAGING RISK
3. SYSTEMS
8. MARKETING, COMMUNICATIONS & BRAND
4. FINANCIAL CONTROL & PROFITABILITY
9. DESIGN & DELIVERY
5. TEAM
10. SUCCESSION!
Let’s take a look at Sessions 5 and 6 Session 5: Team Architecture is not about buildings; it’s about people — the people who use your buildings, the public that experience your buildings, the clients that commission you, the consultants and the builders. Your team is made up of a lot more than simply the people you employ — they are only part of the equation. Alongside your employees, your team is made up of owners, advisors, specialists and employees. The main difference between a business and being self-employed is the team you surround yourself with. Surround yourself with experts, mentors and advisors and work out who you need around you — financial, tax, legal, risk, strategy. By learning from the experts around you, you will get the return on your investment that is imperative to the success of your business. Without people you don’t own a practice — you own a job. It is necessary to focus on hiring people that have the correct skills but, more importantly, who culturally fit in your business and can bring quality and talent to the business that you may not have. Surround yourself with people trying to build a career rather than having a job and foster a culture of accountability. The key issue to remember is trust your judgement. Don’t make the mistakes of putting the wrong people in charge of hiring or failing to let go the employees who don’t fit well in the business. Your team needs to have experience, passion and commitment. Develop clear performance criteria (expectations) and a comprehensive review process (with clearly defined objectives) with your team and ensure you reward and recognise employee contributions accordingly. By being a good listener, you will ultimately build stronger relationships with your team. If you know how to listen you know how to problem solve. Having systems in place will enable
you to delegate responsibility to the right employees that in turn will ensure your staff members confidently take control within their roles. As a leader, it is crucial to spend time on business management while also mentoring and educating your team to help them grow and evolve with the business itself. Key people contribution criteria encompasses: •
Work generation
•
Business representation
•
Strength of client relationships
•
Extra curricular activity
•
Design initiation
•
Design delivery
•
Fees written
•
Project profit
•
Client satisfaction
•
Quality of outcomes
•
Delivery of scope
•
Leadership
•
Personal organisation
•
Professional development
•
Mentoring
Session 6: Management and Operations Management has far less to do with people than you’ve been led to believe. Architects — and most people — are almost impossible to manage. In its simplest form, managing is about managing a process, a way of doing things, a system. Having a great management system in place is imperative when wanting to succeed. Consider the following when thinking about how things get done through people using such systems: •
What is the result we want to achieve?
•
Why aren’t we producing that result?
•
Are our project expectations clearly communicated and understood?
•
Do we lack a system and if we do, why aren’t we using it?
•
This is how we manage around here, not who manages here.
It is also important to consider how you manage your projects by: •
Engaging your team in the plan (show them the scope and the fee!)
•
Assigning responsibility to your team
•
Scheduling weekly programming meetings (45 minutes)
•
Providing a schedule of consolidated projects
•
Setting priorities, milestones, deadlines and expectations for each project (draw up an organisation chart)
To complete any project efficiently and to the best of your ability, a project needs a plan. By planning a project beforehand, you and your team have a clear vision of what’s expected and when. Tracking progress along the way by noting down how much of the project has been completed and making any adjustments to completion estimates will ensure you and your team stay on track and aim for the same completion deadline. It is also important to keep track of utilisation/chargeability of each project. Project plans should consist of the following: •
Tasks by phase — provide timeframes for every stage of the process
•
The responsibility assigned to every member of your team
•
The work required
•
Number of hours estimated to completion
Using systems correctly and efficiently for every project will make a huge difference to how your team performs and the overall outcome of the project. Rather than spending your time on managing people, focus your time on creating innovative systems that you can use and monitor. A great system will make it easier to find great employees. Once it has been implemented, train and mentor your team to follow the system and evaluate them according to their use of the systems.
The real essence of the business of architecture and business success is the need for business owners to focus ‘on’ their businesses rather than ‘in’ them. By getting this right in your business, it will enable you to focus your attention on establishing relationships with your clients and maintaining a cuttingedge position in your industry. This will ensure that the quality and value your practice delivers is maintained that will ultimately encourage your clients to remain loyal to your services. Downloads You can download full slide decks from the webinar series at the following links: Webinar 1 (foundations 1 and 2): http://bit.ly/1F5L9w3 Webinar 2 (foundations 3, 4 and 5): http://bit.ly/1KBLTED Webinar 3 (foundations 6–10): http://bit.ly/1SLkWHZ
The Executive Summary for the 2015 RIBA Benchmarking survey The Royal Institute of British Architects (RIBA) executive summary of their Benchmarking survey was recently published. The survey provides fundamental knowledge about how well architecture practices in the UK are performing and how they compare to other practices in the architectural industry. The in-depth evaluation is comprised against the following criteria: •
Profit
•
Turnover
•
Marketing spend
•
Hourly rates
•
Salaries
•
Client types and sectors.
Similar to our own Business Conditions Survey (results available here), by analysing the survey data professionals are better equipped to shape the future of their businesses and identify areas of strength, weakness and opportunity. All results are key benchmarks but it is advised to consider each benchmark at the correct level for your practice’s size and profile. Key results from the summary In general •
£2.4bn (AUD$4.49bn) total revenue in the past 12 months — 55% from London based practices.
•
£400m (AUD$748m) total profits = 18% of revenue.
•
Practices spend 40% of revenue on paying salaries, increasing with practice size.
•
32,000 staff employed in practices
•
124,000 projects worked on by practices in the past 12 months
•
£500m (AUD$936m) revenue from work on projects outside the UK
Larger practices •
Focus more on new build work
•
Have more clients and jobs, but a smaller number of clients and jobs per person.
•
Tend to plan for the next two, three or more years ahead — 71% practices with 50+ staff plan ahead for 2 years or more
Smaller practices •
Focus more on refurbishment
•
Focused on private housing, particularly for private individuals
•
Tend to plan up to 12 months ahead — only 41% of practices with 3–5 staff members plan ahead for 2 years or more
•
Have a higher success rate than larger practices — more likely to be appointed without being involved in a competitive process.
RIBA will soon be opening submissions to their 2016 annual business benchmarking survey — opening on Friday 29th April and closing on Sunday 31st July. Only RIBA chartered practices can take part in the survey, but the results are equally useful to companies outside of the Institute and the UK. To see the full set of the results, click here.
READING LIST Turning Your Doers Into Sellers PSMJ E-Book A clear and concise overview, direct from PSMJ’s business development experts, this complimentary ebook covers the complex subject of how to implement a successful seller-doer program and provides more than just business development basics.
The Fountainhead Ayn Rand This instant classic is the story of an intransigent young architect, his violent battle against conventional standards, and his explosive love affair with a beautiful woman who struggles to defeat him. A novel about a hero — and about those who try to destroy him.
The Innovator’s Dilemma Clayton Christensen In this revolutionary bestseller, innovation expert Christensen says outstanding companies can do everything right and still lose their market leadershipor worse, disappear altogether. He also tells others how to avoid a similar fate.
The program David Walsh In this updated edition, covering Armstrong’s confession to Oprah about his ban from professional cycling in 2012, Seven Deadly Sins takes the reader into a world of doping and lies, but shows that there is always hope for a better future.
The Hard Thing About Hard Things Ben Horowitz Ben Horowitz, cofounder of Andreessen Horowitz and one of Silicon Valley’s most respected and experienced entrepreneurs, offers essential advice on building and running a startup — practical wisdom for managing the toughest problems business school doesn’t cover.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Winter 2016
10 steps to finally have a workfree holiday
With today’s technology it is difficult to take a real vacation with no time spent answering emails and dodging calls. Many people are becoming reluctant to take time off because it is not much of a break when you are constantly checking your phone and locating the closest Wi-Fi source at your holiday destination, not to mention the pile of work that will still be there when you return. Use this checklist for less stress either side of your vacation to achieve a well-deserved work-free break. 1. Delegate Make a list of everything that will need to be completed before or during your vacation. This includes meetings, ongoing tasks and daily operational work. 2. Prioritise Figure out which tasks are essential to get done before leaving. Prioritise these tasks by importance, deadline and length of project. You should also decide whether the task is a priority for you to get done before you go away or if it can be delegated. Can the work be done without you?
3. Review and add to your employees’ work backlog To ensure your team’s productivity and avoid getting emails, create a backlog of work. This backlog of work should not only include the tasks that need to get done but also the context and tools that may be needed to complete the tasks. 4. Who’s in charge while you’re away? Identify someone who you trust to make decisions in your absence and leave them your contact information in case of emergency. Make sure you define what a ‘real emergency’ is so you’re not hassled unnecessarily. 5. Meet individually with team members to review plans for the time you’ll be gone Before you leave you need to ensure each team member understands the above steps, that they know what extra work they may have to take on, what to do with potential spare time and who to go to if they have questions or concerns. 6. Send a context email to your team Send your team a group email with all the details they will need while you are away. This includes who your delegates are, exact dates you are away, who is responsible for what, etc. This will ensure all members of your team are on the same page and will give everyone a point of reference. 7. Review your plan with any additional departments, outside contractors or teams Ensure you have asked everyone what they need from you before you leave, especially if you work with other businesses or work closely with your clients. 8. Plan a meeting when you return Set a meeting for your team leaders and delegates to debrief you on things that happened while you were away. You can also take this opportunity to improve your systems by getting your team to look at what the learned while you were away, how they handled unexpected situations, what went well and what didn’t go so well. 9. Set your out-of-office message You should set your out-of-office notification to start one day before you leave and one day after you get back to give yourself a buffer. In your message you should tell people that you will not be responding to messages during your absence, but will respond to them as soon as you return. 10. Unplug Make sure you log out of all work-related apps and turn off all work-related notifications until you return to the office.
Have a great break! Credit: thanks to eMyth for inspiring this article. You can download the original article along with an out-of-office email template here: http://go.emyth.com/ business-vacation-checklist.
M4D at Consult Australia’s Annual ASPAC conference
Management for Design participated in Consult Australia’s Annual ASPAC Conference in Sydney at the end of April. The forum provided a unique networking platform for CEOs and senior business leaders of the major consulting and engineering firms in the Asia Pacific region. This three-day event offered an opportunity for insightful debate and discussion with peers from over 25 nations in the region. Management for Design’s Gordana Milosevska presented the session ‘The value of benchmarking — how to use it to drive business success’. Other speakers at the benchmarking session included Max Bomben, Managing Director, Calibre Consulting, and Justin Davies, Chief Operating Officer Northrop Consulting Engineers. In her address, Gordana took a close look at Consult Australia’ practice performance survey and discussed the role of benchmarking to identify areas of opportunity where clients can make improvements. In a participatory
and educational presentation, Gordana focused on the importance of benchmarking as a radar for change where true value resides in the actions leaders take. The Consult survey highlights areas of strength within firms when it come to decision making. Firms who are able to see their strengths and weaknesses are better equipped to take the right steps and maintain their advantages. With numbers becoming a reflection of the decisions made, Gordana underlined key steps to success. These include knowing your numbers, setting your KPIs, measuring financials and also your reputation and brand, comparing or benchmarking, and ultimately taking the right action to create change. Gordana and the Management for Design team have been instrumental in enabling businesses to attain financial stability and sustainable growth by creating the change that’s needed to unleash the professional expertise and creative spirit in AEC firms. Other main speakers at the conference included Megan Motto, Consult Australia CEO; Phil Davies, Infrastructure Australia CEO; Stuart Fowler, Norman Disney & Young CEO; and Professor the Hon. Stephen Martin, CEDA CEO. The program included interactive sessions consisting of an initial presentation followed by a facilitated discussion or workshop to enable participants to share their concerns and learn from each other’s experiences. Sessions covered strategy and planning, legal, operational, managing growth, building brand CEO, future leaders, infrastructure, economic and political outlook, global M&A trends, free trade agreements and practical challenges in working across Asia Pacific. The Management for Design team very much enjoyed the conference and the opportunity to share knowledge on benchmarking, business systems and strategy in the AEC sector.
Choosing the right ERP system for your business: part 1 Many firms use systems that aren’t right for their business needs. Using poorly matched systems has detrimental effects on the productivity, profitability and performance of a firm. To run your business effectively, it is essential to use a purpose-built enterprise resource planning (ERP) system that will optimize the specific needs of your firm. By focusing on what your business benefits from and assessing what is most profitable for your business in the future, it will help
to enhance the growth capabilities of your business. In addition, it will help to achieve a diverse and thriving portfolio. ERP systems streamline the flow of business processes by integrating information between different departments into one complete system. Collated information includes: •
Finance/accounting
•
Customer relationship management
•
Management accounting
•
Acquisition
•
Human resources
•
Budgeting
•
Sales order entry
•
Materials
•
Manufacturing
By integrating the information from the functions above into one system, it enables the firm to establish rules to implement major processes and gain a greater insight into the business. Information that is flowed accurately and efficiently between different departments increases the control that every element has on the business. Key characteristics of an ERP include: •
All information is collated into one complete system
•
Real time information
•
Flexible and interchangeable design
•
An open system architecture — allowing changes to be made to one function that doesn’t interfere with the other functions of the process.
Choosing a Project-based ERP Project-based businesses — firms that receive the majority of their revenue from client-based project work — have very specific needs. It is important to be able to assess the nature and performance of every project worked on by viewing the business in three dimensions. Generic ERP systems don’t enable fluidity and don’t provide the necessary level of complexity when analyzing a project. In order to operate, these systems require a lot of customization. When project-based businesses attempt to customise generic ERP systems, the outcome is often disappointing, with processes lacking precision and focus. Lack of control when manually dealing with predictive costing methods, and reconciliations when connecting accounts makes it difficult to accurately view the profitability and performance of every project. If a projectbased ERP is used correctly, it results in decisions and work being completed faster. To improve your business’ success rate, be sure to address these three essential elements: •
Account —the general ledger account
•
Organization — this describes who is doing the work, eg: a particular department
•
Project — the product/service being completed for a customer/client. The project is the key success element and enables your business to stay in business.
By linking the following elements, businesses are able to produce accurate and efficient results that will maintain the growth of their business: •
Financial reports
•
Invoices
•
Payroll
•
Project status reports
When all information is integrated under one system, firms have maximum control of their business. Being able to easily identify problems and make critical informed decisions helps to maintain a competitive edge in their industry. Real-time integrations between financial, distribution and manufacturing solutions ensure accurate and up-to-date data whilst it also eliminates duplication and manual entry. This ultimately saves time and cuts costs. By streamlining your business, it means there is more time for firms to focus on maintaining their position in the industry whilst being able to respond quickly and efficiently to their clients. Send us an email to info@m4d.com.au if you are interested in learning about some real examples of bottom line impact.
Retaining top talent in your organisation Keeping employees engaged Why does employee engagement matter to your organisation? •
$11 billion is lost annually because of employee turnover
•
Companies with engaged employees outperform those without by up to 202%
•
71% of all employees are not full engaged
Employees will be more loyal and more engaged to their organisation when: •
They feel valued
•
They believe their work matters
•
They feel they have supportive supervisors
It takes a combination of performance management career management and succession planning to get employees engaged. 1. Performance management Have a company wide performance management approach to enhance accountability, visibility and employee recognition. Give your employees support and feedback in order to increase engagement. According to The Energy Project employees who say they have supportive supervisors are 1.3 times more likely to stay with their organisation and 67% are more engaged. Provide constant feedback; do not wait until the annual performance review to let your employees know how they are going. Giving constant feedback about clear and meaningful goals lets the employees know what is expected of them. Goals can be used to inspire productivity and reward talent. Having a well-designed performance management process allows for ongoing, interactive feedback coupled with clear development and coaching plans. By doing this organisations are investing in growing their employees; they build high-performing teams and create more engaged and loyal employees. 2. Career management Employees are always considering their career opportunities, research suggests that up to two thirds of your work force may be looking for a new job or are open to the idea of changing jobs if the opportunity presented itself.
Career development will help employees discover their strengths and the areas that need to be developed. By creating a detailed gap analysis it will make it easier to identify potential successors based on: •
Skill
•
Competency
•
Experience
•
Desire an employee has to hold the job.
Career development has benefits for your organisation as well, it helps you to increase employee retention, develop employees and plan for the future so the decision of who to put into new positions isn’t made in haste. 3. Succession planning Employees want to know that there is a chance for them to grow and to advance within the organisation. Instead of grooming someone who is already a part of the organisation to one day move into a bigger role they choose to not think about what will happen when people leave and instead often look externally for someone to fill the role. Doing this does not give the employees much hope of being able to move up.
Investing in your business management system Your Business Management System is one of the core foundations of your business. An effective and integrated system will enable you to more effectively control your business and is a key foundation to enable you to build your business. At any given moment, project‐based firms need real‐time information to: •
Provide insight into the status and ensure project profitably
•
Understand how the business is performing and why problems occurred
•
Assess the impact on the business, and what should be done to enhance performance
•
Efficiently share information throughout the organization.
Management for Design have developed the most comprehensive Business Management System for Architects, Engineers and Consultants in the
marketplace. Our unique combination of industry specialism and expertise, decades of experience and best practice in business systems and technology has enabled us to offer a fully integrated system with a powerful feature suite that facilitates and automates financial management, marketing, resource planning, project management, business development, management reporting, forecasting, payroll and document control. Management for Design’s solution enables your business to: •
Win more work
•
Improve project delivery and profitability
•
Improve business performance
•
Streamline your operations and execution
No other system in our market will provide an integrated cloud based system that encompasses Accounting and Payroll, Project Control, Business Development, Management Reporting and Document Control. To learn more about how our Business Management System, download the PDF here.
READING LIST 59 Seconds: Change your Life in Under a Minute Richard Wiseman A psychologist and best-selling author gives us a myth-busting response to the self-help movement, with tips and tricks to improve your life that come straight from the scientific community.
The A/E Business Development Bible. PSMJ E-Book A concise overview of the essential “must-knows” of business development, direct from PSMJ’s marketing and business development experts. This complimentary e-book gives you real, tangible tools and advice on all you need to know about business!
The Ten Commandments for Business Failure Don Keough This light-hearted “how-not-to” book includes anecdotes from Keough’s long career as well as other infamous failures. His commandments for failure include: Quit Taking Risks; Be Inflexible; Assume Infallibility; Put All Your Faith in Experts; Send Mixed Messages; and Be Afraid of the Future.
Nine Steps to Creating Predictable Results in Your Business eMyth In this guide, you’ll learn the first steps to designing systems that will help you work toward owning a business that’s under control. You’ll learn the value of systems, how you’re already using them, and the Nine Steps to creating predictable and reliable results.
The Virgin Way: If It’s Not Fun, It’s Not Worth Doing Richard Branson This unique perspective comes from a man who dropped out of school at sixteen, suffers from dyslexia, and has never worked for anyone but himself. He may be famous for thinking outside the box—an expression he despises—but Branson asserts that “you’ll never have to think outside the box if you refuse to let anyone build one around you.”
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Spring 2016
Improve your profit margins
Improving profit margins should be a goal that is shared and understood across the whole business. Your business management systems — from finance to project management to marketing — need to enable and support every function within your professional services business to work together rather than sit in their own functional silos. An interconnected approach is a prerequisite to making sure that projects are successful, while reducing costs and improving profit margins. By working together with the support of a sophisticated project-based Business Management System your practice can gain a clear picture of how your projects and resources are operating and their impact on either a project’s performance and the business as a whole. With this greater visibility, you’ll be able to make strategic choices and increase your profit margins as a result. Access and interrogate your business information •
When you capture the value of your Business Management System you are able to access one version of the truth for each aspect of your
projects. This will enable you to put together an actionable plan to improve profit margins. There’s nothing worse than ‘digging’ around to access this information. •
When you have a clear picture of your resource allocation it becomes possible to move resources to other projects and to ensure all your people are effectively resourced. Are your people fully utilised and do they have a schedule of completion for the week? Your resources need to work efficiently to increase your profit margins.
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How many projects have been completed? When you have a clear picture of when projects are being completed it becomes easier to plan your resource requirements moving forward; ensuring minimal ‘downtime’.
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How many projects are late, running up additional expenses that weren’t forecast and that are likely to reduce a project’s profit margins. Your system needs give you better foresight so that you can identify potential issues with scope and delivery in order to keep a project on track, rather than having to act reactively once a project has become delayed.
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Submissions and feasibilities that have been completed or are unsuccessful. By understanding the number of submissions that have been completed or did not go ahead — and how much it’s costing — it becomes possible to adopt more efficient and effective processes, offer additional training or more appropriately allocate resources to increase the potential success of your submission.
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“We need more resources to complete our project”. We’ve all heard this! “I don’t have the people or the appropriate resources to complete the project”. You need access to accurate and timely information. And this should be at your fingertips.
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Effective reporting systems (e.g. project dashboards) can be created and used to simplify an ever growing amount of information. This allows your project leaders and studio managers and finance to generate and share insightful reports to enable discussions about their performance and resources. You can play a role in ensuring that change sits at the heart of your organisation, whenever the reports reveal that it is necessary. You should only adopt changes when the case for it is established.
Take Small Steps One of the best business practices is to keep your focus on your key objectives and to take incremental steps towards them. The best results are achieved by taking small steps — by concentrating on one task at a time. A failure to allocate resources or to expect too much, too soon from your teams can de-motivate them and reduce their willingness or ability to efficiently work together.
Integrated Business Management Systems can, for example, provide you with the financial and resource availability information to enable you to avoid these situations. This can be used to benefit your employees as you begin to focus on projects and tasks that are likely to make a difference to your company’s revenue and profit margins. Your teams will also know more about how they can work successfully together in order to achieve your business’ project-related and financial goals and objectives. Leadership is required Capturing your financial, project, employee and marketing information in the one place will provide you with a broader picture of how the business is performing. Subsequently, you as a leader can play a greater role by sharing this kind of information to inform your people what needs to change in order to make ongoing improvements to the business.
Principals and Directors need to lead change by facilitating and provoking these discussions and organising regular meetings with your people to discuss the firm’s performance — you need to lead and can’t delegate this to the “Studio Manager”. Explaining where projects or the business as a whole, needs to adapt in order to control operating costs will lead to your business increasing profit margins. Take Action In summary there are six ways implementing a sophisticated project-based Business Management System can improve your business. Used effectively it will: 1.
Boost revenue and cash flow
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Generate higher profits
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Gain visibility and control
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Eliminate non-value adding activity
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Provide access to information in real-time/anywhere
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Increase resource utilisation and productivity
Signs it’s time to move to the cloud Does your company suffer from the following pain points with your current management system? If so, it’s time to consider moving to the cloud. 1. You don’t know how old your system is Your system hasn’t received new updates in quite some time, and you’re honestly not sure what your support systems are anymore. Your vendor has turned its attention elsewhere and is making investments in newer and more current software strategies. Solution: move in the direction that the industry and your peers are moving in. More and more companies like yours are moving to the cloud because that’s where software publishers are making investments and keeping customers up to date. 2. End users are complaining about limited access to data Your company data is locked into a local access-only solution and you can’t access it easily when traveling or away from the office. With reduced access to your information, projects are falling behind schedule. Solution: with cloud: you get native web access to your data wherever an internet connection is available. 3. You just received another invoice for your current system Whether it’s your annual maintenance, an invoice from a vendor for a new backup device or the time it takes your own IT staff to troubleshoot your network, you really don’t know how much that legacy system is costing you. Solution: with a cloud-based system in place, your company will no longer need to spend money. Reassign your valuable IT resources to other high priority functional areas of the company and use your recovered funds to make new financial investments. 4. You recently experienced a hard drive failure and lost critical data You might not have the human capital resources to invest in or routinely test your backup and recovery devices. To complicate things, you may not have the time to monitor your backup processes. As a result, you could be one hard drive failure away from losing very important business information. Solution: with a cloud solution, you won’t have to worry about your disaster recovery process and backup routines. These safeguards are included in your Cloud subscription and are monitored by a team of IT experts to keep your business running smoothly. Files are also securely stored and backed up in Cloud data centres so your information stays safe.
5. Your current system doesn’t scale to meet your growth needs You have set up a new office or acquired a company and realized it will take longer than expected to consolidate your system Solution: cloud software is equipped for scalability and reduced hardware costs. Since Cloud software is flexible, it adjusts and provides additional resources to handle any scalability requirements in your business. You can purchase the necessary scalability without having to buy additional hardware. 6. You have an international workforce that isn’t connected to your system Since your system is housed locally, your global employees have to handle things manually and outside of your system, including overnighting their expense reports and timesheets. Ultimately you lack an efficient way to manage your global operations because your solution isn’t available to your world-wide employees. Solution: With a Cloud system in place, you can connect all your employees within one system and provide secure access to everyone that needs it, regardless of their location. 7. You have come to the realisation that you are not an expert at maintaining a system Lacking expert maintenance skills, you feel as though you are not in control of your environment or the associated system costs. Solution: You are an expert at building relationships with your clients and partners, delivering projects through your project teams and managing a successful business. Why waste valuable time and money owning and maintaining a solution – from end users to disaster recovery – when experts are available that can do it for you in a more affordable and predictable manner? Cloud solutions take the burden of maintaining the software off of you so that you can focus on doing what you do best – winning and delivering projects to your clients. Could your business benefit from a more comprehensive, end-to-end view of performance, productivity and processes? The warning signs all point towards the Cloud. To learn more about how you can fine tune efficiency and capability within your business, discover how Management for Design can help you harness the Cloud by contacting our Head of Business Systems, Callum Bruce, at cbruce@m4d.com.au.
Business of Architecture Series The business of running an architectural practice requires ongoing focus from business leaders, yet is often neglected in the process of servicing clients and delivering projects. Management for Design addressed these issues in a series of monthly webinars for the Association of Consulting Architects. Rob Peake investigated the main elements that make up an architectural business. Looking at people, strategy, business and financial management, legal, brand, systems and delivery, Rob simplified the complexities of business management. The webinars were presented as a 3 part series — we have covered the first six foundations to building a successful architecture practice in previous issues of this eMag. Links to the webinar slides are available at the end of this article. The 10 foundations to building a successful architecture practice are:
Let’s take a look at Sessions 7 and 8. Session 7: Risk and Legal It is important that your business adopts strategies that will mitigate risk. Some strategies include business structure, agreements, contract management, terms and conditions, exclusions, fees, insurances and advisors. How your business is set up can have an impact on the level of risk you take on and there are different legal implications to consider with each different structure. Some of the more common business structures are company, unit trust and partnerships. Deciding on a business structure is not a decision that should be made without research and careful consideration. When creating shareholder or unit holder agreements it is important to consider ownership obligations and transfer of ownership, insurance, restraint, decision-making, other business interests, exiting the business,
percentage of profits linked to performance, employee share plans and buy/ sell agreements. In the architecture business, all profit comes from clients. It is therefore important that you have a signed agreement or contract in place. These documents should define your responsibilities and what happens when things are not working out. You should be providing as detailed a scope as possible and itemise the exclusions and where additional fees are applicable to avoid making a loss due to scope creep. Some items to consider are: what happens when there is a delay in gaining approval?; engagement of secondary consultants; change in documents due to change in scope; additional drawings; negotiation related to Novation; and limit defect inspection. Fee negotiation is an important part of ensuring your business is profitable. You should base your quotes on historical data rather than estimating and reinventing each time. You need to have a system that will track your past performance on projects, this will allow you to more accurately track your profits and create quotes for your work. Look into fixed fees, they do have their advantages, for starters they simplify the invoicing process, they are built around the efficiency of your operation and eliminates the uncertainty for your business. Fixed fees also create certainty in the minds of your clients. You should also provide service guarantees and ask for feedback on performance. Additional things to consider are having adequate PI insurances (relationship with your insurer) and protection of copyright, moral rights etc. You should also have a clause for increasing rates and fees, be clear about indemnity clauses and what their implications are. You should have written documentation on decisions and instructions, comprehensive employment agreements with staff and stay up to date with changing legislation and regulation. As an architecture business you should anticipate downturns, manage cash flow and have a proactive attitude to addressing problems. To have great legal support, establish a relationship. Session 8: Marketing Marketing efforts have a singular focus: “to win work”. Once you start your business it is up to you to help it grow. You should be tracking the amount of work generated and backlogged. To do this you need to think about two elements: business development and communications. To be successful in marketing you need to have a strategy, a plan, a system and measurement criteria. Marketing Business Development You need to be clear about the work you are trying to generate, the project type and client types. By tracking your work generated you can predict your future workload. In Architecture 75–85% of work comes from repeat clients. Develop objectives around this and capitalise on client relationships.
You should identify sectors, clients and a plan on how to connect with them. Some ways to connect with clients is public speaking, philanthropy, industry activities and events, networking and work on relationships, business associations as well as tenders and submissions. Involve and mentor your staff in business development by sharing your strategy and client meetings, attend business development meetings, involve them in contract reviews, engage them in networking and event attendance and develop a business development program. Look for staff/people who have clients who want to work with them, always seem to have more work than they can do, and are able to both delegate and retain responsibility. Keep track of and reward performance in areas such as work generated, networking, new clients introduced etc. Marketing Communications The essence of marketing is to communicate who you are and why a client should use you. This should include both internal and external communications and comprises websites, post project communication, social media, corporate identity, corporate collateral and corporate submissions, event and sponsorship, surveys, client feedback, e-comms, public relations and awards.
Communications focuses on exposing your business to as large an audience as possible. Business is easier when people know who you are. You can’t ignore social media now, it is your online community — your audience is on social, so reach out to them there. Your work, your people and your communications are the core components of your brand; and there is value in your brand to be leveraged. Magnify the characteristics of your business and position your business with words. You should be marketing and getting your name out there when you are at your busiest, one way to do this is to reach out and get to know the editors of key publications that your clients are likely to read. Developing a communications plan and system is key, as this will keep all of your marketing efforts structured, targeted and on track.
Marketing Systems It is important to have a good CRM (Client Relationship Management) system for managing business development and communications activity. A good CRM system will help you to track projects and clients, identify and track activity with potential clients and potential projects. It will also track business development activity. There are many CRM systems out there for you to choose from, for example Salesforce, Sugar and iAccess. Having a good CRM system is one thing, you also need to make sure you maintain it and keep information up to date, you can do this by demonstrating leadership, involving your staff, creating a system and asking questions. Superior client service is based on tight systems that should lead to continued client satisfaction and consistent and sustainable growth.
Introducing our new Head of Finance “Carla strives to provide businesses with the finance rigor, information, skills and commercial acumen to deliver increased profits and efficiencies.”
We would like to introduce and congratulate our new Head of Finance Carla Dexheimer. Carla is responsible for: •
o-ordinating and managing all aspects of accounting, financial C reporting and tax reconciliation
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Developing and maintaining trusted relationships with clients
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Developing and mentoring the finance team
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ontinuously enhancing the financial processes to deliver exceptional C services to our clients
Carla has worked in the UK and Hong Kong for 12 years in the Multimedia, Advertising and Software industries. She is an ACMA qualified, commerciallydriven business partner. Carla strives to provide businesses with the finance rigor, information, skills and commercial acumen to deliver increased profits and efficiencies. Cultural awareness is one of her key strengths gained through working internationally and managing teams spread globally.
The value of design for a sustainable future Vanessa Bird, Australian Institute of Architects Victorian Chapter President and co-founder of Bird de la Coeur Architects, implores designers to value their skills for the future of the industry. The following is a transcript of Bird’s speech at the Victorian Architecture Awards, with credit and thanks to Parlour (http:// archiparlour.org/fairer-fees-to-future-proof-the-profession/; Twitter @_Parlour). When I opened the Awards exhibition two weeks ago I was struck by the exceptional quality of the work given the current fee climate. It is astonishing that while fees are driven down, architects continually find ways to do good work. We are resilient, but this is not limitless. Expectations for ever-higher levels of service for the same fee can’t continue. Fee pressure is applied at both ends of the process. First, at the front end, there’s pressure to provide concept design for free; and second, at the delivery end, there’s pressure to do more for less. I encourage you all to value your skills more highly. Put a decent value on your intellectual property, and don’t sell yourself short. Why are we giving it away? Architects will always need to compete for work, but cut-price design fees or no design fees sends the wrong value message. This doesn’t create a future for our upand-coming practices – or acknowledge the value of design. Concept design is not a loss leader. It is our most precious commodity. The contributions you see here tonight are undeniably excellent and involve significant expertise, developed over time. How can we expect clients and the market to value our expertise if the message we give is that we don’t value it ourselves? Your intellectual property has value – in
some cases, it’s worth millions of dollars in uplift to developers or real-estate agents, and in other cases, it changes people’s lives. You shouldn’t be giving this away for free. We all start with a blank piece of paper and until we provide a creative solution on that piece of paper, the entire project team – consultants, advisors and managers – remain at a standstill. This is where our core value lies. Our intellectual property is our most important asset. All businesses decide what they will and won’t give away to attract clients. However, if you give away your best content for nothing, what possible reason could anyone have to pay for content that is less valuable? If you offer up the farm, or what is truly your most valuable content for free, you are bound to get resistance – or disappointment – on the services you try to sell.
Of course, architects can do ‘pro bono’ work – but a profitable business structure is needed to support this. Value your work, and then make real donations through not-for-profit organisations, community groups, or Architects Without Frontiers, all of which contribute to society in special ways. Doing more for less Architects are doing more for less. And in this case, less is not more, it’s just less. The downward pressure on fees during the GFC created a market accustomed to higher delivery expectations. Business costs, such as insurance and software, have increased – while fees decline. This isn’t because there is a shortage of money in the industry. It just isn’t distributed our way. Tonight you see quality isn’t appearing to suffer – so externally the system seems fine. This is because architects are generous and do more than the fee allows – but under-pricing is not the way forward. For the sake of the future of the profession, change is required. So why does this matter? Inadequate fees mean we can’t pay our staff the wages they deserve. It’s then hard to attract and keep the best and brightest students. Architecture is complex and we need good young minds coming through, who are not having to worry about the
prospect of poor wages or long hours of unpaid work. We need to be paid for the services we provide, so we can pay our staff properly. How do we return the balance and recapture our value? And what is the Institute doing about it? First, we need to take more control of project delivery. One piece of the Institute’s advocacy work is the push for mandatory registration of project managers to help claim back some of our traditional territory and lost ground. This process has begun. The opportunity for architects is to fulfil the registration requirements as project managers themselves, thereby instantly returning scope and lost fees. Or to project manage other architect’s projects professionally and knowledgeably and claim the appropriate fee. Architects can and do find solutions to complex problems. We can change, we like change, we trade in it. This was proven in May when we voted for the governance changes in our Institute’s Constitution. Think about it – there hasn’t been a successful federal referendum for 40 years, so this demonstrates our ability to change by working together. This is fundamental to the concept of a true profession. I encourage you all when calculating your costs and fees to think about our longterm viability. It is one thing to live for architecture – it is quite another to die for it. Architecture is important. We are heading into an election where both major parties are proposing a Minister for Cities. The future of the city, housing and infrastructure are part of the core political debate. We have to advocate for an environment where design is valued. We have to start by giving greater monetary value to design ourselves. Every year at the Awards we see Victorian architects making significant contributions to the city and its life, to our communities and to the advancement of our discipline. In 2016, we see an exceptionally high standard. You all find great solutions and do profoundly valuable work – don’t under-value it.
READING LIST Elon Musk Ashlee Vance In Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, veteran technology journalist Ashlee Vance provides the first inside look into the extraordinary life and times of Silicon Valley’s most audacious entrepreneur.
We learn nothing Tim Kreider In “We Learn Nothing, “satirical cartoonist Tim Kreider turns his funny, brutally honest eye to the dark truths of the human condition, asking big questions about human-sized problems.
Successful Strategies for Small Firms PMSJ “One size fits all” just isn’t the way it works when it comes to leading architecture or engineering firms. Small firms like yours face unique challenges that require unique approaches for success … and small firms principals who know how to tough it out among the big boys.
Good to Great, why some companies make the leap…and others don’t Jim Collins Built to Last, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the very beginning. Resource Planning for Dummies Deltek Special Edition The name of the game for successful project-based organisations is resource management. Without the right resources on your projects, margins can erode and projects can slip. Put the right tools and a collaborative platform in place and you have all of the insight you need to scope, plan, and manage your people more effectively.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Summer 2017
The top 5 reasons your firm needs project information management 1. Overflowing emails While emails are a great tool they are also a large burden on your time. How do you keep hundreds of emails about dozens of projects straight? Which ones need a response? Which ones go in what files? Is your productivity tool interfering with your project success? 20–30% of the business day is spent on email related activity — that’s 2–3 hours per day. Firms with project management systems spend minutes, not hours, on their emails each day. 2. Knowing where your project files are Do you store your project drawings, correspondence files, submittals etc. in multiple locations? Are your files still stored physically and electronically for the same project? Is time being wasted working on an outdated version? Do you place as much priority on managing project files as you do project deadlines?
6 in 10 firms rely on network folders to manage projects, with inconsistent file structures, accidental deletion, drag-and-drop displacement hindering productivity and negatively impacting utilisation. Rather than waiting until the project is complete to start organising files, firms should be proactively managing projects throughout the entire project lifecycle. 3. Quickly finding critical project documents Is it easy to find the right files when a client calls with a project related question or do you have to call them back after spending time searching for the correct information? Does this impact your firm and its reputation with clients? When someone new comes onto the project is it easy to find all the necessary information in order to meet the deadline? How much time are you wasting looking for those files? It can take firms hours or days to track down the correct critical project information, wasting valuable resources and critical project time. By using project management, firms can find the correct drawings or documents, regardless of when a task was completed, in a matter of minutes. 4. Sharing and managing files internally and externally Sharing files across the office, with another office or external teams can be difficult — especially design files as they are quite often huge. Is more time spent trying to share files than actually working on the project? Is it difficult to find the right platform that works for everyone and won’t bog down serves or incur expensive data storage? Is it easy for your teams to collaborate on the most current version of documents and drawings? 75% of firms believe sharing documents is the key to improving collaboration yet only 9% of firms have a single enterprise-wide collaboration system. 5. Capturing your intellectual property One of your firm’s greatest assets is your intellectual property. Is your project information secure and protected? Can you easily find the documents you require during a dispute resolution? Do you have effective disaster recovery plans in place to protect your intellectual property? What information needs to be retained and for how long? Are you putting your business at risk with your project information management processes?
Management for Design in the press Over the past few months, Management for Design has contributed to articles on Source.net — a site focused on industry news & analysis in the construction, design and engineering sectors. Rob Peake has provided his expertise across a number of articles, discussing issues on how best to maximise billable hours in the workplace, how to successfully delegate new responsibilities to staff members and how to manage productivity to gain maximum benefits. Unbillable hours erode architecture profits In business, it is only natural to work on daily tasks that are not directly chargeable to projects. The overall success of a business largely depends on the ability to keep time spent on these tasks to a minimum but the most significant area of opportunity to improve is by maximising the benefits from time spent working directly on jobs. The best way to do this is to ensure you fully understand the scope of the project, be conscious of the limitations and flag any concerns in this area without undue delay. Having non-billable time take up 15–20% of the overall number of hours worked is nothing to be concerned about, however there are a few areas to look out for. Competitions play a big part in bringing in new work but it is important to set guidelines around the type of competitions entered and the amount of time spent on them. By analysing past projects and assessing new work coming in, if you’re able to predict the number of people likely to be needed for each project, it will significantly help minimise time spent on non-billable hours. To read the full article click here.
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Rather than waiting until the project is complete to start organising files, firms can proactively manage projects throughout the entire project lifecycle.
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What architects need to consider in succession planning The transactional aspects of succession planning are usually relatively straightforward but it is the development and transition to new leadership that often proves to be the greater challenge. Many practices struggle when delegating progressive levels of responsibility for design decisions and client ‘ownership’ to less experienced architects coming up in the practice. While managers may find it difficult to give up control it is important that they give those who would be ideally suited more responsibility and authority in their role. Your key people will end up frustrated and ultimately leave the firm if they are not assigned the opportunities they feel they are fully capable of. Finding the right person to take over can be a challenge — it will not necessarily always be the leading designer in your firm. While they have the technical capability of taking over, they often do not possess all the other skills and qualities needed to run a business. It is important to look out for strong characteristics such as accountability and responsibility and a passion to grow and develop the business while forming close client and staff relationships along the way. To read the full article click here. Productivity gains offer upside to architects There are several underlying problems as to why there are such low rates of accurate productivity measurement. First, many architecture businesses and consulting companies do not understand how to measure productivity and the extent of the benefits that come from doing so. This can be directly attributed to the lack of emphasis on this area in architectural education and professional development. It is extremely valuable to have systems and protocols in place so that critical information on productivity can be captured and assessed. Measuring
productivity in this way can give project managers a better understanding of the scope of projects and a stronger capability around managing tasks. It also gives them a greater ability to assess the performance on a given project and analyse how many hours have been worked to complete certain stages as compared to the original plan. To read the full article click here.
Controlling the chaos in your business Managing design and engineering businesses to ensure you are consistently making a profit One of the main assets of a design or engineering business is the knowledge and skills of its people. Similar to the projects they serve, the development and management of resources becomes increasingly complex as the business grows. It’s often said that project-based businesses become difficult to manage when all decision makers can’t fit around a conference table. Here are our recommendations to ensure profitable growth by improving the use of resources and gaining tighter control of business finances. 1. Leverage: how is the business structured in terms of the ratio between business directors and other client-facing employees? In design and engineering businesses in particular, business leaders are often client facing, specifically because it is their talent that is the face of a major project. To manage the spread of billable hours across a team, businesses will often structure with a number of high-performing client facing staff who report to each director. This in turn creates a layer of trusted and skilled employees who can spread the load of the billable hours created by any one client. 2. Utilisation: how do design and engineering businesses maximise billable time while avoiding burnout? Utilisation can be increased by billing more hours from higher-billed staff, however the ability of people to take on these hours needs to be managed carefully. Design businesses often run into problems when their highest performers work an excess number of hours because those hours are the most profitable for the business. Avoiding burnout for your best performers is critical to business success. It can make more business sense to hire new client-facing staff at a less senior level to take on more billable work in comparison to what
could be achieved by top talent working overtime. This strategy is likely to produce larger profits for the business without talent burnout. 3. Fees: should billable hours be determined by the firm or the market? The reality for design and engineering businesses is that fees are often driven by external factors, such as the competition within the industry and the fees the market will bear. Firms that are providing a premium service can refuse to compete on price on the back of a superior or unique project offering for which clients are willing to pay. 4. Salary levels: can a firm afford market rates for top talent, and if so, should it? While project-based firms certainly have control over what they pay their employees, businesses should consider the external marketplace and what competing firms are paying for talent. In times of overall market growth, underpaying talent creates a risk that you might lose them to a competitor. Fostering and nurturing creative talent beyond remuneration can also go a long way to promoting staff loyalty and excitement for the job. If businesses can broaden the skills of their staff without stretching resources, they will reap the rewards. Inefficient use of resources and poorly defined business strategies are two of the biggest problems faced by design and engineering firms. Left unchecked, these issues cause businesses to miss out on increased efficiencies, higher engagement and morale among staff and consistent profitability. Getting business efficiencies, strategies and systems under control will stabilise your business and allow you to focus on what you do best.
Director Sentiment research summary The Director Sentiment Index is a survey that looks at both Australian and Global economical and political issues that are important to Australian Institute of Company Directors (AICD) members and the wider director community. It is a comprehensive resource that assesses the opinions and future intentions of directors and their businesses. As we move into 2017, directors have shown concern for the stability of the global political markets following the results of Brexit and the US election of Donald Trump. The lack of certainty has caused directors to lose confidence in the health of the major global economies. The messy political arrangement in Australia is also largely affecting business outlook, with only 8% of members believing business decision making has been positively affected by the Governments performance over the last year. Further issues such as low productivity growth (26%) and a slowdown in China (25%) have been raised as the main economic challenges that Australian businesses are currently faced with. In the next decade, 38% of directors believe economic policy uncertainty will disrupt their business the most, with political instability (33%) also believed to be a big contributing factor. Despite the global instability, directors remain positive about business conditions domestically and the overall growth of their business. It seems that directors are keen to get on with developing their businesses further and taking more risks along the way — 34% of directors expect to increase investment and employ more staff in 2017. General business confidence is also at its highest since 2013. With only 18% expecting their business to weaken, the overall optimism that directors are showing proves a positive and encouraging sign as we move into the New Year. Directors’ priorities for the Government remains the same, with 44% of directors believing infrastructure to be the number one issue that the Federal Government should address. Renewable energy sources and regional infrastructure are the next two highest priorities that they’d like the Government to focus on. Unfortunately, directors are becoming increasingly pessimistic about the effect of the Federal Government’s current performance, with almost 80% believing the performance had a negative effect on consumer confidence. 75% of directors are equally pessimistic about the state of the current AGM system, with sustainability and long-term growth prospects considered to be the major issues that directors are most concerned about.
With so much global uncertainty and instability, it comes as no surprise that directors are concerned about these issues having a direct impact on their business over the coming year. Despite the many challenges that they face, it seems directors aren’t willing to wait for global Governments to get their act together and are getting on with the job. To read the full survey click here.
Managing your margins In business, firms are always looking for ways to improve profitability and maximise their margins. In our recent study, 80% of all consulting businesses said that they struggle to manage and protect their margins. Factors such as poorly devised processes and time consuming tasks can have detrimental effects on profit margins. Using multiple disjointed systems leads to ineffective financial control and takes up valuable time — time that would be much better spent on managing projects and clients. Such systems also make it harder to manage projects and get real time feedback on the overall health of your business and where improvement is necessary. So how do you ensure that you are part of the 20% of businesses that don’t struggle? By using one streamlined system. This will enable you to manage projects and find all the necessary information in one place and make informed decisions quickly. Having the capability to monitor how your projects are performing in real time allows you to identify any challenges early on in the process and avoid problems further down the track. Proactively managing your margins leads to client satisfaction, positively impacts your bottom line and allows you to make critical decisions most efficiently in order to successfully grow your business. To watch the video click here.
Director responsibilities and obligations Just as all businesses, architecture and engineering firms are obligated to adhere to strict rules and guidelines relating to the legal obligations of a company. As the director of a business, you can become personally liable for decisions made in your capacity managing your business. Therefore it is critical that you understand all the legal obligations of a director.
In order to limit your potential exposure to personal liability you should obtain proper advice in respect of the primary legislation that applies to the activities of the company and the obligations that are imposed by the legislation on both the business and the directors. Below are the main points you need to be on top of to ensure that your business is operating in line with legal obligations. From the moment your company is registered and you have obtained your ACN from ASIC, you must remain completely up-to-date on what your company is doing, and may need external professional advice to understand the fine print and make informed decisions. Always keep financial records and reports, so you can monitor your company’s monetary position and performance for tax purposes. Keep some financial records electronically (and make regular backup copies of them), but remember you must be able to convert them into hard copy so that you can provide them to anyone entitled to inspect them. It is only natural that things evolve, but you must keep ASIC informed of changes in your company’s details, such as: •
Change of name
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Change of registered office
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Resignation of director or secretary
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Change of officeholders or their details
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Change of place you keep registers
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Change of company review date
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Issue of new shares
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Negative solvency resolution
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And many other changes.
The Corporations Act requires you to tell ASIC about these changes within a certain time period. If you tell them after this time, you may be penalised. Personally, this is what the law expects from you: •
Be honest and careful in your dealings at all times.
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Know what your company is doing.
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Take extra care if your company is operating a business because you may be handling other people’s money.
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Make sure that your company keeps proper financial records and can pay its debts on time.
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Act in the company’s best interests, even if this may not be in your own interests, and even though you may have set up the company just for personal or taxation reasons.
On top of what the company’s constitution or rules dictate you need to do as director, you must always be fully up to date on what the company is doing: •
Find out and assess for yourself how any proposed action will affect your company’s business performance, especially if it involves a lot of the company’s money.
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Get outside professional advice when you need more details to make an informed decision.
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Question managers and staff about how the business is going.
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Take an active part in directors’ meetings.
Avoid using any information you obtain through your position to gain, directly or indirectly, an advantage for yourself or for any other person, or to harm the company; this may be a crime or may expose you to other claims. This information need not be confidential; if you use it the wrong way and dishonestly, it may still be a crime. You are unlikely to get in trouble if you are careful in dealing with the business and on its behalf to others. If you ensure that proper procedures exist and are followed in time; keep yourself informed about the financial position; give the interests of the company, its shareholders and its creditors top priority; understand your legal obligations and get professional advice when in doubt. Please note this article does not cover the whole of the relevant law regarding your obligations as a director of a small business. Obtaining appropriate specialist advice is recommended in respect of the matters set out in this publication. More information can be obtained from www.asic.gov.au.
READING LIST The Sale of a Lifetime Harry S. Dent Jr. From founder of Dent Research and Editor of Boom & Bust (www.dentresearch.com), Harry S. Dent Jr. has written an insightful and thought-provoking book that provides a unique look at where to find the biggest profit opportunities in the coming years.
Seeking New York Tom Miller Beautifully illustrated with line drawings and photographs, engagingly presented, and richly detailed, this charming guide traces the architectural and social history of Manhattan one building at a time.
Don’t Sweat the Small Stuff for Men Richard Carlson Over the past five years, Richard Carlson has shown countless families, lovers, and workers how to live in a more calm and productive manner. Now he turns his attention to men, with numerous simple strategies and life lessons that blend humour, warmth, and uncommon wisdom.
Disrupt Yourself Whitney L. Johnson Whitney Johnson wants you to consider this simple, yet powerful, idea: disruptive companies and ideas upend markets by doing something truly different-they see a need, an empty space waiting to be filled, and they dare to create something for which a market may not yet exist. The Pressure Principle Dr Dave Alred MBE From cultivating a no-limits mindset to unleashing the performance-enhancing powers of language, THE PRESSURE PRINCIPLE will help you produce your best in work and at home. Read it and you’ll never miss a shot again. Live What You Love Naomi Simson In Live What You Love ground-breaking Australian entrepreneur Naomi Simson will show you how to love what you do every day and live life to the full. Soon your work experience will become richer, your career path more clearly formed and your life more fully realised. A/E/C Quarterly Market Forecast Report PSMJ Resources, Inc. To help you chart out your firm’s future and take a first-hand look into a wide range of key client markets, PSMJ publish their quarterly report. It is the best upstream indicator of future workloads for architecture and engineering professionals. Click the link here to download the free Report.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Autumn 2017
How to improve efficiency and increase your profit margins
Project-based businesses have two clear-cut ways to increase their profits — they can increase their prices or improve their operational efficiencies. If they choose to raise their prices, they risk losing clients and pricing themselves out of the competitive market. This ultimately makes improving operational efficiency the smarter and more effective choice. By following these five simple steps, you’ll be able to increase your profit margins without increasing your prices. 1. Assess current performance You can’t improve your operational efficiency until you understand your current performance. You need to analyse every aspect of your operations and identify the existing inefficiencies. During this process, you should implement a set of KPIs that will enable you to improve the way you manage your business performance now and in the future. 2. Manage capacity and resources accurately Having previously established your baselines of performance you now need to carefully assess your current human resource capacity. Your employees are your
most important, yet also your most expensive resource so it is vital that you do not have more people than absolutely necessary to fulfil your project obligations. To ensure you manage your resources most effectively: •
Assess employee skills and productivity
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Look back at previous projects as a guide for creating new project plans and delivery milestones and relate this to your fee and scope
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Identify where resources are not being utilised by pro-actively reviewing your project reporting. That is, if you have it!
3. Improve estimation and resource allocation Now that you fully understand your capacity and available resources, you can begin to allocate them. By checking the following instances, you will be able to resolve any resource allocation issues and have more time to create new efficiencies instead: •
Are your project leaders clear about the scope and fee?
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Is your resourcing aligned with the project scope and fee?
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Do you have an overall studio picture of resource allocation?
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Are you clear on when projects have too many resources.
Gathering information from as many projects as possible will give you greater insights into where estimates are failing and mistakes are being made. It will also highlight where project managers have allocated resources incorrectly, consequently affecting efficiency and profitability. 4. Stay on top of project management If you don’t carefully manage your projects, it won’t be long until they spiral out of control and reduce your profit. Regardless of how capable your project managers are, there is always room to improve. Key areas to investigate and improve include: •
Scope management and variations — project managers need to manage changes to milestones and deliverables
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Unbillable work — always avoid tasks that are outside the scope of the project, particularly those that are unbillable
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Skills — keep skills up to date to ensure managers are performing at the top of their game with the latest techniques and skills
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Client expectations — implementing your own frameworks will enable you to better manage your client expectations and the actual project process. In addition, fully resourced teams will help to ensure that your clients receive the service they expect as efficiently as possible.
5. Use technology to your advantage Make sure you aren’t eroding your profit margins by using inefficient systems to capture project performance. The key to efficient operations is accurate and timely information. Thus, investing in systems that increase operational efficiency is an investment that will boost profits. The ideal system will: •
Make KPI capture and reporting easier by centralising data
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Prevent errors by automating common tasks
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Be flexible enough to accommodate your operations and project management frameworks
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Allow you to allocate and manage resources better to achieve positive outcomes for customers.
Nicole Kidman, business leadership and balancing it all Nicole Kidman is no stranger to business. A star of stage and screen, she has built a globally renowned career at the same time as juggling family and children. In a nutshell, she gets it. And she’s all over it. On Monday Gordana Milosevska, Director of Management for Design, had lunch with Nicole Kidman. Well, Gordana and some of Management for Design’s fabulous clients. Plus a room full of inspiring Business Chicks. The whole room were hanging on every word that came out of Nicole’s mouth. In an incredibly down to earth and insightful interview, Nicole shared nuggets of wisdom and the values she lives by. Interviewed by Jessica Rowe at Melbourne’s Crown Palladium, Nicole talked about life, family and her career. She considers her relationship with husband Keith Urban to be ‘soul love’, is on a mission to support the film industry and when asked what she is most proud of, Nicole says, “I have this family that brings me to my knees.” Raised by a feminist, Nicole became very attuned to women growing up and sees female relationships as a benefit in both life and in work: “We get things done by talking and helping each other”. As a female business owner with clients who are female business owners and leaders in their fields, this is something I see every day. Women are fantastic at giving support to each other
and excel at moving projects and initiatives forward as a team. It’s that great combination of leadership skills and an intrinsic ability to develop and mentor teams toward a goal. With leadership comes strength and I think all of us in leadership roles can admit that we got to where we are now only after taking a few hard knocks along the way. It is through those experiences that we learn and grow and that have shaped us into the leaders we are today. Nicole cites her mother who helped her learn that growing up. “My mother always told me, ‘Pull your head in and take it on the chin.’ Learn resilience young. You get criticized and get back up.” As women in business it can be hard to face what we often refer to as failure, but we should be turning that around and taking strength from every experience. To cite another celebrity recently, in this week’s Lenny Letter, Shirley MacLaine made an insightful remark about failure. In reference to her film The Last Word where she said, “You don’t make mistakes, mistakes make you,” Shirley MacLaine said that she has very few regrets in life and that she doesn’t see anything as failure; “I’ve always had the point of view that when things don’t go well it’s not a failure, it’s a learning experience.” I think as business leaders we can all see the truth in this and that learning resilience and having the ability to pull yourself up is what moulds you into a more accomplished and successful person. It’s all in the learning and growing and evolving. Yet even movie stars struggle to balance it all — career and family and marriage — and need a great support network and coping mechanisms to control what can sometimes feel like the uncontrollable. So how does Nicole Kidman do it? She reads a lot and asks her friends for advice to put it all back in balance. Being open and receptive to the advice on offer seems to be a key factor in bringing everything into perspective, “I’m willing to learn, I’m willing to change and I’m willing to grow”, she says.
Nicole Kidman’s 10 rules to live by: 1.
When you promise something be impeccable with your word.
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Be open and emotional and compassionate, not thick skinned.
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No matter how impossible it is, if you focus and really want something you can get it.
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If there’s fire and passion then she’ll do it otherwise if it doesn’t move her she won’t.
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Take care of your emotional health.
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You have to work hard to get what you want.
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When an opportunity comes along just grab it.
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Bravery comes from not over thinking things. There can be a million reasons why not to — but then jump in and try it. You get back up.
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As a parent: be there and listen without too much advice and guide rather than telling what to do; they do better without the strong advice.
10. Be willing to learn, willing to change and willing to grow.
Retaining your top talent
Research done by The Talent Pools shows that 66% of businesses report that finding and retaining great people continues to be a significant challenge. Without the right mix of skill and experience, these businesses are often unable to deliver according to client expectations or within the agreed project budget.
Innovation is key With competitors constantly changing the way they work, your business needs to keep a step ahead — otherwise you will risk losing your top talent to your more innovative competitors. Innovations not only allow you to work more effectively and therefore improve profits but can have larger cultural implications that are more likely to attract and retain employees. Cutting-edge talent management techniques and tools can allow your business to: •
Maintain or gain a position at the forefront of your industry
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Keep existing talent engaged
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Tempt high-quality talent to join your business.
Assign resources effectively Employees who are challenged effectively by their work, yet also given appropriate support and opportunities for professional development are likely to be more focused and satisfied with their current roles. If employees are challenged in their current roles they are less likely to look for work elsewhere. Ensuring that employees are focused on tasks that best suit their skill set will reduce the risk of “burn out” and thus reduce the risk of them leaving. Assigning roles and responsibilities effectively is essential. By doing so, it: •
Maximises profit by assigning tasks and job roles appropriately
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Ensures people with the most appropriate skills and experience are engaged with projects when required. This will not only help maximise profits but will prevent your best talent wasting time on less skilled tasks
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Avoids people being assigned roles that do not match their skill set. This will only increase job dissatisfaction and make them more likely to find work elsewhere.
Build structure that simplifies administration Every manager in your business will be involved with some administration tasks and this will likely be the least favourite part of their role. It therefore makes sense to implement systems that streamline administration tasks, allowing your managers to focus on the needs of their clients and people. This will improve job satisfaction for employees and increase your revenue by spending less time on activities that do not directly generate income. Reduce frustration A lack of direction and goals is a source of great frustration for employees. Having a clear development plan for each employee will help managers to
evaluate their people and to provide them with a thorough career succession plan, leading to a lower risk of losing top talent. Finding and retaining the best talent is a constant struggle that affects businesses across all industries. These four key strategies will help you achieve the greatest success: 1.
Use a talent management system that will allow you to create career development plans for your employees
2.
Assign your resources effectively to fully utilise your employee’s capability and ensure they are challenged
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Build structures that simplify and minimise administrative tasks
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Adopt a commitment to constant innovation and keep your company at the forefront of the industry.
Expanding our IT team
To effectively address our growing clients’ needs and to improve our range of services for the future we have expanded our IT team. And we plan to grow further! We have recently appointed a new Head of Information Technology — Dinesh Rajalingam and a new IT Administrator — Sam Timmins, to continue to drive and deliver IT strategy, solutions and management for our clients. Management for Design prides itself on the development and delivery of innovative strategies for Architects, Engineers and Consultants utilising current and emerging technologies.
We ensure our clients have an effective and efficient IT infrastructure and IT platform that is cost effective and delivers a competitive advantage into the future. Our service is specifically tailored to the AEC industry providing us with the Intellectual Capital essential for your design business. Do you sometimes feel your IT systems are falling behind your business needs, best practice and your competitors? Data has exploded in the industry and information has become a commodity and staying in full control of your business’s information resources are essential. Management for Design delivers IT Services to support and protect your business. We ensure your IT strategy is aligned with your commercial objectives and generate savings to your bottom line. We provide onsite checks to assess your current IT Systems are in line with best practice and industry standards and includes the following: 1. Systems review 2. Business continuity review 3. Phone and Data costs review. A thorough check of your system will allow you to discover imminent risks to your systems and your business, discover opportunities for improvement in productivity, learn about the perception of IT in your organisation, and gain an indication of where your business can save money. To introduce Dinesh and Sam to your business we are offering a limited number of free and obligation-free IT checks. Although we would be delighted if we could assist in any way to ensure the ongoing success of your IT Systems. IT Health Check If you are interested in how your business can achieve more from your IT solutions then please get in touch for further information: drajalingam@m4d.com.au.
7 warning signs that your Business System isn’t delivering Your business system should be saving you time and money but many architects, engineers and designers have business systems that don’t achieve this at all. It isn’t uncommon to set a system in place and let it run without regularly updating and assessing whether it still is — or ever was — optimised for success. Look out for these seven issues that will indicate that your business system isn’t delivering.
1. Input takes longer than output It is absolutely essential to your business intelligence that you can simply and quickly capture data that highlights errors and duplication. It is equally crucial for this to be comprehensive by collecting all the data you need for your business metrics. When your system is too difficult or requires too much manual labour, it will lead to your people cutting corners or completely avoiding the system altogether. This inevitably results in the introduction of bad data, which in turn will devalue any insights generated. 2. You do all the reporting If your current business system only allows the finance team to undertake reporting functions, this is holding the business back. A project-based ERP solution will provide detailed tools to enable both the financial department — and even end users — the capability to create their own planning and improvement reports. 3. Compiling reports takes too long Many businesses do not have one system that is used by the whole business. Instead, many businesses have each department using a different system, meaning that it becomes difficult when it is time to make a company wide report. The ideal system will replace multiple systems with a single common data store and interface. Reports can then be made in real time with the most up to date information. Planning and decision-making ultimately becomes faster and is based on accurate data — helping the business to become more responsive and agile.
4. Forecasting is difficult and/or inaccurate Being unable to obtain accurate information quickly and effectively means that you will be unlikely to create the forecasts you need to draw up realistic budgets or forecasts. The ideal business system will validate data upon entry and will give you access to data in real time, therefore removing the introduction of manual errors and providing more accurate forecasting. 5. Finance is separated from project management ERP is more than the management of finance and production invoicing. It’s also an integrated resource and project management tool. Each project should have a budget and therefore should share a system with finance. If the two systems are separate, budgeting and forecasting information becomes less accurate. In addition, accounts and project data are more likely to contain errors, causing it to become impossible to accurately manage profit and loss across multiple projects. Your ideal business system will unite finance with project management to give a more accurate and clear understanding of business processes and the true costs. 6. Your business system is too manually intensive When using separate systems, there is a greater risk of errors because you need human intervention to copy data between screens, or to export and import data into the different applications. Not only is there an increased risk of error but this is a poor use of resource utilisation as staff time and resources are wasted copying data and checking for errors. Your ideal system will make use of automation and advanced error checking. This will help to reduce wasting time on manual labour and in turn will mean direct cash savings for your business. 7. Your system does not match your sector Many business management solutions are still geared towards the manufacturing sector and although you can heavily customise these systems, they still present some problems. The add-ons don’t often translate well to the architecture and engineering service sector and the expensive enhancements and customisations do not interface smoothly with the core platform. To avoid such problems, it is important to select a solution and a platform that is designed specifically for your sector — this will help to reduce cost and reduce the time to ROI realisation. To summarise, your ideal Business Management solution should: •
Make data input quick and easy
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Reduce errors
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Allow other business units to report on project and resource information
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Speed up the reporting process
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Increase accuracy, timeliness and access to financial modelling and forecasting
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Integrate project management with other information for greater business operating transparency
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Use automation and error checking to reduce costly mistakes
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Be specifically designed for the AEC industry sector.
M4D’s new office
In July last year we moved from Southbank to our current location in Melbourne’s CBD. To the first multi-level reinforced concrete building built in Melbourne. The move has since provided us with a great opportunity to grow Management for Design, welcoming new employees and new clients over the past 8 months. The office is brought to life with walls painted in typical Bauhaus colours, paired with patterned hand-woven rugs and an eclectic mix of furniture and accessories. This design is spatially flexible, calm and inspirational, making it not only a great working environment but also the perfect place to host client meetings and events. If you would like to check out the space, we would love to show you around, contact us at info@m4d.com.au to organise a meeting.
READING LIST Key Person of Influence Daniel Priestley Becoming a Key Person of Influence has been written to help business owners, service providers, consultants, freelancers and corporate escapees to do one more important thing: build something they’re proud of.
An Astronaut’s Guide to Life on Earth Chris Hadfield An Astronaut’s Guide to Life on Earth, Col. Hadfield takes readers deep into his years of training and space exploration to show how to make the impossible possible.
Money Tony Robbins Each of us have wished we could master money matters and stop worrying about financial security forever. But for many of us, money remains a bit of a mystery. How can we achieve the financial independence for ourselves and our families that we crave?
Speed: How Leaders Accelerate Successful Execution John Zenger & Joseph Folkman The rapid pace at which change occurs in business today is unprecedented. Speed has become a major source of competitive advantage. Zenger and Folkman reveal eight essential leadership behaviours shown to improve performance and ultimately drive organisational effectiveness.
Harvard Business Review — 10 Must Reads on Leadership Peter F. Drucker An essential read on leadership — go from being a good manager to an extraordinary leader. The book compiles the most important articles on leadership to help you maximise your own and your business’s performance.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Winter 2017
A guide to project-based success
Leadership, efficient business systems and clear goals are the key ingredients to business growth. Great leaders will have a fully rounded 3D perspective of their business; they understand that while clients are important it is equally important to focus on being a great leader. It is about both doing business and running a business. According to the University of Cambridge Judge Business School there are five topics that are vital to the success of any professional service firm. These five topics are: strategy and differentiation, leadership, people management, client service and business development. Key to the success in a growing professional service firm is transparency and action, turning concepts and ideas into specific actions that will improve individual, practice and firm performance. The key signposts for any growing project-based firm must include enterprise resource planning (ERP). You should ensure your ERP system is set up for your project-led business infrastructure. Finding a solution that connects all aspects of the business both front and back end will increase efficiency, decrease confusion and create accurate proposals that turn into projects and invoices.
1.
Project-based firms need a project-based ERP that drives billable capacity and project profitability. An ERP system that best suits professional service firms will avoid complex and costly customisation, enabling quicker growth and immediate tangible value.
2.
Having a completely connected and well-designed planning solution ensures low maintenance, as you will only need to look after the one system. Using a cloud-based solution will further lower maintenance costs as maintenance, upgrades and security is handled by a vendor whose focus is solely on an impenetrable data centre.
3.
You want to find a proven professional services project-based ERP system that is easily adapted. The system should allow you to personalise views, create your own reports and add new workflows as necessary.
4.
Project-based firms are only as good as their leaders. To successfully grow, those leaders need to have three-dimensional vision, the knowledge on how to lead and which paths they should take. Leaders don’t just wear one hat or have one responsibility; they must be unique and strategic, manage employees, manage clients and manage business systems.
M4D networking event with guest speaker Andrew Leoncelli
On Wednesday 21st June, we have the pleasure of hosting our latest networking event — an insider’s view of the Property Market — with guest speaker Andrew Leoncelli. The event will be a great opportunity to join colleagues and business leaders across the architecture, engineering and design sectors to gain insight into the current and predicted property market.
Andrew single-handedly established the Residential Projects business line for CBRE in Victoria in 2010. He has extensive experience working with large listed Australian developer clients as well as some of Asia’s largest residential developers from Singapore, Malaysia and mainland China. Andrew is currently managing a number of Melbourne’s highest profile and exciting residential projects including Australia 108. During the evening, he will share his insights into the procurement process, engaging the design team, the intricacies of collaboration and marketing and delivering the “highest residences in the southern hemisphere”. And what’s planned for the future! Drinks and canapes will be available throughout the night and it is set to be a great evening worth attending. If you have not yet reserved your place and would like to attend, please contact Director, Rob Peake at rpeake@m4d.com.au or call M4D on 03 9645 8834.
Winter Watch
Our selected must-watch video this quarter comes from Gartner Research and explores the world of Project and Resource Planning solutions specific to service firms. The speakers in this video go in depth on the full scope of solutions available and the problems that they solve as well as how they will improve your business performance. It is important to pick the right business management system for your enterprise and be able to use it effectively.
Businesses that effectively use integrated systems across all stages of the business lifecycle have been found to manage resources more effectively and thus improve margins. Stats show that businesses with a clear view of their business end-to-end have 25–30% better margins. Having the right business management system that can be used by both front and back end processes will help to improve productivity in all aspects of the business. By using a cloud based system you can expect 1.7 times the return on investment you would get from an on-premises system. This is because cloud based systems have more rapid and less disruptive upgrades saving money and increasing efficiency. A cloud-based system will also save you 20% on your IT costs, further improving your margins. Business management systems that are industry specific are able to handle vertical business practices and specific processing requirements negating the need for customisation or third party software to fill in the gaps. Regardless of size, all creative businesses can benefit from purpose-built solutions. The visibility they get when framed in the specific industry context gives them a competitive advantage.
Is your business secure in the face of cyber attack? The Australian Cyber Security Centre has reported that 90% of organisations in Australia encountered some form of attempted or successful cyber security compromise during the 2015–2016 financial year. This information combined with the recent global ransomware attacks proves that cyber security should be a priority for all businesses. We’ve created a checklist of the top 10 things you should be doing to protect your business. This short checklist ticks off the main issues you can address right now to keep your business safe. Download the checklist here.
MANAGEMENT FOR DESIGN
Cyber Security Checklist MANAGEMENT FOR DESIGN
Professional Services Benchmarking
Service Performance Insight, a global research, consulting and training organisation, has developed a professional service maturity model as a strategic planning and management framework. The core belief of the professional service maturity model is that professional service organisations achieve success through the development of five service pillars. These pillars are: •
Leadership
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Client relationships
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Human capital alignment
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Service execution
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Finance and operations.
For the past 10 years, Service Performance Insight has been surveying the professional services industries to give key insights into the overall landscape of these industries combined, regionally and individually. The survey is extremely comprehensive, and as such, so are the results. Here are our key takeaways from this year’s survey. Biggest challenge Interestingly for the past few years the top challenge for firms has not remained the same, the latest survey revealed that improving sales and marketing is the biggest challenge. Over the past three years the overall importance of these challenges has risen, reflecting competitive pressures, achieving revenue, maintaining targets and retaining top talent are all becoming more difficult for professional service firms. Many firms have experienced torrid growth and expansion over the past five years and now struggle to keep up as their infrastructure and culture haven’t grown at the same rate.
Biggest wins The results from the client relationships section of the survey revealed that the revenue from new clients was highest in the Asia Pacific region at 37.5%, indicating strong growth. The Asia Pacific region also had the highest bid-to-win ratio, percentage of referenceable clients, solution development effectiveness, service sales effectiveness and service marketing effectiveness. They also had the lowest sales cycle. All of these are good indications that the Asia Pacific market is growing and strong. The survey did however indicate that architecture and engineering firms had the smallest percentage of revenue from new clients but the highest percentage of repeat clients. Employee utilisation Human capital alignment continues to be a major challenge and significant improvement priority for professional services firms. The global economy, changing workforce dynamics and technology, in both our professional and private lives have changed the world of work. 27.5% of consultants now work primarily from home and 4.9% are contingent workers both on and offshore. The survey revealed an extremely strong correlation between employees’ performance indicators and business success, with almost all the best results coming from those working at the most successful firms. Interestingly, architecture and engineering firms had the highest employee billable utilisation. They also have the highest days to recruit and hire standard positions (69.1) but the lowest number of days for a new hire to be productive (41.4). Service execution There are several positive trends that have been observed over the last five years in the service execution section of the survey. The survey found that there is faster staffing, greater use of a structured delivery methodology, better on-time service delivery, fewer project cancellations and cost overruns. All of this has led to higher project margins. While this is all very positive, it was also found that the average price per project went down significantly, meaning it now takes more projects to maintain and grow annual revenue. Finance and Operations Service Performance Insight’s 2016 survey of professional service firm’s finances and operations revealed that architecture and engineering firms achieved 94% of their annual targets and 87% of their annual margin targets. They also had the most days of sales outstanding at 60 days, which is 20 more than most other service firms. The survey also found that architects and engineers have improved their profits year on year, they have also increased their revenue growth. However architects have reported the second highest level of general and administrative overhead, accounting for 17.1% of all their expenses. Contact us to discuss the survey results and see how your business measures up.
Consult Australia ASPAC Leaders Conference M4D Directors Rob Peake and Gordana Milosevska attended the Consult Australia ASPAC leaders conference from the 3–5 May. The conference provided them with a unique opportunity to network, debate and discuss relevant topics and issues with their peers from 25 different countries in the Asia-Pacific region. Over the three days they heard from nearly 50 speakers on topics ranging from succession planning, to the political outlook, to mental health in the workplace.
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Succession: Charles Nelson told us that an exit strategy takes 10 years, so start planning! Look carefully at the levers affecting valuation of your business and invest in capital assets to increase value.
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Cyber security: before the world was hit by the recent ransomware attacks, Aptify, a software technology & services company were already telling us that we need more secure passwords, restrictions on system admins, tested disaster recovery plans, and cyber insurance.
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Mental health: speaker Karmal Sharma, Director of Rezilium and an RUOK ambassador, spoke about mental health becoming a growing issue in Australian workplaces. He believes that as we are in the business of people, it is important we are all able to improve our awareness of and response to mental health. In another session, Mental Health Commissioner Lucy Brogden, outlined the five key areas workplaces need to address: »»
smarter workplace design
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promoting and facilitating early support and intervention
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building a positive organisational resilience
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supporting recovery
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the awareness of mental illness and reducing stigma.
Consult Australia
Key messages
Consult Australia
(From left to right) Peter Geoghegan, Founder, Geotron Consulting Engineers; Gordana Milosevska, Director & Owner, Management for Design; Megan Motto, CEO, Consult Australia and Arthur Psaltis, Managing Director, Pritchard Francis. •
Technological disruption: AutoDesk discussed the severe lack of expenditure on R&D by architecture, engineering and construction firms. 30% of revenue at AutoCAD is spent on R&D, yet the rest of us are averaging 1%. With 65% of primary school students growing up into jobs that don’t exist yet it is important that AEC and creative businesses invest more to protect their businesses in the future.
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Economic outlook: Hardy Dale, Chief Economist at the HIA presented insights into the economic outlook. While the global economy is unpredictable in the face of Brexit and Trump, and the tide is turning for the Australian construction industry, there are opportunities. New South Wales and Victoria are all about population growth and will continue to grow for at the least the next 4–5 years. There is a huge amount of government investment in infrastructure. Architecture firms can look forward to an increase in the need for commercial and retail developments as well as entertainment and recreation buildings — there’s a shortage of hotels in Melbourne, for example!
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Gender equality: it was pointed out (again) just how unequal the male to female ratio is in engineering, architecture and associated professions. Currently out of all engineering graduates only 16% are female and only 12.4% of the engineering workforce are female. The ratio is better for architects, with 41% of graduates being female, yet only 21% of the workforce is female. On the day there was a significant proportion of businesses believing that this is an issue that needs to be addressed and are actively trying to advance equality across their businesses.
The conference had such a wide range of speakers and topics, overall the event was incredibly insightful and a great way to meet other key players in the industry.
READING LIST Fast Future John Doehring Over the next 25 years, grand-scale, “uber” change will profoundly transform virtually everything in our world. Amazing opportunities lie ahead for forward thinking and agile organisations, while killer threats await those unprepared or unwilling to change.
Your Unbeatable Business Louis Dharma Your Unbeatable Business is essential reading for every entrepreneur and business to thrive in this new hypercompetitive world marketplace. Listen to EVERYTHING Louis Dharma has to say as if your business depended on it, because it does. The world needs people to lead the way in our rapidly changing world.
Business Growth Manifesto Louis Dharma Do you want to create exponential growth in your business & leave your competition in your dust? This book includes the “magic” ratio you can use to grow ANY Business, the six policies to growth hack your business and explains how to double your business & crush your competition in the fastest time humanely possible.
Project Management in the Real World Elizabeth Harrin This highly accessible guide summarises over 250 years of experience from professional project managers. It contains a wealth of knowledge that can be applied in a short period of time and contains theory, international case studies and hints and tips on controlling budget, time, scope and people.
The Elegant Universe Brian Greene Brian Greene, one of the world’s leading string theorists, peels away layers of mystery to reveal a universe that consists of eleven dimensions, where the fabric of space tears and repairs itself, and all matter — from the smallest quarks to the most gargantuan supernovas — is generated by the vibrations of microscopically tiny loops of energy.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
WHAT’S NEW
MANAGEMENT FOR DESIGN Spring 2017
Strategy, leadership and where it all goes wrong
In many businesses strategy is often confused with operations, resulting in a lack of alignment between strategy and execution. Furthermore, strategy and leadership are frequently viewed and discussed as very separate concepts that exist in independent, distinct places. Just think about books you may have read on these subjects over the past few years. They are all about either strategy or leadership, but never about both or about the relationship between the two that is a necessity for a business to succeed. In reality, you can’t have one without the other. In our experience, business strategy gets set and the leaders rely on others to execute most of the time. There are several reasons why this ends up happening, but, for strategy to work and to be accepted throughout a business, it needs to be executed by those at the top. The issue here is that most employees in any business have other things they are working on and unless strategic change is modelled clearly then most people will just continue working on what they were already doing and no real change occurs. It is up the leaders to set an example and drive change.
Execution of a business strategy is the most valuable part of the strategic process. Execution is about how you deliver and create value. The problems with execution eventuate when there are vacuums around strategy communication and priority. Employees will always focus on their own ‘urgent’ task list that may not comprise true priorities for business leaders. In these instances, strategy clearly isn’t filtering down. Here are a few ways to improve business strategy: 1.
Consider how you will execute before you commence
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Have a clear understanding of why you are doing it and the impact it will have
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Understand where the pain points and challenges are
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Communicate the strategy throughout the business
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Make sure priorities are set with timeframes
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Your strategy needs to excite
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Keep communication open, keep talking about it
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Update the strategy as you go — keep it current
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Utilise available information and data
10. Don’t withhold information down the chain. Remember that business strategy is more than just a plan that sits in your desk drawer. It is an ever-evolving element of your business that needs to be nurtured and nourished.
How does your financial management measure up? Management for Design recently conducted a study with business leaders in the AEC and creative sectors to review how well their finances are managed. The results provide insights into how other firms are tracking and provide some benchmarks against which you can measure your own financial management success.
Our findings indicate that: •
50% of respondents have a positive, yet inconsistent cash flow
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25% of respondents have budgets but they don’t really adhere to them
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25% of respondents regularly review their balance sheet ratios and use them in their decision making
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12.5% of respondents have no project costing system in place
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50% of respondents do not know their project specific profit margins
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25% of respondents said their financial data is not easy to interpret and doesn’t add value to their business.
As a business leader, ensuring your financial data is consistently updated, tracked and analysed makes a dramatic difference to the value it can bring to your business. If finances are not consistently managed, it can quickly become difficult to stay in control of your cash flow, financial position, balance sheets, budgets, future forecasting and resources. Reviewing information on a regular basis and making sure it is set out in a way that is easy to interpret is essential to making effective and informed decisions about the future growth and success of your business. Having an effective project costing system also allows you to differentiate between direct and indirect labour costs on a project by project basis — ultimately assisting business leaders to make changes in the workplace where necessary to maximise profits.
While finance isn’t the heart of your business, it is the blood that flows through every part of it. Having full control of your finances makes all the difference in the success of your business. Don’t let your finances get lost among the day to day operation of your business — take the reins and set up processes that make it easy to manage your cash flow, set up budgets and accurately forecast to maximise your future success.
Deltek Insight
We are looking forward to attending the annual Deltek Insight conference in Nashville from the 23–27 October with some of our clients. We’ll be investigating, learning and interrogating the Deltek developments and collecting as many insights as we can to maximise our solutions and to use the systems to the best possible advantage. We’ll no doubt have a lot of useful information to share on our return and will be able to pass this on to our clients using the Deltek platform.
The networking opportunities are always terrific at the Deltek conference and we’re looking forward to making the most of our time there to collaborate with like-minded businesses and other users. This year’s keynote speaker is Mike Rayburn, an inspirational speaker, author, comedian and world-class guitarist. He will be drawing on his experience as a successful entrepreneur to discuss increasing profitability and impact by inspiring teams to lead by creating change. Alongside what is sure to be a great keynote speaker there are many expert-led breakout sessions that we are looking forward to attending. Be sure to watch this space to hear about our highlights from the trip.
M4D Business Conditions Survey Each year Management for Design conducts a Business Conditions Survey. The aim of this survey is to assess the prevailing economic and business climate and to drive thinking and decision making. In turn, the results assist businesses to work through current circumstances and deliver sustainable growth. This year’s Business Conditions Survey will be available to you soon. We are creating the survey now so keep an eye on your inbox this September for this year’s survey — coming soon.
Get more out of your business
Are you getting the most out of your people and your business systems? To ensure your business is running effectively you must first optimise the key levers that allow people to do their work efficiently and productively. Without properly functioning systems you will not be maximising their potential and the value your systems can bring to your business and people. It is no easy task to run a business, so make it easier for yourself and your employees by ensuring your systems are finely tuned to be the best they can possibly be. Here are some quick tips to optimise your workplace. Keep your employees up to date: Bringing in new systems and software to increase productivity is all well and good but unless your employees receive adequate and effective training in how to use them you won’t reap all the benefits. The more your employees know and understand the systems and software you use, the less likely they will be to make serious mistakes. Properly understanding the systems and software will also increase their productivity and job satisfaction. A lack of understanding of systems and software can easily lead to employee frustration and low morale. This is especially important for new employees — you must ensure that they all receive the appropriate training and feel that they understand how things work in their unique environment. Keep your systems tuned up: Maintaining continually high productivity requires not just setting up your systems and letting them go, but also setting up regular updates to ensure they are functioning at maximum effectiveness. Updating your systems allows them to be more likely to cope with newer software and technology to keep your business moving forward.
Internet Speed: As your team and client base grow the speed of your internet service will become increasingly important. Every time an extra person logs on to your internet service the bandwidth decreases for everyone else. You need to ultimately make sure all your people can gain access when they need it, without concerning themselves with capacity issues. If your office spans a large space, WI-FI extenders can benefit to boost the signal in weaker areas. When all your employees have adequate internet access and speed their productivity will increase dramatically.
M4D Business Systems Survey There are a myriad of Business Management Systems available to businesses and the industry to manage your finances, projects, clients and documents. Yet there is minimal information describing the effectiveness of these systems and minimal expert assistance about making the right choice for you and your business. We recently conducted an important Business Systems review of professional services businesses in partnership with the Association of Consulting Architects Australia. This review was conducted to assess the use and effectiveness of the various business systems across the Architecture, Engineering and Consultants industry. Having now collated the data it is interesting to analyse which systems are the most effectively used in running AEC businesses. For instance, a staggering 64% of respondents don’t use a CRM (Client Relationship Management) system at all. CRM systems help you to keep track of all your customers, leads and contacts as well as all interactions with clients from everyone in the business. Having such information helps anyone new to the client, while also providing a communication history to draw upon to enhance client experiences. In accounting, our results show that the most commonly used accounting system was MYOB. Xero, however, was shown to be more effectively used — 45% of users finding it a very effective accounting system compared with MYOB’s 20%. Similarly, for all business systems the most commonly used was not necessarily the most effective.
Here is a snapshot of the most used vs most effective business systems: System Accounting Resource management CRM
Most used MYOB MS excel MS outlook
Most effective Xero MS project Union Square
If you would like a review of your business systems and information on how you can use them more effectively contact Callum Bruce, Head of Business Systems at CBruce@m4d.com.au.
An Insiders View of the Property Market We recently hosted a networking event at the Management for Design office here in Melbourne — An insider’s view of the property market. We were very fortunate to be joined by our guest speaker Andrew Leoncelli, industry leading Victorian Managing Director of CBRE. Andrew is currently managing several of Melbourne’s highest profile and exciting residential projects including Australia 108. An industry leading, highly capable professional, he single-handedly established the Residential Projects business for CBRE in Victoria in 2010. Andrew has extensive experience with several large listed domestic developer clients as well as some of Asia’s largest residential developers from Singapore, Malaysia and mainland China.
Gordana Milosevska, Director of Management for Design.
Andrew Leoncelli, industry leading Victorian Managing Director of CBRE. During the evening, Andrew shared his insights into the procurement process, engaging the design team, the intricacies of collaboration and marketing, and delivering the “highest residences in the southern hemisphere” — not forgetting what’s planned! We walked away with a greater understanding of the current and predicted property markets. Andrew covered the relationship between migration patterns in Victoria and the average house price as well as the key drivers for international interest in Melbourne property. Tellingly, 11 years ago there were only 5 suburbs in Melbourne with a median house price over $1 million and as of 2016 there were 102 suburbs with a median house price over $1 million. It was great to see this comparison drawn so clearly, to visualise just how much the property landscape has changed in a very brief period and how that growth is driving demand for more affordable housing alternatives such as apartments and town houses. It was also interesting to hear about Andrew’s work with Australia 108, the highest residency building in the southern hemisphere. With Melbourne being consistently voted the world’s most liveable city, massive population growth that is set to outstrip Sydney by 2030, increased availability of alternative housing plus stamp duty benefits, it’s easy to see why Melbourne is an attractive market to buy into for a range of buyers at various stages in their lives. The event proved to be a wonderful opportunity for us to meet and mingle with colleagues and business leaders across the architecture, engineering and design sectors. Our Director Rob Peake also gave a presentation on business performance in the AEC industry, giving our guests a guide to benchmark their performance in several aspects of their business. If you would like to receive an insight into the presentation please contact Rob on RPeake@m4d.com.au.
READING LIST Beyond Harvard Mark H. McCormack The publication of What They Don’t Teach You at Harvard Business School in 1984 introduced the world to the Mark H. McCormack street smart, nuggets of wisdom offering accessible insights into how to get ahead in the real world of business.
Outliers Malcolm Gladwell In this stunning new book, Malcolm Gladwell takes us on an intellectual journey through the world of “outliers” — the best and the brightest, the most famous and the most successful. He asks the question: “what makes high-achievers different?”
Grit Angela Duckworth In this instant New York Times best-seller, pioneering psychologist Angela Duckworth shows anyone striving to succeed — be it parents, students, educators, athletes, or business people — that the secret to outstanding achievement is not talent but a special blend of passion and persistence she calls “grit.”
Thinking, Fast and Slow Daniel Kahneman In the international best-seller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a ground breaking tour of the mind and explains the two systems that drive the way we think.
Tools of Titans Tim Ferriss For the last two years, Tim has interviewed more than 200 world-class performers for his podcast, The Tim Ferriss Show. The guests range from super celebs (Jamie Foxx, Arnold Schwarzenegger, etc.) and athletes (icons of power lifting, gymnastics, surfing, etc.) to legendary Special Operations commanders and black-market biochemists.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
MANAGEMENT FOR DESIGN
Summer 2018 Release
Should You Merge Your Business? Probably! Robert Peake, Director, Management For Design
In Australia there are approximately 10,800 architecture, engineering, planning and related consultant and design businesses*. Of these: ■■ 60% of practices have less than 5 people ■■ 80% of practices have less than 10 people ■■ 90% of practices have less than 20 people This is just under 10,000 businesses who have a heavy reliance on the principals to bring in the clients, recruit and manage the people, design and deliver projects and control the finances. Ultimately, it doesn’t leave a lot of headspace, time or capacity to build and grow the practice. It also doesn’t allow much time to deal with success and the increasing risks that result from demanding contract conditions, finding and retaining the right people, lower fees, investment needs, and the changes in an increasingly global economy. *Australian Bureau of Statistics Professional Service Businesses 2016.
The benefits of merging Merging—the coming together of two businesses and becoming a new business—is an increasing trend worldwide, an approach that Australia is slow to embrace. In our region, we are a long way behind what’s happening in other parts of the world—in particular, Asia and the US. In the past six years alone, approximately 600 architecture and engineering firms have been either sold or merged in the US. It is clear that the total number of architects, engineers and designers in Australia far exceeds the commercial demand for services. There are too many businesses competing for a diminishing service in an increasingly competitive market place. The number one concern for AEC leaders is the diminution of fees and services — the consequence of high and increasing competition for clients and projects from a myriad of sources. This includes other professions, the construction sector, the impact of technology and the forces of globalisation. The advantages of merging /combining your business in today’s increasingly competitive and oversupplied market place include: ■■ Increasing the client base ■■ Stronger and more talented leadership ■■ Increasing your skill base ■■ Increasing productivity ■■ Economies of scale ■■ Increasing the capacity to invest in technology, innovation and systems ■■ Building scale to engage experts in business ■■ Improving the firm’s competitive position ■■ Expansion into other geographic regions ■■ Adding new practice areas ■■ Greater capacity to devolve and spread the client relationships ■■ Diversification of work to mitigate the risk ■■ Sharing the workload and improving work / life balance ■■ Increasing your influence in the marketplace ■■ Succession and exit strategy.
The downsides AEC businesses, in particular, are different to most in that each has a clear identity, a distinctive design proposition and unique culture. Merging with another company and maintaining that uniqueness is ultimately seen to be especially difficult to overcome for many AEC business leaders. Below are a few of the primary reasons that Management for Design regularly confronts with businesses who are hesitant to merge: 1. Leaders not wanting to lose control of design and clients 2. Lack of outside trusted advisors — “who do I go to?” 3. Answering and being accountable to others 4. Inability to step away from the day to day 5. Not knowing where to start and how to go about it 6. Not knowing potential partners / targets 7. Culture of independence and freedom.
Learn more To find out more about he pros and cons of merging—and how you can make it work for your business—make sure you read our recent two part Business Journal series in full.
Read Part 1 | Read Part 2
Management for Design has developed a unique approach to executing an approach to developing and executing a merger strategy that, if implemented, effectively ensures alignment of strategy, brand, aspiration and results. At the core is a methodology and system to ensure successful execution that involves the key people in the business. For more information, contact Rob Peake on rpeake@m4d.com.au.
12 Reasons Why Architects, Engineers And Designers Underperform Financially Robert Peake, Director, Management For Design
12 Reasons Many Architects And Engineers Underperform Financially 1
Minimal business management expertise
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Lack of accountability
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Low expectations
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Focus is design outcomes and not business outcomes
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Managing the design process
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Poor project and resource management
MANAGEME
Focus O You Do B
Managemen strategic, fin managemen maximise th architects, d engineers an professional Most leaders that are elevated to senior roles don’t have the necessary business management expertise.
Lack of accountability can and does occur at all levels of an underachieving business.
If mediocrity is the goal—you will probably succeed.
We get it, it’s why you went into business, but that shouldn’t be the main reason and its bringing down the profession!
Most practices don’t have and adhere to a process, system or people for managing the design process.
As this is the key to sustainable business profitability one would think that most firms have this under control. Not so, unfortunately.
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9
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Not handling scope creep
Lack of strategic planning and execution
Taking too long to elevate your key people
Tertiary education not matching the skills required
It’s not the people
Not reinvesting in the business
By helping yo practice effic you to plan e your time to best — build creating grea Our team ca everyday bus functions, fro accounting, information human resou
Over and abo strategic ins developmen succession, benchmarkin positioning.
Scope creep is often considered part and parcel of servicing the client—not additional to the service that was originally agreed to.
Our research shows that up to 70% of design businesses do minimal or no strategic planning.
This leads to great people moving on to other opportunities or establishing their own practice.
There’s more focus on design, idea creation and technology and less on what’s required for a successful and rewarding career.
Without the right leadership, culture and systems in place; it’s pointless bemoaning people’s lack of capability.
It’s not the time for taking profits out—you should be allocating a third of the profits for reinvestment in your business.
03 9645 8834 | INFO@M4D.COM.AU | M4D.COM.AU | LEVEL 4, 18 OLIVER LANE, MELBOURNE 3000, AUSTRALIA
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Get in touch can give you what you do
© Copyright 2018 MA
1. Minimal business management expertise Most architecture, engineering and design (AED) leaders that are elevated to senior roles or directors positions don’t have the necessary business management expertise to manage, direct and drive a successful business that performs across the key business drivers of design, rainmaking, project delivery, people performance, strategy, innovation and financial management. Not only that—they don’t have a plan to gain this expertise, other than on the job training, or just surrounding themselves with this expertise.
2. Lack of Accountability Lack of accountability can and does occur at all levels of an underachieving business. Whether it’s partner to partner, partner to project leader, or project leader to the team—seldom are people held accountable for missing deadlines, unproductive work, rework or over budget projects.
3. Low expectations “If mediocrity is the goal you will probably succeed”. Expectations of business performance are often set far too low—and people do their best to barely achieve them. Most architects and engineers underperform financially, and seriously underestimate their capability and potential. They’re prepared to accept the status quo and not focus on innovation and performance improvement.
4. Priority, focus and effort is on design outcomes—not business outcomes We get it, it’s why you got into this business—to produce great work and be recognised for it. But that shouldn’t be your main reason, plus it’s bringing down the profession! What about building a great business, making an impact in the industry, and changing the way you work and your role in the project.
5. Managing the Design process Do you have a process, system or people in place for managing the design process /stage? Probably not, or if so, the process is more than likely unsophisticated and/or not adhered to. Considering that a clear, resolved design and central idea is the foundation for the on-going performance of a project, it would be expected that most businesses should have this under control.
6. Poor Project and Resource Management As project and resource management is the key to successful and sustainable business profitability, you would think that most firms have this under control... not so, unfortunately. There is downward pressure on pricing, and businesses are competing with a higher emphasis on attractive price rather than increased value. Yet, as well intentioned as these strategies are, these initiatives have made it even more challenging for firms to deliver projects profitably. Management For Design is often astounded by the lack of thorough and integrated systems in practice for managing resources and projects across the studio (i.e. a plan of work, what’s completed, what’s still to be done, who is working on what when, who is available, who is utilised and underutilised and what are resource requirements moving forward).
7. Not handling scope creep Scope creep for architects and engineers is typically considered part and parcel of servicing the client—and not additional to the service that was originally agreed upon. This often stems from the leadership, where the performance drive is design outcomes and not business outcomes. Lack of clarity around the service, a culture of over-servicing and lack of systems to manage scope are prevalent in an underperforming business.
8. Lack of Strategic Planning and Execution It’s no secret that many design-focussed businesses are superficial in their planning—concentrating on the design, fees, schedules, and day-to-day deliverables, rather than defining exciting, attainable objectives for the future that will motivate the key people and lead to high achievement. The strategic plan for many firms could be summed up as: a. Bring in as much work as we can b. Do our best to create a great design and satisfy the client c. Hope that we make some money Management For Design research shows that up to 70% of design businesses do minimal or no strategic planning. Of the remaining 30%, only one in three achieve clear and sustainable change in their business that leads to new markets, new locations, new client sectors, new design approaches, new ways of working, or improved leadership.
9. Taking too long to elevate your key people Decision making at the top is how most architects and engineers operate— across design, people, innovation, and finance. This tends to mean that key people are not involved in, or exposed to the key business decisions. It’s then difficult to proactively elevate the great people in the business. Procrastination rules! Often, this leads to great people moving on to other opportunities, or establishing their own businesses—and we don’t need more architect and engineering businesses, we need better!
10. Tertiary education is not delivering the skills required What’s happening in the tertiary education of architects, engineers and designers? There’s am increasing focus and emphasis on design, idea creation and technology, and less and less on what is required to have a successful and well rewarded career. When more and more of the required education is being left to businesses, is it any wonder why graduate salaries are so pitiful
compared to other professions? It’s difficult to see when this boat will be turned around.
11. It’s not the people Most of your people will actually have minimal impact on your business performance. Without the right leadership, culture and systems in place, it’s pointless bemoaning the lack of capability of your team.
12. Not reinvesting in the business We are currently operating in a buoyant economic environment – there’s more than enough work to enhance our built environment. Many successful businesses are delivering exceptional financial performance. This is the time to be reinvesting profits in mergers and acquisitions, investing in needed technology / systems, leadership, innovation and new ways of operating. It’s not the time for all the profits to be taken out of the business for the benefit of the owners or to pay taxation. Today, businesses should be allocating a third of the profits for reinvestment in the business.
If you liked this article, make sure to look at and share our 12 reasons why architects, engineers and designers underperform financially infographic here.
Do You Know Your Numbers? Gordana Milosevska, CPA, Director, Management For Design Are you an expert in business financials? As business leaders you are confronted with a myriad of financial information about your business — your income, your expenses, your profit margin, cash position and project performance. And that’s only the start! Your role as a leader is to regularly absorb this information and to make decisions in a timely manner. These executive decisions can then be converted into activities to be completed by your team. Your accountants and finance people then report these activities in a numerical way to produce your business report card. This will most likely be in the form of an income statement, a balance sheet and most importantly a cashflow statement.
You then turn to your Chief Financial Officer (CFO) to decipher and inform you about these numbers. That is, if you have a CFO! The role of your CFO is to describe back to you the financial impact of the decisions and associated activities that caused the numbers in the first place. The numbers are always a reflection of the decisions made and/or not made. So doesn’t it stand to reason that if we want to change the numbers we simply need to change the activities that caused the numbers? Where are your numbers today and where do you want them to be at the end of the year? How do you drive your business to succeed and deliver the outcomes that you are seeking?
5 steps to business success 1. Know your numbers The language of business is accounting. How do you know where you need to go if you don’t know where you are? 2. Set your KPIs Are you measuring your day-to-day activities? Have you set targets that align with your strategic plan? Analyse your data and select relevant metrics to help you define business success. For example, do you know your debtors days? This KPI has a direct impact on your cashflow and should be measured monthly. Do you know your % of technical salaries to fees? This is another valuable measure to use to keep your business in check. 3. Measure, measure, measure Management guru Peter Drucker is often quoted as saying that “you can’t manage what you can’t measure.” What gets measured is what gets done. If you are not measuring it you are not managing your business effectively. 4. Compare/benchmark You need to compare to how you are tracking year in year out as well as comparing your results with those of appropriate peers — that is, firms that are similar in size and business model to your own. 5. Take the right action — create change Of course, knowledge without action won’t benefit your business. You’ve got to use the information you gather to make smart strategic moves that will enhance your success.
Outsourcing your CFO The quality of your decision-making has a direct impact on the performance of your business. To make good decisions and outperform the competition you need the right information at your fingertips. An experienced and expert CFO can bring significant value to your business and ensure that you are set on and continue the path to success. And you don’t need to employ this role on a fulltime permanent basis. By supercharging your accounts, your CFO will become your trusted business advisor and empower the business leaders to see the big picture that impact at a micro and macro scale to protect and accelerate the company. Business analysis and decisions are able to be made with more confidence giving your firm the advantage over the competition. Outsourcing your CFO provides many business advantages, including: ■■ Business leaders are able to focus on core business activities and strategies to remain competitive ■■ Access high level technical resources ■■ Continuity of service, knowledge and financial management ensuring your business never misses a beat ■■ Cost savings for larger firms and affordability for smaller firms for whom a CFO was previously a prohibitive expense ■■ Independent and objective advice — no-one is protecting their job ■■ Data-driven analysis to guide decision-making any time and anywhere ■■ Certainty regarding up-to-date commercial and financial knowledge ■■ Tailored budgeting to ensure your profits are reinvested where they will have maximum impact for people and infrastructure
■■ Total confidentiality of client records ■■ Knowing where your business stands financially at any given time
In an environment where every dollar has a place and a purpose, outsourced your financial expertise to an experienced and expert Chief Financial Officer will enable your business to cohesively manage its bottom line. This will free you up to take the lead in your core of your business with the knowledge your finances are in safe hands.
Technology And Architecture, Engineering, and Design: Where Is It Heading? Dinesh Rajalingam, Head of Information Technology, Management For Design The advancement of technology is happening at an increasing pace, and as new tools and technologies are developed and released, they leave a wake of change behind them—with the potential to revolutionise the way we work in the industry. With this in mind, let’s look at some of the technology trends that will shape the way architects, engineers and designers will work into the future.
The Internet of Things (IoT) This is not recent technology—it’s has been around for some time, in many things that we use daily. The swipe card you use to access your work, security sensors in the parking garage, or temperature sensors throughout a building. Experts estimate that the IoT will consist of about 30 billion objects by 2020. How will this impact designers? The biggest change in this space is being witnessed in the retail and work space, and around connected homes, influencing the way people interact with the buildings and spaces they will occupy. Future designers will have to consider how to ensure buildings, spaces and the built environment will customise a solution for each occupant and individual. Buildings of the future will use facial recognition to identify an authorised person, unlock doors, adjust the lights and temperature to an individual’s preferences, and even connect with the coffee machine to have their choice ready and waiting by the time it takes the individual to move from one part of the building to the next. With a possibility space this diverse, buildings and spaces will use some form of digital solution to access, monitor, maintain and maximise the operation of all any facilities. These will include:
■■ Cladding, windows, or sun protection and weather protection that will selfadjust dependant on the level of sunlight. Not only that they will operate in conjunction with the heating/cooling system to ensure optimal conditions. ■■ Automation of waste handling and recycling – all syncing with third party contractors. ■■ Meeting rooms that turn glass walls opaque, for private meetings or turn walls into multi-purpose e.g. whiteboards, projectors, monitors, screens and interchangeable artwork.
AI and machine Learning Artificial intelligence (AI) and machine learning have been branching out into our everyday lives more and more in recent years. As systems improve and the reliability of their results increase, these tools will be increasingly integrated into the design process, with the power to solve complex problems and the ability to create many variations. All replacing, enhancing or replicating what was historically the domain of the “designer’. Through AI and machine learning, you’ll be able to fully unleash the power of your expensive design PC and software solutions. Using Big Data, parameters and constraints to empower the software to come up with many design variations far faster than any designer could. The underlying method is that the design is done via code—this is important because once you are happy with a design, that code can be codified, stored, repeated and altered – all making the design process far more comprehensive but also efficient.
Immersive Architecture (Virtual Reality, Augmented Reality and Mixed Reality) While the hardware and technology are still a bit too new to be truly useful in the actual design process, it is mature enough to impact the presentation and bid stages. Imagine walking into a presentation with a prospective client, passing the competing firm, as they exit with arms full of A3 printouts, USB keys etc. As you enter, you set down (a suitably powerful) laptop and pull out a pair of googles. You instantly have everyone’s attention. You can then talk your client through the design while they walk through the building and see the details from a first-person perspective. No prizes for guessing who gets the gig! In the future this concept could stretch to remote presentations, where you could meet your client within the virtual building, even if their office is on the other side of the world.
Robotics and 3D Printing While this may not have a direct impact on designers, it will change the way construction is done in the future. Robots will become smaller and faster, with embedded AI allowing for a degree of self-correction and autonomy. 3D printing will also get more robust, with a larger range of base materials available to be printed. In the future - your next home might even be 3D printed. And while it may sound a bit farfetched, it’s already happening here in Australia. Australian company, Fastbrick Robotics has a developed a prototype for a fully
automated robot (Hadrian X) for building houses using 3D printed bricks. The bricks are printed with channels for plumbing, electrical and other infrastructure, therefore drastically cutting down the time it takes to build a house.
Adoption of BIM The BIM (Building Information Model) is based on several principles that can be implemented with relative independence: ■■ Projects are designed using a unique 3D model which is modified throughout the project’s life. ■■ This 3D model is not only the volumetric surfaces, but also has metadata attached (like the material of the element) and parametric modifiers (like the height of a wall). ■■ The 3D model can be stored in a multi-client database, as well as in the cloud, to be accessible at the same time by several people. ■■ Multi-user permissions on the model can be defined to accurately reflect team member’s individual responsibilities on the project. ■■ All construction elements are classified using standard categories, namely the IFC. ■■ Libraries of construction products can be inserted into the model, and can even get actualisation if the product version changes. While these aspects are promising, adopting BIM design practices may create tensions with members of the construction team, who have historically been hesitant towards the shift. As the adoption of BIM grows, it’s looking likely it will be the mainstream tool to design and deliver architecture in the coming years and it presents an historic opportunity for Architects to lead and drive its adoption, working with the other design consultants to “encourage” the construction industry towards its use.
Conclusion Despite the increasingly fast pace of change of technology, there is no one trend that’s more valuable or dominant above the other. It’s crucial that business leaders, architects, engineers and designers take a holistic look to the horizon regarding how all these trends will fit within their own business.
When considering trends like the IoT, AI and Machine Learning, the industry need to understand how these elements will change the way design is performed, and their work is delivered, ensuring they are part of and lead the conversation from the start and are not tacked on at the end. Those who invest early in key technologies, and embed them within their workflow and processes, will without doubt benefit in the next 3-5 years, as these trends become more mainstream.
Apple Global Flagship Federation Square
A proposed Apple global flagship in Melbourne’s Federation Square has ignited debate over the commercialisation (and Americanisation) of public space. In December 2017, Apple and The Victorian Government announced plans for the store, designed by UK Architects Foster + Partners, to be situated on the current site of the Yarra Building, over looking the Yarra River. Approval of the plan was granted to Apple by Planning Minister Richard Wynne, however this happened without any public involvement or comment. Vanessa Bird, president of the Victorian chapter of the Australian Institute of Architects, argues that a detailed masterplan is sorely needed to ensure proposed changes to Melbourne’s Federation Square are successful. “Without due process we can’t conclude that we have achieved the right solution.”
Additionally, a grass roots organisation, Citizens for Melbourne, has formed and launched the Our City Our Square campaign, which “demands Fed Square remains Melbourne’s civic square, preventing its corporatisation by Apple.” The public debate looks to continue in the coming weeks. A motion to block the development will be tabled by the Victorian Greens in late February, with the support of City of Melbourne Council. To read Vanessa’s discourse in full, on ArchitertureAU click here, or to keep up with the work of Our City Our Square click here.
M4D Business Conditions Survey M4D recently released the results of our annual Business Conditions Survey, a survey that benchmarks real business conditions and analyses predicted outcomes for firms in the design and architecture industry. The good news is current conditions are very favourable for Australian businesses in the Architecture, Engineering and Built Environment Sector, according to our recent Business Conditions Survey, in association with Consult Australia. ■■ Increases in revenue and profitability drive business conditions higher ■■ Leading indicators, including forward revenue projections, point to minimal softening in the year ahead ■■ Employment continues to be solid but is constrained by the ability to find and keep talented and experienced people
HOW MUCH DO YOU EXPECT REVENUE TO GROW / REDUCE BY IN THE NEXT 12 MONTHS?
16% 17%
More than 40% Between 20-40% Between 5-20% Less than 5% We don’t expect growth Reduce between 0-5%
55%
Reduce between 5-20%
What are the major issues facing Australian businesses in 2018? Key points from the recent Management For Design Business Conditions Survey: ■■ Almost 90% of respondents expect their business to continue to grow over next 12 months ■■ 30% of respondents are very optimistic that business performance will improve over the next 3 years ■■ Nearly 20% of businesses are expecting exceptional growth of more than 20% in the next year ■■ Refining business operations and improving leadership capability will be the key drivers of improving business performance To read the complete report please click here.
Australia Has Too Many Small Design Firms - M4D In The Media Andrew Heaton, Sub-Editor, Sourcable
Back in the 1990s, then-Victorian Premier Jeff Kennett encouraged young people in that state to follow a dream of starting their own business. In design, many have done that. Indeed, 2016 data from the ABS shows that there are around 10,800 businesses which operate in the architecture, engineering, planning or related consultant and design sector.
Nevertheless, many of these remain small. According to the data, approximately 60 per cent have fewer than five people, whilst 80 per cent have fewer than 10 people and 90 per cent have fewer than 20 people. That, Management for Design (M4D) managing director Robert Peake said, is a problem. In a recent edition of his firm’s Business Journal, Peake wrote that the design sector in Australia has been slow to embrace a growing international trend toward mergers and acquisitions. In the past six years alone, that journal noted, around 600 architecture and engineering firms had merged in the US. As a result, Peake wrote, the number of architects, engineers and designers in Australia “far exceeds the commercial demand for services” and there are “too many businesses competing for a diminishing service in an increasingly competitive marketplace.” Read the full article on Sourcable here.
New M4D Team Members We’re happy to welcome two new systems analysts to the M4D team, Learnie Apiado and Gavin Varley. With a background in programming, Learnie has over 15 years experience working as a programmer analyst, bridging the role of programmer and system analyst. Learnie now provides our clients with comprehensive support, ensuring they’re confident in using, and able to take full advantage of their integrated systems.
Gavin has over ten years’ experience working in IT, defence and finance systems. As an active member of our Business Systems team, he helps clients with their ERP needs and problems; while assisting clients that use XERO, Vision ERP and other integrations to enhance their design and engineering businesses.
We’re also pleased to welcome Dave Clark, in a newly created Communications Manager role. With over ten years’ experience, working in design, communications and marketing, Dave has joined the business to oversee all M4D content, helping to shape the future of our dialogue with the architecture, engineering and design community, while building on our strong foundation of surveys, reports, journals, articles, and newsletters.
Reading List What They Still Don’t Teach You At Harvard Business School Mark H. McCormack A straight-talking must-read of powerful strategies for every executive headed for the top. Written in the same no-nonsense, hard-hitting manner that McCormack brings to his own fast-paced business and management style, this is mandatory reading for executives on every rung of the corporate ladder.
Just Start Leonard A. Schlesinger & Charles F. Kiefer with Paul B. Brown In a world where you can no longer plan or predict your way to success, how can you achieve your most important goals? It’s a daunting question. But in today’s environment, where change is the only constant, it’s a question everyone must answer.
Start with Why Simon Sinek In 2009, Simon Sinek started a movement to help people become more inspired at work, and in turn inspire their colleagues and customers. Since then, millions have been touched by the power of his ideas, including more than 28 million who’ve watched his TED Talk.
Astrophysics for People in a Hurry| Neil deGrasse Tyson What is the nature of space and time? How do we fit within the universe? How does the universe fit within us? There’s no better guide through these mind-expanding questions than acclaimed astrophysicist and best-selling author Neil deGrasse Tyson.
When Daniel H. Pink Everyone knows that timing is everything. But we don’t know much about timing itself. Our lives are a never-ending stream of “when” decisions: when to start a business, schedule a class, get serious about a person. Yet we make those decisions based on intuition and guesswork.
MANAGEMENT FOR DESIGN
Autumn 2018 Release
Why Successful Architecture, Engineering and Design Firms Partner with Experts
Knowing where your business stands financially, at any given time, is a crucial business function of successful engineering, design or project-based firms—which is precisely why some savvy firms simply hire an expert to accurately tell them. However, for those of you that are still doing it in-house, you’re likely managing a resource you don’t have the expertise to do, rather than focusing on your core expertise. In fact, outsourcing accounting and finance tasks is one of the most effective ways to make your business deliver greater efficiencies. By partnering with a specialist service partner, your business can focus its attention on other key areas that directly impact its profitability. This will free you up to lead with confidence in a competitive market, with the knowledge your finances are in safe hands.
The benefits of partnering with experts In an environment where every expense has a place and purpose, outsourced accounting and finance can help your firm cohesively manage the bottom line. Time and cost savings are normally the main reason firms outsource, however there are many other advantages.
1. Sharper focus on core business activities and strategies Outsourcing non-core business functions means firms can devote more of their people and resources to the core mission. This is especially important in small businesses, who may have more limited resources than their larger competitors. By freeing the business from handling accounting and finance in-house, firms will be less distracted by back-end office functions. For engineers and architects, outsourcing can help renew their enthusiasm in their work. Few people start businesses because they’re looking forward to crunching numbers in Xero, but it’s a task many find eating up their time. By outsourcing, firms get more time to spend on the aspects of their business that they’re most passionate about, allowing them to develop new ideas and find better ways to do business.
2. Access to high level technical resources, knowledge and financial management There are times when the geographical location of a firm doesn’t allow for access to the best accounts personnel. However, the outsourcing model puts an end to such difficulties. If the service provider is in a city or a country that regularly produces some of the finest financial minds, then that talent pool can be tapped effectively. The client can then have highly qualified accountants looking after the books. Quality of accounting and finance is then assured to be error-free.
3. Continuity of service, flexibility and scalability By selecting a specialist accounting and finance partner, you benefit from a solution that is customized to your requirements. They can scale accounting and financial processes up or down, much more rapidly than you’d be able to do inhouse. With outsourced accounting and finance, increasing or reducing service is merely a matter of getting in touch with your partner and outlining your needs— much easier than making tough decisions about your internal workforce and cheaper than paying huge compensations.
4. Cost savings for larger firms and affordability for smaller firms Outsourcing accounting and finance activities to a specialist service partner can help firms save money. Hiring accountants can be expensive, especially for smaller businesses with minimal personnel. Not only do you have to pay them a salary, but you also have to provide them with benefits, and cover payroll taxes. Accounting and finance employees also require workspaces, and the appropriate hardware and software. By outsourcing the work, you avoid having to worry about any of these additional costs.
5. Independent and objective advice Financial reports play a key role in business decision making, but as most firms tend to focus on the operational side of their business, the accounting and finance function may take a back-seat. In fact, most firms review their performance only when year-end financial reports are being devised. From budget cash flow projections, to management accounts, an outsourced professional accounting firm provides all the financial reports on a timely basis, making it easier for every firm to make the right financial decisions.
6. Certainty regarding up-to-date commercial and financial knowledge Outsourcing your accounting operations keeps you up-to-date with the global trends in the industry. It gives you access to the latest tools, which can help you to assess your firm’s past financial performance, as well as to predict its future as well.
7. Data-driven analysis to guide decision-making anytime and anywhere As in every other field, technology is making an impact in the accounting sphere as well. Most architecture, engineering and design firms can’t be expected to be completely aware of all the new software and applications that are available in the market—and which ones are actually suitable for their business. Many of the tools are also simply too expensive to purchase. However, a specialist service partner is willing to invest in this technology, knowing which ones are right for what kinds of business. They find it profitable to invest in a whole line of new tools, because they are servicing different clients with different needs. By outsourcing to a specialist service partner, your firm will gain access to professionals using the latest financial services software. This results in more accurate and accessible work, and more organized records and documentation. This improvement in service can then help firms get a tighter grip on managing finances and be better prepared for potential audits.
Your Software is Not the Answer The difference between software and a system The word “system” has been hijacked by the software and technology industry! Let’s roll back the clock—what is a system? “A business system is a repeatable process that people understand and use to achieve a desired purpose.” For example, you will ideally have a system for business development i.e. generating leads, creating opportunities and converting these into projects. The elements of the system could include: •
Forecasting the work in the office and the potential projects on a monthly basis
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Generating and reviewing a list of potential projects and clients
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Assigning responsibility amongst your team for each of these
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Maintaining regular contact with your potential clients
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Conducting and attending regular networking events
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Allocating resources to the activity
Business Development System Regular networking events
Most of these activities require people to act, to monitor, review, and communicate progress. All of this requires regularity, accountability, and feedback to be effective. Where does the software fit in? Potentially you will be using a database or application to keep track of the progress and to capture information and review the performance. Your software is only a small piece of the overall marketing solution. So, when you are investigating and implementing a software solution, don’t think you are implementing a system—all you are doing is putting in place a repository of information and a way to communicate that information. It’s the people that utilise the software that make it work.
When your software is surrounded by supportive, consistent and effective behaviour, you have a system. Several of our clients have been discussing the systems in their business and they look to the software application for the solution. But often they are actually describing the software, and not the system and the root cause of ineffectiveness and inefficiency. In our experience, this is exacerbated by: •
The lack of system expertise (and we’re not talking about software expertise)
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Unskilled resources
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Lack of internal expertise
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Inability to effectively change behaviour
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Conflicting priorities
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Not understanding the work required to implement a new set of behaviours
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Lack of commitment to the change process
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Blaming the software
This inability to implement a system leads to confusion, mistakes, client complaints, and failed communication between employees. The problem in many businesses is that the system is not defined. When it is defined, it’s often not documented. This leads to people following their interpretation or variation of what should be done. A good system needs
standards and quantification. What are the metrics for producing the result? We suggest four steps to creating successful systems: 1. Clarify the purpose 2. Assign responsibilities for each step 3. Document the process 4. Make sure it’s repeatable
What’s going wrong with current software solutions There is a proliferation of software solutions for architects, engineers, and designers available. In fact, Management for Design recently conducted a survey of Business and Practice Management Systems, to research and assess the functionality, effectiveness and importantly the use of the various business systems used in practice. The results identified that: “There are no systems across project control, resource management, CRM and document management that are consistently rated “very effective” by our respondents” And “The level of effectiveness of project control systems is very low — a concern considering this is one of the key foundations of any project centred business”
What’s behind this? With so much investment in software and implementation, why is this happening throughout the industry? Our research indicates that there is a myriad of reasons for this failure to realise the promised benefits. Most of these reasons are not related to the actual software application and relate to ineffective system implementation.
What’s required What’s required is a cultural and behavioural change in your business to support your software solution. And this won’t be achieved by investing in and implementing the latest and greatest software application. Successful system implementation is more than just downloading and creating a new application. The certain key elements for a successful implementation are: leadership, planning, communication, support, resources, training, follow up, and measurement.
What Do You Do About Unpaid Scope Creep? What is Scope Creep? If you operate an architecture, engineering, or similar design practice—no doubt you will have a scope of services, a consultancy agreement or a signed fee proposal, which is agreed at the commencement of the project (or the stage). This should clearly articulate what services you will be providing for an agreed fee and that the project is performed on-time, to budget, and with great outcomes for all the parties involved. Scope creep is when you perform work that is outside of this agreed scope of services. There are 2 main types of scope creep: 1. Changes to the scope created by external factors 2. Changes to the scope created by internal factors Occasionally the industry is paid in the first scenario, however, you’ll likely never be paid in the second. Unpaid scope creep is still a major issue for architects, engineers, designers, and professional services in general.
Why does it occur? Generally, projects performed to the agreed scope of services are few and far between, when creative professionals are actively engaged with clients, authorities, other consultants, and local government for any length of time. Those factors outside of the control of the architect, engineer or designer (external factors) include: •
A change of client
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Changes to rules and regulations
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Unknown environmental or site conditions
Work performed because of this is typically called a variation or change to the services—and sometimes you are reimbursed for this work. However, most scope creep is created because of internal factors created within the studio, and you will never be paid for this. These reasons include: •
Lack of clarity in the scope of services
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Inadequate internal controls
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Unresolved designs
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Over documentation
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Not capturing the out of scope work
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Not clearly articulating what is outside the scope i.e. what you won’t do
Also, architecture, in particular, is prone to widespread design and documentation changes. Architects have an innate tendency to over-service and do whatever is required to achieve the best outcome. This mentality is reinforced at university where there are no defined boundaries around the work to be performed, the inputs required and no effective project planning. “Extra effort is often viewed with pride – going the extra mile because, after all, we’re service providers” – John Doering PSMJ Resources
What’s required What’s required is a cultural and behavioural change in your business. (And this won’t be achieved by reading and filing this article!) Firstly, you need to understand and acknowledge the cost to your business. Rework and scope creep combined can add up to 40 % of the project costs! Having said that, this can be impacted, more effectively managed, and controlled with the right leadership and systems in place; but a change in behaviour is required. Unpaid scope creep causes frustration, delays, low profitability and disenchantment in the studio. Your leaders will need to drive the process, so they need to be actively involved. We suggest identifying the issues with your leadership team and project leaders. No doubt, some of these issues will include: •
An inadequate scope of services
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No articulation of what is additional, what is a change/variation and how you as a business deal with this
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Not capturing the work that is additional
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A culture of over servicing
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Poor project planning
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Ineffective or no systems for managing changes to the scope
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Leaders accepting the status quo
Develop an action plan with responsibilities for making it happen. Be mindful that you won’t succeed in trying to implement everything at once. Your action plan could be: •
Raise the awareness in the studio: e.g. mention and discuss this at the next six employee meetings
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Review your scope and develop a more concise list of exclusions
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Develop a system to capture work that is outside the agreed scope—use the timesheets
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Identify the root causes (your system is a set of behaviours – not a piece of software)
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Ensure all projects have a project plan (that is consistent with the scope of services)
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Add variation to scope measurement to our management reporting
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Implement internal design sign-offs at agreed milestones
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Implement client sign-offs at the completion of stages
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Ensure all identified scope changes are signed off internally before the work commences
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Capture and charge for the work between the end of one stage and the commencement of the next stage
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Introduce a reward system that is linked to project profitability for the project team/leader
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Identify a scope change and charge for it early in the project to establish the process
What’s the point? Project performance depends on effectively managing the scope of services—and business profitability starts and ends with project performance! Scope creep is one of the main reasons for under-performing projects and results in more work, more resources, missed deadlines, and frustration—yet not much has been done within the industry to radically change things It’s not an easy fix - it requires the business leaders to focus on, and commit to, an effective design management process, quality management, education, regular review, and open communication. It especially needs responsibility and accountability (and that requires leaders to commit to change!). The leaders need to set the example and can’t delegate these change processes to “office manager”. Quite often the leaders are the main cause of the scope creep in the first place! If you can commit to the behaviour change required to develop and ensure your way of working is as effective as it can be, there are so many benefits that can be achieved, including: •
Work is more consistent and there is less re-work
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Less time/on time
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Improved profitability with increased efficiency and scope control
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Will attract and retain great people
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More effectively manage and assess the performance of projects and people
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Systems create time for the leaders to be entrepreneurs
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Allows others to take responsibility for different components of the business
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Improved and consistent client management
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Mental health, work/life balance
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Facilitates and enables growth
Prosperity, happiness, having a life outside your business depends on how well your practice performs!
Bringing Balance to Work and Life In the architecture, engineering and design fields, work-life balance can sometimes feel out of reach and leading a satisfying and rewarding life, both in and outside your chosen profession, can be challenging. An important aspect of work-life balance is the sense of purpose that your work provides; feeling that the time spent at work is productive, important and contributes towards fulfilling your goals in life. And, the effort you put into work and your personal life is critical to your overall well-being, physical and mental health. The ability to successfully combine work, family commitments and personal life is important for your well-being and those close to you. In terms of the amount of work, leisure, and personal care, it’s interesting to compare Australian workers with other OECD countries. The OECD Better Life Index states: •
Approximately 15% of Australians work over 50 hours a week (resulting in Australia’s rank of 30/38)
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At 14 hours per day, Australians have some of the lowest time devoted to leisure and personal care (resulting in Australia’s rank of 33/38).
Long hours culture in the architecture, engineering, and design industries is endemic. Whether it’s the pressure of delivering the best result on each project, the struggle of balancing large workloads, or simply not wanting to be the first one out the door, the pressure to stay at work is great. But what is the effect of this on the AED industry, its professionals, and where is it leading us?
Overtime and unpaid Australia has one of the highest levels of unpaid overtime in the developed world, on average 4.28 hours a week (Randstad report, 2016), and the increasing time pressures of the industry and resulting financial pressures are considered to be detrimental to a sense of work/life balance - a third of Australians rate good work/ life balance as one of their top considerations when looking at a new role. The culture of working late into the night in architecture, engineering, and design has its roots in University, where students are encouraged (or at the very least not discouraged) to put in long hours and aren’t educated about the value of their time and effective project and resource management. This culture of no fixed work constraints – and working to a deadline only – is embedded in the culture in the formative years of the professions. Technology is also blurring the lines between the office and home. While most people are happy to occasionally reply to a work email at 9 pm, if that’s not being recognised or recompensed then it only piles up.
Productivity Contrary to what a lot of people might think, more hours at the desk doesn’t always result in greater productivity. AED businesses generally have a presenteeism problem—people may physically be at work, but not really paying attention to what they are doing. How can employees remain focused for a 12-hour day? How much of this time is beneficial—and how much results in costly mistakes and rework? Multiple experiments by K. Anders Ericsson (one of the top experts on the psychology of work) have shown people can only commit themselves to four to five hours of concentrated work at a time before they stop getting things done. Past the peak performance level, output tends to flat-line, or sometimes even suffer. Many companies have also found that implementing four day work weeks, results in the same amount of productivity, while employee morale improves. Employees can’t work optimally when they are stressed, tired, or sick. Research by the NSW Architects Registration Board concluded that excessive working hours can negatively affect the mental health of architects and those around them. Our research indicates that one of the main reasons people leave their place of employment people is due to stress-related issues. The business costs from this are enormous!
Gender equality Long hour work culture is also having a negative impact on gender diversity and equality in the AED industries. Despite positive steps towards more equal roles, women are still the primary carer for children in Australia. In 2015-16, 95% of primary parental leave used by non-public sector employees was taken by women (ABS); and primary parental leave is the type of leave most likely to affect people’s career trajectories. For many women returning to the workplace, the pressure of working late into the night just doesn’t fit in with picking up children from daycare or school. And, the lack of flexible working arrangements in the industry is having a detrimental effect on gender equality. The ability to be available 5 days a week is still often considered a necessary pre-requisite on the path to becoming a Partner or Director of an AED business.
So, what can be done to improve work/life balance in the AED industry? It stands to reason that in order to create an inspirational and functional built environment—architects, engineers and designers would need to actually spend some time out in it. A change in culture starts at the leadership level. Here are some ways to implement greater work/life balance in your business: •
Realise that you can do anything, but can’t do everything (at once)
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Let go of perfectionism and focus on delivering
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Use technology solutions to enable more flexible working conditions
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Work on reducing time wasting activities in your practice (think 80/20 rule)
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Facilitate exercise or meditation to reduce stress
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Encourage social interactions outside of your workplace
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Start with small changes then move from there
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For maximum productivity, people should stay mindful of when they start to feel burnt out
Architects Falling Behind on Business Management Systems M4D in the Media Andrew Heaton, Sub-Editor, Sourcable
In any business, having the right systems is critical. Yet many architects, engineers and consultants throughout Australia lack the systems required to deliver optimum outcomes in their practices. According to a recent survey conducted by financial and business management consultancy Management For Design (M4D): Less than one in five architecture, engineering and consultancy (AEC) firms have a formal and functioning system to manage resources •
44 per cent of firms do not have a resource management system in place, and of those which do, the level of effectiveness of these systems is very low
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60 per cent have no system for managing customer relationships (or if they do, the system is not considered to be effective)
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More than 40 per cent lack a formal document management system
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Microsoft Office programs such as Word and Excel remain the most common platform for managing contract administration.
Of those who do have systems in place, there is a lack of enthusiasm about the value of these. Only two finance and accounting packages achieved a ‘very effective’ rating whilst no systems across project control, resource management, CRM and document management were consistently rated as ‘very effective.’ Cautioning that the results reflect a higher proportion of smaller firms (with up to 10 people), M4D managing director Robert Peake says problems revolve around several areas. Read the full article on Sourcable here
Running Your Own Practice? Here are Some Growth Strategies You Should Consider - M4D in the Media
From growing your business, to marketing, finance, leadership, IT and business systems, we’ve got all your bases covered with professional advice and insight. Up first we look at the business foundations necessary to enable sustained success and growth. In Australia, we’ve been seeing strong economic conditions, albeit challenging, and it looks set that this will only continue. But something we often realise when working with architects, engineers and designers (AED) is that the current opportunity to achieve strong and sustained profitability is not necessarily being realised. We know that there are increasing competitive pressures, combined with a subsequent requirement to produce enhanced services for diminishing fees. The profession is delivering more value for less, and as architects, that’s what you innately do. So how can the industry position themselves for future growth and meet the challenges of increasing competition, technological changes, a changing workforce, and potential ownership transitions? The answer is that if you want to succeed in today’s environment you need a stronger commitment to and focus on resource, financial, and project management practices – the kind that can bring long-term goals to fruition. Typically in architecture, engineering and design businesses, 75 per cent of business profits are generated from roughly 25 per cent of the projects. Below we outline some key principles to consider if you want to keep your practice growing from strength to strength. Read the full article on Indesignlive here
Introducing Rana Blair to Our Business Systems Team As you may know, Management for Design provides strategic, financial, technology, and business management services that maximise the potential of architects, designers, planners, engineers and other design professionals. We know that maximising your business potential is a combination of strategy, systems, and people. Interwoven, they enable you to build your business and produce great design. Often though there is a disconnect that prevents you from realising the benefits of the investment you have made in your systems. What’s going wrong and what can you do about it? In light of this, Management for Design is thrilled to announce that Rana Blair is joining our team. Rana brings over 20 years’ experience working to bridge the divide between potential and actual business performance, utilising proven methodologies and systems. Rana is an expert in how to best streamline and improve operations, by combining the power of business systems and behaviour change. Her extensive background working with the top performing architecture and engineering businesses in the US and across the globe provides her with a unique ability to provide project-based professional practices with firm guidance and expertise. She provides consulting services for clients looking to increase efficiency, utilising automation, documented processes, and effective communication.
To book a business systems consultation with Rana, and maximise your potential, contact Callum Bruce on cbruce@m4d.com.au
Reading List The Future of Architecture in 100 Buildings Marc Kushner The founder of Architizer.com and practicing architect draws on his unique position at the crossroads of architecture and social media to highlight 100 important buildings that embody the future of architecture.
Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier Edward Glaeser America is an urban nation, yet cities get a bad rap: they’re dirty, poor, unhealthy, environmentally unfriendly . . . or are they? In this revelatory book, Edward Glaeser, a leading urban economist, declares that cities are actually the healthiest, greenest, and richest (in both cultural and economic terms) places to live. Getting There by Design Kenneth Allinson Getting There by Design adopts an architect’s view to design and project management. It sets out the fundamental principles and shows how they are applied, dealing with these two topics as one indivisible subject.
The Anatomy of a Golf Course: The Art of Golf Architecture Tom Doak Tom Doak, one of America’s youngest and most successful golf architects, here discusses his craft and explains the strategies behind a golf architect’s decisions. Knowing why a course is laid out is critical to how the course should be played.
Business for Bohemians: Live Well, Make Money Tom Hodgkinson If cash flow forecasts, tax returns, and P&Ls sound horrifying, fear not: help is at hand. Tom Hogkinson has spent his career advocating for laid-back living, and in Business for Bohemians, he combines practical advice with hilarious anecdotes to create a refreshingly candid guidebook for all of us who aspire to a greater degree of freedom in our working lives.
MANAGEMENT FOR DESIGN WINTER RELEASE 2018
The Value of Benchmarking How does your business stack up? How does your current performance compare to previous performance? How about other businesses in your industry? What does the future look like for you, your competitors, or your industry as a whole? The answer to these questions lies in benchmarking—but what value does benchmarking actually provide in architecture, engineering, and design businesses, and how can it be used to give your business an edge? Quite simply, benchmarking is a radar for change; in and of itself, benchmarking is only a means to an end—and it’s worthless if not accompanied by a call to change. The value is not in the benchmarking, but in the decisions you make, as leaders, to create change that will enhance your performance. Benchmarking leads to focus on change and provides a clear direction for the change process. There are two components to benchmarking performance: 1. Comparing your business with your own historical and expected performance 2. Comparing yourself to the industry and other businesses By benchmarking in these areas, there will always be a call to action, a call to change. For instance, for a business that’s operating in the top quartile, benchmarking could highlight areas where they are doing well and should provide a focus for how to maintain their advantage, as well as presenting an opportunity to raise their standards. Alternatively, for business in the bottom quartile, benchmarking identifies areas of opportunity where they can make improvements such as: 1. Reviewing fees 2. The work they are taking on 3. How they’re producing it 4. Employment costs
Case study In the chart below, we have a snapshot of a monthly management report for a Management for Design client. Their total income is approximately $10m, with a profit margin of 40%. According to industry benchmarks, they’re at the top of their game, in the top quartile of their industry, and are exemplifying superior performance.
But are they really at the top of their game? Their total income sure is, and so is their profit margin. However, when we drill down further, we find that their total employment costs to total income are running at 35%—less than their historical averages, and over 20 points below the industry average. How does that show up in the operations? The principals are buried in projects, with little to no opportunity to work on areas that could potentially improve, or to focus on where the company needs to head. By comprehensively measuring across all areas of the business, they have the numbers to know that billable time is high, income per employee is high, average hours worked is high, but work coming in from new clients is low in comparison to previous years. Therefore, the current position for this business is not sustainable. Armed with this information, they can now focus their attention and make the necessary decisions to see them well into the future.
Decision making You need to compare to how you are tracking yearly as well as comparing your results with those of appropriate peers, that is, businesses that are similar in size and business model to your own. Chances are that benchmarking will reveal many areas of your business that can be strengthened. For example, your results relative to your peers may present opportunities to: 1. Raise your standards 2. Focus on growing revenue 3. Reducing your labour 4. Increase your use of productivity-enhancing technologies 5. Or take numerous other actions. Conclusion Measure. Assess. Create change. Ultimately, if you want to run a successful business you need to know what’s going on in your business, so you need to be measuring as you go. Monitor your progress from year to year. And then compare yourself to your peers. Management For Design adds certainty to business decisions by combining your vision and hard data. We uncover the fundamentals of your business, identify areas for improvement and enable sound, evidence-based decisions, to move your business and projects forward confidently with fewer surprises. For more information, contact Gordana Milosevska on gmilosevska@m4d.com.au.
Leading a Design Business In design businesses, it’s common for leaders to be the face of the business, to nurture existing and future clients, as well as be the key initiators of design. But it’s often also the case that leaders have a challenging time separating themselves from the day to day activities of the business—allowing for time and energy to focus on building the business, improving the operations, surrounding themselves with great people, and nurturing the future leaders.
This approach often results in profitability taking a back seat to producing brilliant design, which is great for the clients, but not so great for the design practice. As a leader of a design business you are confronted by a set of circumstances (challenges) that are somewhat unique: •
Often the leader is the face of the business
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Leaders are typically the key initiator of design and client relationships
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Leaders have a difficult time separating themselves from the day to day activities of the business
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Leaders often don’t share financials
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Effective business management is considered secondary to other considerations, including design capability, client relationships, and delivering projects
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Profit and profitability can take a back seat to producing great design
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The entrepreneurial drive of the founders is usually not found in the second generation
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Client relationships tend to be deeper, stronger, and more personalised
How important are sound business principles in your business? How do you demonstrate and drive this? Do you have a culture of empowerment? It’s incumbent on business leaders to lead by example and set the tone. Not only that, entrepreneurial vision and drive are often not inherent in the next tier of management, so enthusiasm for your vision, clear strategic objectives that filter through to every aspect of the business, and empowering your people are key to driving your business forward. What are the priorities for your business and how do you communicate these to your team? Do you pursue a culture of trust, sharing, collaboration, empowerment, performance, and profit? Talk about what you believe in, be open, and address those values in the everyday conversations that you’re having with your people. Use phrases that are inclusive of the collective whole of your business, using the tone and language that reinforces ‘this is important to us’. Successful leaders, more often than not, exhibit the following personal qualities: •
Have a clear purpose
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Keep to clear and actionable goals and priorities
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Are relationship builders
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Understand and challenge their people
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Understand the true value of their time
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Constantly ask themselves ‘am I the right person to be doing this’
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Focus on what will make a difference
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Accept and embrace performance criteria
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Are realistic (self-assessment)
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Follow up and create energy
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Effectively balance life and work
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Let go of design decisions and client relationships
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Mentor others
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Actively pursue professional development
In most design businesses there are critical elements of the business that the leaders need to drive and ensure they contribute to continuously – the ‘business drivers’. In a design business, these are typically to generate work, to nurture client relationships and to design and deliver great work.
But what about all the areas of the business? For a design business to be truly successful, the leaders’ attention is needed across strategy, communications, design, delivery, innovation, operations, human resources, and financial control. Having said that, most architecture, engineering, and design (AED) leaders that are elevated to senior roles or directors’ positions don’t have the necessary business management expertise to manage, direct, and drive a successful business that performs across these key business drivers
As a leader, you need to be clear about your expectations around client outcomes, project and financial performance, and managing deliverables. None of this comes overnight and it typically requires small steps. It comes through a well-constructed plan, time and experience, and the assistance of your team—the team of experts you surround yourself with. It goes without saying that what’s required is a balance between the time you spend ‘in the business’ and ‘on the business’. You need the time out from project-related activities to make this happen. Be clear about where the business is heading and be prepared to engage your key people in why, where and how you will get there. Ideally, you will be able to empower your staff, hand over control and give some of the responsibility and accountability for achieving your business objectives to others. Your objective as a leader should be to empower your key people to take on responsibility for project and design delivery, project performance, client relationships, and business systems. Set them up to succeed and flow responsibility for decision making through the business.
Ask yourself the following questions of your key people (and future leaders): •
Are they trained?
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Do they have the necessary skills?
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How much responsibility and accountability do they have?
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Are they responsible for performance (project deliverables)?
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Do they have the information and tools they need?
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Are they financially literate?
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Do they embrace technology?
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Do they delegate effectively?
• And if they don’t have the necessary (or desired) capability, work with them to develop a plan to make it happen. Motivate your team by driving a culture of leadership and ownership succession. Articulate and provide an opportunity for future leaders and be clear about what it takes to become a leader in your practice. By providing a transparent path to leadership you will set the standard for future growth.
Here are some steps to create a culture of leadership among your key people: •
Involve your people in articulating and clarifying your business ‘drivers’ and desired business outcomes e.g. strategy, rainmaking, design, innovation project delivery etc.
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Define, articulate and measure the performance criteria across these business ‘drivers’
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Ensure your key people are working in their core capability (set them up to succeed)
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Understand and nurture their inherent personal strengths/weaknesses, temperament, and abilities
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Include measurable criteria in your executive agreements
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Provide individual (and team) contribution requirements and link these to the profit/bonus pool
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Provide regular (and expert) feedback on performance on a quarterly or 6 monthly basis
Your business can be the vehicle that enables you to shape and control your destiny – both in life and your career. Your challenge as a design leader is to balance the creative and commercial aspects of what you do. Successful and effective leaders today, more often than not, are doing less and achieving more. To borrow from Mies Van Der Rohe ‘less is more’.
Social Marketing for AED Businesses In our industry, where traditional advertising is often considered taboo, social media marketing has quickly become a crucial communications tool. Most successful architecture, engineering, and design businesses use it to augment their corporate media and marketing messages, reaching thousands of people each day. When done well, it’s one of the least expensive ways to promote your business and engage with current and potential clients. Whether it’s using Instagram to show off your latest projects, Twitter to engage journalists or your peers, Facebook to announce the award you just won, or using LinkedIn to recruit the best new talent, the key to effective social media marketing is a strategy.
What are your goals and who is your audience? You need to know what you’re trying to achieve if you want to know if your efforts are paying off. Do you want to offer more services to your existing clients, attract new clients from a different sector, make more connections with your community or industry peers, or to grow your company’s brand presence? Once you’re decide, the next step is to think about the target audience for each of these goals: •
When are they online?
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What social networks do they use?
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Which articles do they read?
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Which images inspire them?
Get started It’s easy to get overwhelmed by every “best social media tips” article you read online, but don’t let that stall you, make a small start and build momentum from there. You can start with as little as 5-10 minutes per day—like and retweet your favourite Twitter and Facebook posts, comment on your peers’ Instagram photos, share an interesting article on LinkedIn. Increase your engagement each day and get a feel for your voice—participate in industry conversations, follow journalists and reply to their articles, find and discover relevant enclaves within each network.
What to post When you’re ready to start posting your own content—make it count. Current social media algorithms favour both quality and quantity, so there’s nothing ‘too good’ and no ‘too often’ to post. Next time you have a conversation that comes to an interesting conclusion or idea, don’t just store it in your head, write it down and share it. Start to view all your conversations and interactions through the lens of an editor—you’ll be surprised where some of your best ideas come from. Networks like Facebook, Twitter and LinkedIn will reward you for richer content, so aim to post photos, videos, and links along with your words. A well-selected stock image can go a long way to getting your carefully written blog article a bigger audience. Instagram is a visual medium, so you want to post your very best photos. Don’t limit yourself to just your own completed projects though, interesting sketches, renders, field trips, and inspiration photos should help to diversify your content and give you plenty to post about. Continue to post interesting, polished content to your social channels, and you’ll see growth in your followers and engagement. Use a variety of hashtags to increase views of your posts, trying different variations each time to find what works best for you.
Amplify your reach Now you have a growing social media presence, how can you increase your audience? Try experimenting with promoted content. Promoted or ‘boosted’ content is a means of paying to increase the number of impressions and views you will receive. Pick your posts, set a budget, and let the algorithm work for you. Again, it’s best to start relatively small and experiment with images, headlines, and content types, until you’re comfortable with larger budgets here.
Converting If you’re planning to turn your social media marketing efforts into measurable client returns, you need to ensure you’re directing people back to your website, which has clear calls-to-action—like mail-list subscriptions and contact forms. Phrase these from the point of view of the potential client and the benefits you can provide them. The more consistent the language and imagery is between your social channels and website, the more likely you are to convert your new leads.
Investigate, iterate, and improve All popular social media networks feature analytics, so you can measure which posts are performing better than others. Use this data to constantly improve your content and create meaningful posts that will engage your target audience. Regularly review your performance against your initial goals, and course correct any time you notice that your engagement is slipping.
So, whether you’re the owner of a small practice with less than five employees, or the leader of a large multinational firm, with the right content, some care, and strategic thinking, your voice and the voice of your business can gain an audience that will reap rewards.
The Benefits of Managed Technology Services with M4D Are you struggling to adequately meet your technology requirements inhouse? Are you under-skilled, under-resourced, or unsure how you can make improvements? Businesses of all sizes can benefit from outsourcing their technology requirements through a managed technology service partner.
AED Industry experts At M4D we understand the technology requirements of the architecture, engineering and design industries, from Autodesk to desktops; project, resource, and financial management.
Reduce Risk Balancing new software, hardware, severs, suppliers, possible technology down times, system maintenance, support tickets, and hiring the right people to get it all done... handling all your technology in-house can be expensive and hard to get right.
Controlled & Predictable Spending Under a managed service contract, you can plan for your regular technology expenditures well in advance and avoid and unforeseen costs.
Level the Playing Field Larger companies typically have in-house teams of full-time technology professionals. But, small to medium sized businesses can’t afford this luxury on their own. Our managed technology services give you the resources of a much larger practice.
Compliance and Security We’re familiar with all the relevant security and compliance technology standards—ensuring that you and all your data is safe.
Greater Scalability We can quickly and economically scale your technology offering up or down much faster that you could with an in-house technology team.
Quickly Implement New Technology We use our experience and understanding to identify and quickly implement new technologies into your business, ensuring your systems and processes stay up to date.
Stay Focused on Your Core Business We help you stay focused on your business needs while we deal with the complex technology solutions. By helping you run your practice efficiently and plan for the future, we free up your time to focus on creating great design and building your business.
New M4D Team Members We’re pleased to welcome two new accountants to M4D, Oliver Chan and Rodrigo Valerio. Both Oliver and Rodrigo come from diverse backgrounds in accounting, bringing unique perspectives and experience to our finance team. Working closely with our clients, our accountants assist to prepare invoices, perform reconciliation of AR and bank accounts, assist with accounts payable, and help with a range of client queries.
Reading List The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future Kevin Kelly Kevin Kelly provides an optimistic road map for the future, showing how the coming changes in our lives—from virtual reality in the home, to an on-demand economy, to artificial intelligence embedded in everything we manufacture—can be understood as the result of a few long-term, accelerating forces. The Industries of the Future Alec Ross Ross provides a “lucid and informed guide” (Financial Times) to the changes coming in the next ten years. He examines the fields that will most shape our economic future, including robotics and artificial intelligence, cybercrime and cybersecurity, the commercialization of genomics, the next step for big data, and the impact of digital technology on money and markets.. A Fortunate Life Albert Facey A true classic of Australian literature, his simply written autobiography is an inspiration. Born in 1894, Albert Facey lived the rough frontier life of a sheep farmer, survived the gore of Gallipoli, raised a family through the Depression, and spent 60 years with his beloved wife, Evelyn. Despite enduring hardships we can barely imagine today, Facey always saw his life as a “fortunate” one. A Course Called Scotland: Searching the Home of Golf for the Secret to Its Game Tom Coyne A Course Called Scotland, a hilarious golf and travel adventure throughout the birthplace of the sport and home to some of the oldest and most beloved courses in the world, including St. Andrews, Turnberry, Dornoch, Prestwick, Troon, and Carnoustie. The Field Study Handbook Jan Chipchase Travel anywhere, make sense of the world, and make a difference. The how-to, why-to guide to running international field research to inform and inspire product, brand, strategy, policy and communications. Described as “The canonical classic reference for cross-cultural research” and “A blueprint of the future”.
MANAGEMENT FOR DESIGN SUMMER RELEASE 2019
Business Conditions Survey According to our Annual Business Conditions Survey, Australian businesses in the Architecture, Engineering, and Built Environment Sector have an increased level of uncertainty for the year ahead. However, there is only a slight reduction in confidence levels from 12 months ago, as our respondents continue to remain optimistic moving forward. Have we turned a corner and we don’t know where that road is heading? Not according to our respondents (or not yet!)
Key insights from this year’s survey include: •
After years of continuous increasing revenues, there is only a minor tapering in growth expectations for businesses in our industry
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The overwhelming majority of our respondents are still expecting to improve their business performance over the next 3 years
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Two-thirds of our respondents are still expecting to have a skills shortage moving forward
If you would like to look at the full report and results, please click here.
Systems Survey How effective are your business systems and what should you be using? In November, we conducted an important business systems review of professional service businesses, in partnership with the Association of Consulting Architects Australia. This review was done to assess the use and effectiveness of the various business systems across the architecture, engineering, and consultants industry. There are a myriad of business management systems available to businesses and the industry to manage your finances, projects, clients, and documents. We have collated the results to review the effectiveness of business systems across accounting, time and invoicing, project control, resource management, contact/ client management, project information, and contract administration.
Insights from this year’s survey include: •
Xero is the only accounting system considered “very effective”
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There are a number of systems that manage time and invoicing that are considered “effective” or “very effective”
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There are many project control systems that are used and not considered “effective”
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41% of respondents did not have a resource management system in place
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Almost 60% of businesses don’t have a system for managing client relationships
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More than 40% of businesses don’t have a formal document management system
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There are no systems across project control, resource management, and client management that are consistently rated “very effective” by our respondents
To view the full report and results, please click here.
The Growth of BIM When seeking to achieve excellence in the engineering, architecture, design, or consulting industry, businesses can never rest on their laurels. What was cutting edge one day, will quickly become the standard, and then before long you’re using a legacy system that’s been superseded. Building Information Modelling (BIM), is a term that you’re already familiar with, however few Australian firms have truly integrated it into their way of working. And while Australia still has a long way to go before mandating BIM on a national scale, the direction the industry is heading is clear, with plenty to gain for motivated and proactive technology focused practices. From a business standpoint, multiple studies have found that BIM implementation can result in positive ROI for practices through:
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Faster and more efficient processes
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Increased productivity and speeds up delivery
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Reduced uncertainty
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Controlled whole-life costs and environmental data
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Avoidance of rework costs
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Improved safety; opportunity to secure government contracts
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Reduced on-site waste
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The prevention of errors.
To really understand the importance of BIM, it’s necessary to understand that it’s more than just a tool or software, but an evolving system for managing the entire life-cycle of infrastructure and buildings. BIM’s scope and scale will grow through staged developments, commonly referred to as the “dimensions” of BIM.
The current and conventional model of three-dimensional (3D) BIM is evolving into a 4D, 5D, 6D, or even 7D model, and, in the future, eight-dimensional (8D) versions based on the application of PLM (Product Lifecycle Management) to construction. This solution is known as BLM (Building Lifecycle Management) or unified project management. •
4D: A virtual model of the built structure with construction plans and work progress control capability; with additional possibility to prospectively visualize a virtually constructed building in any moment in time.
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5D: Cost data is fed into a 3D model, coupled with the construction schedule. Benefits of the fifth dimension of BIM may consist in the higher precision and predictability of changes occurring in the project together with a more reliable cost analysis of different construction scenarios.
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6D: Introduction of sustainable development principles into the investment process with an emphasis on energy efficiency. The sixth dimension of BIM allows for obtaining information about the building’s projected energy consumption at a very early (concept) stage.
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7D: Integration of the Facility Management concept into BIM. It allows tracking of the status of given building components, their specifications and guarantee periods. The seventh dimension of BIM encompasses the management of the full life cycle of a building from the concept to the demolition.
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8D: Supplementing the model with security and healthcare information. This dimension focuses on three tasks: identification of threats resulting from chosen design and construction solutions, indication of alternatives to the riskiest solutions, signalling the need to control specific risks on the construction site.
[Reizgevicius, M.; Ustinovicius, L.; Cibulskiene, D.; Kutut, V.; and Nazarko, L. ‘Promoting Sustainability through investment in Building Information Modelling (BIM) Technologies: A Design Company Perspective’, 2018.]
With the rise of this level of data and the integration of Geographic Information Systems (GIS), it’s reasonable to assume that entire neighbourhoods and public infrastructure will eventually share data, creating entire cities managed under these types of models, totally revolutionising all aspects of the built environment. This emerging idea is becoming known as city information modelling (CIM). BIM Standards The UK is really at the forefront of BIM adaptation. The British Standards Institution (BSI) has started to publish international standards for building information modelling (BIM), the first two of which were published in 2018, with the second two due for release in 2020. Management for Design will be hosting a event in Sydney in the coming months, aimed at helping you to realise the potential of BIM in your business. If you’re interested in attending one of our events, would like to learn more, please contact Dinesh Rajalingam on DRajalingam@m4d.com.au.
An Insider’s Guide to the Property Market Networking Event At the end of 2018, we were excited to welcome back Andrew Leoncelli, industry-leading, Managing Director of Residential Projects Victoria at CBRE, for An Insider’s View of the Property Market. This was a follow up to an event we conducted a year before, and again it was both insightful and engaging. With the residential industry under pressure from challenges such as tax increases, tighter controls on personal expenses-serviceability, and lending restrictions on foreign purchases of real estate, Andrew maintained that Melbourne’s macro fundamentals were very positive, and should prove resilient. We’d like to thank everyone who joined us for the event, it was fantastic to talk to you all. To ensure you hear about upcoming events, please subscribe to our newsletter here.
Management for Design Global Expansion Management for Design are excited to announce that we have recently expanded our presence in Australia and globally with our people now based in Brisbane and London.
Being close to our clients is a core component of our strategy of delivering the best outcomes. Known for our expertise in Financial and Business Management, Technology, Business Systems, and Leadership Development, our teams in Brisbane and London will play a key role in assisting our clients to focus “on their core capabilities of designing and delivering deliver great work” enabling them to build successful and sustainable businesses. “Establishing a physical presence in London is an exciting development for us, and one that positions us to continue to grow our influence and service offerings. London is a bridge to the world and a central hub for Architecture, Engineering, BIM, Finance, and Technology,“ said Carla Dexheimer, M4D Finance Director. “We are now closer to the challenges of clients in the region and this will allow us to be even more responsive to our clients’ needs, particularly at an uncertain time as businesses navigate challenges following the U.K.’s vote to exit the European Union,” Carla said. As part of establishing a physical presence in London and Brisbane, Management for Design will be: •
Expanding the number of people in the region: One of our key people, Swan Ong, has recently relocated to London to spearhead our operation. Swan is an expert in Financial Management and the link between accurate, timely information and business performance
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Running more events: For example, Management for Design recently presented at London Build on the “Profitability and Growth for Architects”. We will be conducting follow up events into the New year
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Increasing thought leadership output specific to the region: This will entail research specific to the market on topics around leading through digital transformation and other aspects of business leadership
Being experts in Technology and Innovation has allowed us to quickly and seamlessly build the infrastructure and capability to enable us to provide our services anywhere, anytime We look forward to extending the partnerships we’ve been privileged to build with clients here — and to working with many new leaders and organizations as well. As Management for Design continues to expand into the global market, our clients and company culture will remain the priority.
Resourcing Re-imagined
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The recruitment industry needs a shake up — it needs to be disrupted
” Are you... •
Tired of recruitment agencies
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Tired of paying 10-25% placement fees
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Tired of not getting the right candidates
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Tired of your new people not being the same person you interviewed and appointed
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Tired of not getting a return on your investment
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Tired of “placement guarantees”
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Tired of your new people not having the skills and capability you thought you were getting
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Tired of paying upfront fees
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Tired of paying fees before you realise you chose the wrong person
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Tired of all care—no responsibility
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Tired of the work involved
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Tired of nothing changing.
So were we... That was until we re-imagined how the recruitment industry should work •
Forget endless CV’s—that aren’t accurate
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Forget LinkedIn—that’s written by the candidate
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Forget references—who ever provided a “bad reference”
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Forget trawling through endless CVs and conducting untold interviews
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Forget making a decision on your most important asset based on a one-hour conversation (no matter how good that is)
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Forget making an assessment based on psychometric test
There is a new way. And this is how it works: •
We partner with you—think of us as your in-house recruitment manager
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By partnering with you we guarantee that we will improve the calibre of your people
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You pay after the candidate work outs
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You don’t have to attend endless interviews
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We test and assess behaviours in real time situations
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We assess your candidates for business acumen, communication, Project management, management (time and people), capability, and cultural fit
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We work with you to develop your people after you have employed them
Who does this for you? No one except us! Contact Robert Peake or Gordana Milosevska at Management for Design—your recruitment business partner—if you agree there is a better way forward.
Reading List Freakonomics: A Rogue Economist Explores the Hidden Side of Everything Steven D. Levitt Freakonomics is at the heart of everything we see and do and the subjects that bedevil us daily: from parenting to crime, sport to politics, fat to cheating, fear to traffic jams.
Key Person of Influence Daniel Priestley Many people think it takes decades of hard work, academic qualifications and a generous measure of good luck to become a Key Person of Influence. This book shows you that there is a five-step strategy for fast-tracking your way to the inner circle of the industry you love.
Making It Happen: Reflections on Leadership John Harvey Jones Reflecting on his years as chairman of ICI, and on his experience of leadership in the Royal Navy, the author offers common sense advice on all aspects of business life and management.
Mastery Robert Grene Around the globe, people are facing the same problem- that we are born as individuals but are forced to conform to the rules of society if we want to succeed. To see our uniqueness expressed in our achievements, we must first learn the rules- and then how to change them completely.
The Old Ways: A Journey on Foot Robert Macfarlane The genre-defining book by acclaimed nature writer Robert Macfarlane: travel Britain’s ancient paths and discover the secrets of this beautiful, under appreciated landscape.
Photo John Gollings
MANAGEMENT FOR DESIGN AUTUMN RELEASE 2019
Managing Risk While Risk Management might not be the most engaging subject for leaders of Architecture, Engineering, and Design businesses, it’s an essential concern that you can’t avoid—and something you need to manage effectively. But, what does Risk Management actually mean? •
Surrounding yourself with the right expertise
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Adopting strategies and systems to minimise your risk and exposure.
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Effective quality control to keep yourself free of unwanted claims
Although this can be an extensive subject, we’ve simplified this by identifying the key issues most businesses encounter and categorised these into four main areas. 1. Business Structure and Legals 2. Clients, Fees and Fee Negotiation 3. Insurances
Business structures and agreements Business Structure Establishing a company, unit trust, or partnership is a decision you will need to make early on—and you probably won’t fully understand the implications of your decision until you are directly faced with them. Each structure has its pro’s, con’s, and implications for the owners and directors. What works for you may not work for others. A Unit Trust is different to a company in that the trust is not directly taxable on income it earns; however, all taxable income is distributed to the unit holders pre-tax, who then pay tax at their own rate. The workings of the unit trust are governed by the trust deed which is like the constitution of a company. Some of the disadvantages of a trust structure compared to a company include: •
It can be more expensive to establish and administer
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It can be difficult to dissolve, dismantle, or make changes once established
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It can’t distribute losses, only profits
And some of the advantages include: •
Reduced liability, especially for corporate trustees
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Assets are protected
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Flexibility of asset and income distribution
Shareholder | Trust Agreement Why do you need this? A formal agreement prevents disputes. Having an agreement prevents disputes and allows for the smooth functioning of companies, trusts and partnerships. Disputes often arise when owners wish to sell or exit. It doesn’t matter how well you know the person you’re doing business with – conflict is extremely common when you’re doing business with someone. Having a shareholder agreement provides you with the opportunity to tailor a contract to your needs. Without one you will just have to work within broad legal principles which may or may not work to your advantage. An agreement is a private agreement. Unlike the constitution of a company, a shareholder agreement does not have to be made public. Also, only people or companies who are parties to the shareholder agreement can change it. An agreement can result in the smoother functioning of the company. Because the shareholder agreement can divide management functions and spell out rights/obligations it can have a useful secondary use as a kind of collaborative management tool. An agreement can save costs. The initial fees in setting-up an agreement is nothing compared to the costs of disputes or from bad deals which you might fall victim of in the future. When third parties know you have a shareholder agreement is a strong indicator that this is a stable business—this applies particularly when applying for credit and dealing with financiers.
What should your agreement encompass: •
Ownership obligations and transfer of ownership
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Insurances
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Restraint (and upon exit)
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Decision making
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Other business interests
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Exiting the business
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% of profits linked to performance
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Employee share plans
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Buy / Sell Agreement
Comprehensive employment agreements with your people Employment agreements are an essential document for both employees and employers, legally establishing the working relationship and setting out important frameworks and policies. These contracts provide both the employee and employer with a clear agreement of what is to be expected from each party while outlining all rights, responsibilities, and obligations. This works to protect the rights of the employee, and also protect the employer from certain risks such as breaches of confidentiality. Here are five reasons why employment contracts are a must-have in any business: 1. Understanding of Employee Role and Responsibilities. One of the first things an employment agreement will do is clearly spell out the position and responsibilities of the employee, salary, and benefits. There’s nothing worse than stepping into a new role and not being quite clear on the tasks and duties involved. This should be established by the employer before the on-boarding process. Both parties should be clear around what is expected in terms of employee performance and this should include measurable criteria.
2. Understanding of Termination. The employment contract should specify exactly what actions can result in termination and the terms associated with this. Including this information ensures that each employee knows which activities are mandatory to their role and which actions or behaviours are outside policy and may result in dismissal. 3. Defined Pay Rates and Income. Regardless of whether an employee is full time, part time or casual, an employment contract defines pay rates and income and handling overtime. Having this information contained in one document shows an agreement between both parties on salary, leaving no room for miscommunication. Within the employment contract, you can establish the income your employees will be receiving and how often they work. You can also set what their annual income will be and any relevant bonuses, or basis for bonuses. 4. Clear Protocols for Annual, Personal, and Long Service Leave. Throughout their employment, team members will need to take all different forms of leave, such as annual leave, personal leave, maternity/paternity leave or compassionate leave. Having this information set out in a contract means that the procedure for taking leave is always consistent and legal, for all people. 5. Confidentiality for Employers. Many positions give employees access to confidential company information and data. A confidentiality clause in each person’s employment contract acts to protect the business. With this clause in place, employees are prevented from divulging sensitive or confidential information to others. This can include being released to the media or public, shared on social media, or being used for any other purposes. Employment contracts also often include a ‘non compete clause’ – a clause that prevents the employee from working for any competitors for a certain period (perhaps two or three years) after the employment ends. To continue reading this article please click here to view the full Business Journal online
International Women’s Day 2019 On the 8 March 2019, we had the pleasure of once again inviting our inspiring team and clients to the 2019 Women in Rotary’s International Women’s Day Breakfast, which celebrates the achievements of women, while discussing the remaining obstacles to full equality of opportunity, in all aspects of life. This marked the seventh consecutive year we attended this powerful event and share its insights with a group of successful, professional women. Once again, the event was truly inspiring with a fantastic panel of interesting speakers who proved to be both motivational and inspirational. As in previous years, we once again wanted to share some of our collected highlights and thoughts on the topics discussed, to continue to shine a light on this important issue.
We have a trust problem Years of inequality means that women don’t trust—more and more women need to put their hand up and engage. You can’t be what you can’t see We need to do something new. We all need to encourage more women to participate and to step up into roles—this is how change will happen. We need to shift the power by giving it up Th most educated and empowered generation is the current one—these are the leaders of tomorrow. Power will be re-distributed through struggle If someone’s behaviour is threatening —challenge this and have that uncomfortable conversation, even if you don’t know what’s going to happen.
Flexibility is key to keeping women in the workplace The concept of being physically in the office between 8:30am to 6:00pm will be a thing of the past in the next 10 years—companies need to get on board and innovate. Wear some gender lenses and have empathy Redistributed power shouldn’t be just good for girls and bad for boys. Stick together and keep fighting The Australian Economic Forum current statistics tell us at current rates it will take another 117 years to get to parity and achieve gender balance—we must not let up or give up.
Thank you to everyone who was able to share this engaging morning and I’m looking forward to more inspiring discussion in the future.
Introducing Rana Blair: Business System Effectiveness Evangelist
Management for Design provides strategic, financial, technology, and business management services that maximise the potential of architects, designers, planners, engineers, and other design professionals. Maximising your business potential is a combination of strategy, systems, and people—interwoven, they enable you to build your business and produce great design. However, there’s often a disconnect that prevents you from realising the benefits of the investment you’ve made in your systems. What’s going wrong and what can you do about it? We’re thrilled to announce that Rana Blair has joined our team. Rana brings over 20 years’ experience working to bridge the divide between potential and actual business performance, utilising proven methodologies and systems. Rana is an expert in how to best streamline and improve operations, by combining the power of business systems and behaviour change. Her extensive background, working with the top performing architecture and engineering businesses in the US and across the globe, provides her with a unique ability to provide project-based professional practices with firm guidance and expertise. She provides consulting services for clients looking to increase efficiency, utilising automation, documented processes, and effective communication. If you believe you’re using less than 50% of what your system offers, click here to contact Rana today and maximise your full potential!
Characteristics of all successful AED businesses What separates the average (and most) Architecture, Engineering, and Design (AED) firms from the most successful? Is it the design work? Their business processes? The personalities at the top? How are they able to consistently create great work, while growing their businesses, and achieving impressive profitability?
There are common characteristics across these leading and high performing firms that enable them to succeed where many others struggle. They are industry leaders that are dedicated to building relationships and they work selectively, allowing their expertise and skills to shine. It is the characteristics of leading architecture, engineering, and design firms that, not coincidentally, enable them to be the most commercially successful. They tightly control the design process and fewer people are involved Leading AED firms tend to have less (and not more) people involved in the design initiation process. Working with fewer people at the initial stages allows them to have tighter control of the design process. The central idea is strong, consistently applied, and clearly communicated to the client by the design initiators—a core group within the business. To borrow from Mies van der Rohe, “ less is more”. They focus on what they are great at Expertise comes with experience and talent—which doesn’t come overnight. Great AED businesses have clarity about their expertise and they focus on this. They concentrate on what they are great at. They don’t take on work that isn’t within their expertise and they clearly articulate and deliver their value proposition. They thrive in their specific niche.
They are very good negotiators The leaders of successful design firms are very good at negotiating—their opinions are considered and highly valued. Negotiations are reputable and more often than not, all parties feel respected, listened to, and satisfied with the outcome, whether that be a design, a project delivery, or business negotiation. Their negotiations strengthen their relationships.
They take on work on their terms High performing AED businesses are clear about the work they want to take on and just as importantly the work sectors and clients. They have a clear sense of the value they bring to a project; their point of difference and they are able to clearly articulate this to the marketplace. They don’t pursue and take on work with clients that don’t share their values. They don’t negotiate on price. They are sought out by the marketplace Successful AED firms have a value proposition that sets them apart from most. They are sought out by the market place due to the reputation of their leaders, their expertise, their ability to collaborate and innovate, and their relationship skills. Due to their demand, these companies become very valuable. They charge more than others Successful design firms are typically more expensive than others. They are commercially astute but understand clearly the value they bring to their clients and to the project. They focus on communicating their specific expertise, innovation, and their unique value proposition—so that the client understands the flow on benefits to the project and their business. They’re not reducing their fees.
They surround themselves with business expertise Successful design firms surround themselves with experts in business. It’s their team. Whether that be across strategy, finance, IT, BIM, project delivery, contracts, mentors, or systems. By surrounding themselves with business expertise, the leaders are able to focus on what they are great at—design, generating work, and client relationships; and they are constantly learning from these experts. Their clients love working with them Clients love working with these firms. The client experience across all touchpoints is compelling—client service is paramount and this culture flows throughout the entire business. They partner with their clients to build mutually beneficial relationships to deliver outstanding work. They attract the best and brightest people—and they retain them One of their core capabilities is their ability to source and entice the best and brightest professionals and then to develop and retain them. People are at the core of what they do. They provide fulfilling challenges, flexible working conditions, and clear paths to leadership. For them, it’s about people, not buildings. The leaders focus on client relationships, winning work, design, and representing the business The leaders concentrate on building and maintaining close relationships with clients, winning reputable work, developing designs, and representing the business to the best of their ability. The leaders as a collective are across all elements of the business—the “business drivers”. However, they certainly aren’t intimately involved—there are others in the business that have this covered. They don’t complain about the industry because they are winning Their businesses are thriving, they are producing outstanding work, they are surrounded by talented people, working with good clients and they are commercially successful. What’s to complain about! For them, the industry is exciting and compelling. They don’t compare themselves with others Because these businesses are winning, they’re not interested in comparing themselves with others—forget benchmarking! They are achieving their aspirations, well respected and sought out by the industry. They are outward looking, seeking worldwide industry trends and innovation. But they pay minimal attention to others in their space.
They provide above average remuneration These businesses have talent and they reward their people accordingly. That sets the benchmark across the organisation. Team members are valued and remunerated for the value they bring to the business. They provide above average remuneration. They’re clear about who they are and where they are heading Successful AED firms have an unclouded vision of why they do what they do. The leadership is aligned with this direction and hence this flows throughout the entire business. It’s articulated and communicated regularly. They are focussed and driven by this purpose and where they are heading. And it’s not necessarily to conquer the world. It’s to be the best at what they do. Their consultant teams are of a similar ilk Successful architecture, engineering, and design firms associate and align themselves with equally successful professional consultants. When they come together as a team, they are consultative industry leaders. They work with the best, in order to operate at the top of the industry. And they don’t talk about it. They get business Although the leaders are focussed on what they are great at—client relationships, design and delivery, and generating work, they are somewhat surprisingly educated and informed about most business matters. And that may be across, commerciality, fees, contracts, the marketplace, financials, or people management.
Do you want to achieve a greater level of success? Management for Design is your essential business partner, to enhance your performance. Refocussing your way of working means you’ll spend less time micro-managing, while the key decisions will always remain firmly in your hands. For more information, contact Rob Peake on rpeake@m4d.com.au.
Association of Consulting Architects Australia Webinar Series
Management for Design Director, Robert Peake, recently just concluded a twopart webinar series with the Association of Consulting Architects Australia. Servicing clients and delivering projects are key to the success of an architectural practice, but attentive, ongoing practice management is equally important. Unfortunately, many architects neglect the sometimes complex day to day running of the business to focus on the more enticing aspects of architecture. By popular demand, Robert as invited back to ACA Insight, with an updated presentation of his very successful ‘Business of Architecture’ series originally delivered to their audience in 2015. Over this two-part webinar series, Rob shared the 10 foundations required to build a successful, sustainable architectural practice. Rob unpacked and explained the complexities of business management, focusing on the main elements that make up an architectural business – people, strategy, business and financial management, brand, systems, delivery, risk management, marketing and communications, and the all-important succession planning.
For more information on this series, contact Rob Peake on rpeake@m4d.com.au.
A/E/C Strategic Planning: Executive Survey Report by PSMJ A/E/C principals who think of “plan” as a noun tend to write a nice neat document, tuck it into a three-ring binder, and let it gather dust on a bookshelf while they make day-to-day decisions and react to events with little or no thought to a long-term direction. Think of “plan” as a verb instead—something you do all the time, tending to it at regular intervals—a process that never ends—an ongoing part of your proactive approach to the marketplace and to running your business. The best strategic plans share these attributes: — Simplicity — Clarity — Measurability A strategic plan is your carefully-considered written description of where your firm is going and how you will gain competitive advantage by capitalizing on its unique capabilities. It accomplishes the following: — Identifies what you bring to the marketplace to provide value for clients. — Presents a specific vision of what your firm will look like in the future — Establishes measurable firm wide and operational long-term and interim goals — Defines the strategies that will achieve your goals. — Assigns responsibility and accountability for making it happen. A strategic plan is not: — A budget — An operational plan — A list of tactics — A one-time event Underscoring that importance of “plan” as a verb rather than a noun, we wanted to better understand some of the latest breakthrough strategies and tactics that A/E/C firms are using to get results from their strategic planning. We wanted to find what works and what doesn’t. Click here to read the full report prepared by PSMJ | Resources, Inc.
Reading List Federal Budget 2019-20: A middle-market perspective Prepared by Pitcher partners Federal Budget 2019-20 A middle-market perspective
Prepared by Pitcher Partners 3 April 2019
The Government is firmly in election mode, spruiking its perceived Budget winners and its economic credentials. The question remains, will this be enough to sway the Australian electorate, and overhaul the 5% deficiency in the current polls? Click here to read the full white paper
Design Management for Architects Stephen Emmitt This unique guide helps architects improve their management skills by addressing the relationship between the management of the design project and the design office. The author demonstrates how a professionally managed project, conceived and delivered within a professionally managed office ensures that client values are translated into construction without loss of creativity. Impact 2030 PSMJ | Resources, Inc. Predicting how client demands, design techniques, environmental conditions and financial forces will change over the next decade? In a fluid and dynamic industry like A/E/C, that’s a challenging exercise. Click here to purchase the full report
Why Architects Matter Flora Samuel Why Architects Matter examines the key role of research- led, ethical architects in promoting wellbeing, sustainability and innovation. It argues that the profession needs to be clear about what it knows and the value of what it knows if it is to work successfully with others.
Rise & Resist: How to Change the World Clare Press Rise & Resist takes a wild trip through the new activism sweeping the world. The political march is back in a big way, as communities rally to build movements for environmental and social justice.
MANAGEMENT FOR DESIGN WINTER RELEASE 2019
The Importance of Cash Flow Forecasting Often, when Management for Design asks business leaders if they control their cash flow, we hear a resounding “yes!” But when asked how they do it—the response is usually a more tentative “well... we check the bank account every day.” This is not an effective cash flow management strategy! Firstly, your bank account is a historical record of the comings and goings of your money. Unless you have a proper plan in place for how you are generating money and how it will be spent, simply reviewing the bank balance daily will not make it grow! One of the most important tools in business is a cash flow forecast. Would you ever sit in a car, put a blindfold on, and then start driving? That’s what managing a business is like, if you don’t have a cash flow forecast in place. Three things to set you up for success 1. Know how to differentiate between profit and cash 2. Create a cash flow management system, including a safety bank balance 3. Review and manage your cash flow regularly Know how to differentiate between profit and cash Firstly, profit and cash are different. Profit is a measure derived from income (revenue) less expenses and is reported in your income statement. Cash is simply the money you have in your bank account. Each business transaction will affect your profit and cash in different ways—and at differing times. Paying tax, purchasing computers and equipment, waiting on debtors to make a payment, or the creditors you haven’t paid yet affect your profit and cash position differently. Most of the time, the effect on your cash position can be delayed and occur after the change in your profit position. So, which one’s more important? Profit or cash? The answer is actually more complicated—and the two are interrelated. As your business develops, the more you will probably need to invest in systems, equipment, additional people, and premises—all of which require cash. In most cases, you’re investing this cash before you earn any additional profit, so to make more profit or grow your business, you will require more cash. Of course, you can also borrow it or receive it from shareholders or investors, but the point is, to understand how cash and profit impact each other. In saying this, the age-old saying “cash is king” usually prevails. There have been plenty of profitable businesses that were forced to close down because they ran out of cash. Having a loss on your Profit & Loss statement (P&L) doesn’t mean you’ll go out of business, running out of cash is much harder to recover from.
Looking at just one of these metrics (profit and cash) doesn’t tell you the whole story. Just because you had a profitable month doesn’t mean you had a positive cash flow month. Similarly, just because you have cash in the bank doesn’t mean your business is performing well. That’s why cash flow and a P&L must be looked at together. Create a cash forecasting system Cash can be your single most important asset, it’s the lifeblood of your business. You need a cash system that allows you to forecast, as accurately as possible, your cash in and cash out. This may start as a monthly forecast, but depending on your needs, it could turn into a weekly or even daily system. The point is, you need a cash forecasting system. Starting with historical numbers, you can build out your first cash forecast using either a cash management system or simply MS Excel. The first time you create your forecast, everything is based on historical numbers and future assumptions. Each month that passes is going to tell you something about the accuracy of those assumptions and give you the opportunity to assess and revise. Ask yourself the following: •
What was inaccurate about your assumptions?
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Was this a “one-time thing”?
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How can you refine your forecast based on the actuals that just happened?
A cash flow forecast, coupled with your P&L, gives you an accurate picture of the financial position of your business and where it is heading. Most importantly, it gives you the knowledge to make more informed strategic decisions. If you don’t have the capability or capacity to create cash flow forecasts, work with an experienced accountant to create them for you.
Review and Manage With a cash flow forecast, you can see which months of the year you can expect to face a cash deficit and which months you’ll see surpluses. This information can assist you to hold over funds from surplus months to cover deficit months. It can also give you insights into your business when you compare forecasts to the actual figures. Not only can a cash flow forecast help you to even out your cash flow, but it can also help you to make important decisions, such as when to make a capital purchase and when to reduce expenses moving forward. By reducing sporadic cash flow and maintaining a healthy equilibrium, your business can enjoy the benefits of increased stability. So, what are the steps you can take in your business, to prevent you from running out of cash? 1. Ensuring enough cash reserves in your business to cover 2-4 months of expenses (this will depend on your risk profile) 2. A cash plan and forecast that you use to make informed business decisions 3. A clear understanding of the difference between profit and cash Management For Design adds certainty to business decisions by combining your strategic goals and hard data. We uncover the fundamentals of your business, identify areas for improvement and enable sound, evidence-based decisions, to move your business and projects forward confidently with fewer surprises. For more information, contact Gordana Milosevska on gmilosevska@m4d.com.au.
Managed Technology Solutions That Deliver Superior Results Management for Design has significantly developed our technology services through partnering closely with industry-leading architects, engineers, and designers. We are now the only AEC industry specialist technology provider that can provide you proven technology solutions specifically tailored to your business requirements.
Licensing From Autodesk to Adobe, Microsoft or M-Files—we take the work out of software licensing. By optimising types and numbers of licenses, we provide the best pricing and predictable billing, enabling you to focus on successful projects. Procurement We select, configure, install, and maintain devices that enable you to get the job done. We’re specialists in the AEC industry and understand how to outfit your team with the most suitable hardware, for each of their specialised roles. IT Managed Services We provide your team with superlative support. Through remote access or on-site expertise, our skilled technicians will help and assist you with all of your technology needs.
Strategic Consulting As experts in the AEC industry, we can help you plan for, and achieve, technological superiority in your business. Whether that’s through improved processes, work-flows, BIM readiness, or emergent technology, we’ll put you at the forefront of your industry.
Through integrated systems, expert people, and effective decision making, we maximise your potential and free up your time, allowing you to focus on what you do best—building your business and creating great design. To discuss how we can transform the technology in your practice and assist you to achieve superior results for your projects, contact Dinesh Rajalingam, Technology and Innovation Director, here.
Get More Out of Deltek Management for Design provides strategic, financial, technology, and business management services that maximise the potential of architects, designers, planners, engineers, and other design professionals. Maximising your business potential is a combination of strategy, systems, and people—interwoven, they enable you to build your business and produce great work. However, there’s often a disconnect that prevents you from realising the benefits of the investment you’ve made in your systems. What’s going wrong and what can you do about it?
Enhanced Deltek Support With over 10 years of experience helping architects, engineers, consultants, and other design professionals, we understand how to optimise your software, for your project and business success. Behavioural Change Our skilled team are experts in helping businesses to streamline and improve their operations, by combining the power of business systems and behavioural change.
System Reviews Your software is only a tool. In the competitive business environment that most architectural, engineering, and other design firms operate in, it’s important than ever that your systems are right for your business, work effectively, and are embraced by your whole team. Bespoke Deltek Development We can assist you to identify, develop, and implement custom Deltek functionality to enhance the software. M4D are specialists in the AEC industry and understand how to outfit your team with the best systems, for each of their specialised roles. Through integrated systems, expert people, and effective decision making, we maximise your potential and free up your time, allowing you to focus on what you do best—building your business and creating great design.
To talk about how we can help to optimise the systems in your practice and assist you to achieve superior results for your projects, click here to email Callum Bruce, our Business Systems Director.
Your Business is Only as Solid as Your Financials What Drives Profitability? There’s a number of factors that drive profitability for Architects, Engineers and Design (AED) businesses—particularly in today’s competitive environment. Even so, many businesses have set record profit levels in the past several years. How have they achieved this? Firstly, they have not spread their attention across the many components of the business that may affect performance. And secondly; they have had a clear and concise focus on the Financial Management of their businesses. Though notably, more pragmatic challenges in the existing environment can make this key area of any business difficult to address. The Financial Management Challenge Many AED businesses build their own systems or adapt to what they have been exposed to in the past. It’s rare for the leaders to be exposed to great business and financial management before establishing their own businesses. Not only that, we are in an environment of reducing fees for service. It’s goes without saying that winning work with low fees places significant pressure on profitability, quality, and cash flows—and ultimately on the “brand”. As a consequence, strong and effective financial control and management systems are becoming increasingly important. The ability to understand a company from financial statements is one of the primary differences between small and large businesses. Where and how will you attain this capability?
Where to Focus? You might feel that your finances are complicated and confusing, but the following should help you gain control of them. 1. Have a clear strategic direction Your strategic objectives will articulate where you currently are and where you would like to go, in the next few years. It should detail how you will finance your business and look ahead 3-4 years, with deliverable outcomes for the next 12 months and 90 days. It should be concise with definitive time-frames, yet flexible. Leadership needs to drive the process and it goes without saying that it should be exciting. 2. Know your financial position You should regularly monitor the progress of your business. On a daily basis, you should know how much money you have in the bank, how many invoices are currently waiting to be paid, and how many projects you have in the pipeline. You should also review your position against the targets set in your financial plan on a monthly basis. 3. Ensure clients pay you on time Businesses can run into major problems because of late client payments. To reduce the risk of late or non-payment, you should make your credit terms and conditions obvious from the outset. You should also quickly issue invoices that are clear and accurate. Using a sophisticated credit management system will help you to keep track of clients’ accounts. 4. Know your day-to-day costs Managing costs is a critical element of success. Even the most profitable companies can face difficulties if there isn’t enough cash to cover day-to-day costs—such as rent and wages. You should be aware of the minimum amount of cash your business needs to survive and ensure you do not go below this – increasing competition has put pressure on the pricing models of even the most established businesses. 5. Keep up-to-date accounting records If your accounts are not kept up-to-date, you could risk losing money by failing to keep up with late client payments or not realising when you have to pay your suppliers. Using a good record keeping system will help you to track expenses, debts and creditors, apply for additional funding, and to save time and accountancy costs. 6. Meet tax deadlines Failing to meet deadlines for filing tax returns and payments can incur fines and interest. These are unnecessary costs that can be avoided with some forwardplanning. Keeping accurate records saves your business time and money, and you can be confident that you’re only paying the tax you owe. Therefore, it’s important that you meet your obligations.
7. Become more efficient and control overheads Is your business operating at its most efficient? For example, cutting the cost of your internet, phone, or software licensing, through more competitive billing, optimising the number of user accounts required, or doing away with software and equipment that’s not essential, can save your business money and allow it to operate more efficiently. 8. Get the right funding It is essential that you choose the right type of funding for your business. Each type of funding is designed to meet different needs. Smaller businesses usually rely more on business overdrafts and personal funding, but this might not be the best kind of funding for your company.
9. Seek professional advice It is always very stressful facing financial problems as a business, but there is help and advice available to help you tackle them before they get too large to handle, so seek professional advice as soon as possible. There are also some initial steps you can take to minimise the impact, such as tackling priority debts first and assessing how you can improve your cash flow management. How Financial Management & Reporting Drives Consistent Profitability An effective solution—streamline financial management by unifying disconnected processes and fragmented information into a common, shared environment—a single source of truth. For decision makers at all levels, such solutions present a current view of clients, workload, resources, and finances to better manage budgets, create and consolidate reports, and look for trends and relationships in all parts of the business.
A unified business solution is ideal for exposing the consequences that can be wreaked from the numerous small and seemingly disconnected decisions that are made by the leaders. Clients now require complex and time-consuming project reporting and financial accounting. Though critically important for client relations and compliance, this non-billable work does represent an opportunity cost. Resources that are engaged in providing invoice transparency are not doing work that could otherwise be driving growth. Modern financial management solutions take care of this by placing controls on each project, enabling people to record billable time to the appropriate phase, task or cost-centre. Correct and client-acceptable invoices enable accounting teams to bill faster, reducing service-delivery cash cycles, while delivering a higher level of client satisfaction. Integrated financial reporting solutions provide consultancies with current, ondemand financial intelligence about their business operations, which help to manage risk and streamline operations. In turn, the efficiencies provide more time for senior managers and partners to focus on clients.
Conclusions Economic conditions are constantly changing and the factors that contribute to growth in all sectors are shifting. Profitability within the AED industry have historically been dependent on overall economic conditions. When the economy is booming, many businesses do so well they are too busy to implement solutions. And the economy slows, budget constraints usually forestall upgrading or implementing needed solutions. But that doesn’t need to make management queasy. Controlling the uncontrollable means businesses must smooth the jagged peaks and fill the deep valleys of an otherwise cyclical business. The only way to accomplish this is by truly optimising project and financial management capabilities. Only then will a AED business be able to profit consistently.
Management for Design’s New Website
We’re excited to announce the new Management for Design website is now live. On the site you can find more out about our services and areas of specialisation. You can also browse and read our full back catalogue of Business Journals and Seasonal Release articles. Additionally, you can learn about our client and strategic relationships, which we leverage to maximise the potential of architects, designers, engineers, planners and other creative professionals. To view our new website, please click here
Reading List Measure What Matters John Doerr Legendary venture capitalist John Doerr reveals how the goalsetting system of Objectives and Key Results (OKRs) has helped tech giants from Intel to Google achieve explosive growth—and how it can help any organization thrive.
The Infinite Game Simon Sinek A checkers match and the Super Bowl are finite games. Someone wins. Someone doesn’t. Business, by contrast, is a ceaseless endeavor in which playing field, players, and rules change constantly. Leaders require not just the resources but also the will to win such contests, organizational expert Sinek explains. Lean In: Women, Work, and the Will to Lead Sheryl Sandberg Written with humor and wisdom, Lean In is a revelatory, inspiring call to action and a blueprint for individual growth that will empower women around the world to achieve their full potential.
Building Confidence Report Building Ministers’ Forum This document outlines a roadmap for reforms, including target time-frames in each jurisdiction to implement recommendations. This approach acknowledges that implementation and timing will need to be tailored to varying regulatory systems. Read the full report here Future Practice Rory Hyde Seventeen conversations with practitioners from the fields of architecture, policy, activism, design, education, research, history, community engagement and more, each representing an emergent role for designers to occupy. Whether the “civic entrepreneur,” the “double agent,” or the “strategic designer,” this book offers a diverse spectrum of approaches to design, each offering a potential future for architectural practice.
MANAGEMENT FOR DESIGN SPRING RELEASE 2019
Presenting 2030: An uncertain future for our industry? Thank you to everyone who was able to make it to our recent networking event. Frank A. Stasiowski, FAIA from PSMJ Resources, Inc. gave a truly engaging presentation on the future of our industry.
With bold predictions like the end of time recording and retirement; changing the structure of fees; the impact artificial intelligence will have on the way we work; generation shifts in leadership; and business succession—there was a lot to consider. It was a pleasure to host everyone in our offices, and we’re looking forward to seeing you all again soon at our next event. If you would like a copy of the presentation slides from this event, or if you didn’t receive an invitation and would like to receive invitations in the future, please contact events@m4d.com.au.
How you Market How you Growth
Embracing Disruptive CHANGE in…
Project Delivery Human Resources IT/AI How you Get Paid Leadership How You Capitalize How you Make Acquisitions Your Business Model
40
Effective Design Management Effective design management should be one of the core values of your architecture and design practice. However, when Management for Design delves into this subject and asks business leaders to explain and articulate their processes, they tend to struggle with their response. Consistent and effective design management across the studio is not common in our profession. Why is that? Is it because, as architects and designers, we are inherently creatives—and creatives consider management as somewhat counter-intuitive to design innovation? Creativity and management don’t fit neatly together! Creatives don’t necessarily embrace management, even design management. But the key thing is, you need to find a balance between creative freedom, innovation, and business management. Innovation needs to flow throughout the business and be actively encouraged and resourced. But strong and consistent business performance also requires business management and systems. Typically, the larger your business is or becomes, the more you will rely on a way of working that is consistent, methodical, and aligned with your studio culture— that’s business. Effective design management finds a balance between creative freedom and management systems.
Why is Design Management Important? Clients don’t choose you for your design talent, they choose you for your ability to deliver high-quality design through an exceptional experience. Your design approach, outputs, and the ability to “capture” your intellectual property provides you with the opportunity to innovate and to truly differentiate your business from competitors. Effective design management should be one of the core values of a successful architectural and design practice—the controlling mechanisms that allow the creative process to be transformed into fee-generating activities. Management includes the management of people, technologies, information, and resources. The essence of design management is to maximise these resources and outputs, alongside promoting creativity and innovation within your business.
Effective design management—a consistent approach that is understood and applied throughout the studio—allows your business to: •
Ensure consistent processes (and to improve them)
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Capture and deliver the design intent
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Maximise value to the stakeholders
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Improve your relationship with your clients
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Build your brand and marketing efforts
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Improve your financial performance
Leadership & Culture Project Brief
Plan
Ini�a�on
Capture Central Idea
Design Development
Review
Deliver
Evaluate
Current Status Design is central to the tertiary education of architects, engineers, and designers, but graduates receive little or no training in design management and designers are having to learn this on the job. The challenge for architecture and design businesses is to provide a stimulating and creative studio environment that allows the space for creativity within an organised environment. Like any other business system, design requires monitoring and control mechanisms. Consistent processes ensure that design outputs are consistent, design-intent is maintained, and quality work is produced and delivered. Having said that, ineffective design management is one of the major causes of rework and loss of productivity in the studio. And quite often it’s the leaders that are creating this. Unresolved design work and design changes at the wrong time can be one of the biggest challenges for most studios. Quite often, design reviews occur too late in the process and documentation and production has moved ahead of the design decision-making process. Design management requires focus and commitment from the leaders. The unique value architects add to people’s lives and communities is grounded in an ability to deliver something their competitors cannot: design vision. But being a creative auteur doesn’t always translate to business success—design needs to be a professionally managed service—effective and responsive. With the move towards integrated project delivery and the uptake of the “design manager” role by contractors, no longer is design or the management of design the exclusive domain of architects in a collaborative, digital marketplace. To be successful, what’s required is to ensure projects are managed professionally and are conceived and delivered within a professionally managed studio. Read more here, to find out what’s required to start implementing effective design management in your business.
Business Conditions Survey 2019 Each year Management for Design conducts our Business Conditions Survey. The aim is to accurately assess the prevailing economic and business climate and to drive thinking and decision making to assist businesses to work through the current circumstances and deliver sustainable growth.
So, what’s happened to confidence in the economy and business conditions compared to the same time 12 months ago? We asked over 700 business leaders, directors, and executives from the architecture, engineering, consulting, and design industries. The results indicate a noticeable reduction in confidence levels from 12 months ago. Accompanying this is an increased level of uncertainty (and pessimism?) as our respondents are faced with uncertain economic and industry conditions! Only 10% of our respondents are very optimistic about their business performance over the next 12 months (compared with 33% this time last year). This is a level of uncertainty not seen over the past 10 years of conducting the survey. The Business Conditions Survey aims to accurately assess the prevailing economic and business climate and to drive thinking and decision making to assist businesses to work through the current circumstances and deliver sustainable growth.
Key points from our business conditions survey are: •
fter years of increasing revenues there is a noticeable tapering in growth A expectations for businesses in our industry
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nly 15 % of respondents expect improved economic conditions over the O next 12 months
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ver two thirds of our respondents expect their profit margin to stay the O same or decrease (25% expect their profit margin to decrease!)
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0% of respondents do not expect to have a skills shortage moving 7 forward – significantly increased from past years
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nly 5% of our respondents expect to significantly increase their O revenues over the next 3 years
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L eading indicators, including forward revenue projections, point to softening in the year ahead
So, certainly not optimism! Not surprisingly one third of our respondents don’t expect to increase their fees (compared to 10% last year) and salary levels will only increase moderately (if at all) The full Business Conditions Survey Report will be released in December 2019. If you would like to purchase a copy of the report, please contact Rob Peake at Management for Design via rpeake@m4d.com.au.
CPA Congress 2019 In November, Management for Design Director and Co-founder, Gordana Milosevska, was invited to chair two sessions at the CPA Congress in Melbourne. The sessions chaired were “Finance Transformation—make it real, make it happen, make it last!”, presented by Stephannie Jonovska, and “Reinventing your business and teams when change happens”, presented by Helen Mac. Stephannie, Manager Finance Transformation, BlueScope Australia and New Zealand, focused on finance transformation as a buzz word with a high element of FOMO. She talked about how BlueScope is integrating process improvement with technology optimisation while importantly keeping people at the centre.
In the second session, Helen introduced seven keys to reinventing our way through “storms” in our business and with our teams, to make sure that we all arrive safely at our ultimate destination—business success. With a strong focus on the transformation that technology is having on the industry, congress delegates were asked to immerse themselves in technology and develop a greater understanding of the digital world. Some of the most significant challenges for finance and accounting professionals are: •
Accounting for the Robots, how the accounting industry is changing in the face of rapidly developing artificial intelligence technology
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The Future of Digital Money, where the increasing digitisation of money will blur the distinction between money and data
Overall, the congress was very insightful and demonstrated an exciting and dynamic future for the industry.
M4D launches partnership with ACA UK at London Build 2019
Management for Design (M4D) has recently partnered with the Association of Consultant Architects UK (ACA) to provide financial and business management services and systems to their members. The partnership was launched in November at London Build 2019, where ACA President, Andrew Catto, invited M4D Finance Director, Carla Dexheimer, to speak about the “Business Foundations” necessary for running and growing a successful architecture practice. Click here to access a copy of the presentation. A component of this partnership is that ACA members will have on-line access to the “M4D Business Foundations Starter Kit” that is used and recommended for establishing and sustaining business success. As well as access to a help-desk and advisory service. This partnership - based in London - reinforces our commitment to our international expansion and our desire to assist a larger number of architecture, engineering, design, and consulting studios and leaders worldwide If you’re in the UK and are interested in talking to us to about helping your business perform better, contact Finance and Business Director, Sim Thirunesan directly: sthirunesan@m4d.com.au.
M4D Business Systems Selector Management for Design is excited to announce the launch of our Business Systems Selector. With this unique tool, architects, engineers, designers, planners, and consultants are able to enter information about their business practice, processes, and priorities, to find out which system software will be best suited to their business. To find out more and find out how to access the Business System Selector, please contact Callum Bruce cbruce@m4d.com.au.
Reading List What Would Google Do? Jeff Jarvis What Would Google Do? is an indispensable manual for survival and success in today’s internet-driven marketplace. By “reverse engineering the fastest growing company in the history of the world,” this book offers indispensable strategies for solving the toughest new problems facing businesses today.
Impact 2030 Frank Stasiowski Impact 2030 outlines how demographics, globalization, government expansion, and technology advances can benefit firms that plan ahead — and be devastating for those that don’t prepare. Frank made bold yet accurate predictions about A/E/C practice management and strategic shifts in the ‘80s, ‘90s, and ‘00s. Nearly all have come true. Those who integrated his prognostications have reaped the rewards.
Business Growth Manifesto Louis Dharma Do you want to create exponential growth in your business & leave your competition in your dust? This book includes the “magic” ratio you can use to grow ANY Business, the six policies to growth hack your business and explains how to double your business & crush your competition in the fastest time humanely possible.
Why Architects Matter Flora Samuel Why Architects Matter examines the key role of research- led, ethical architects in promoting wellbeing, sustainability and innovation. It argues that the profession needs to be clear about what it knows and the value of what it knows if it is to work successfully with others. Without this clarity, the marginalization of architects from the production of the built environment will continue, preventing clients, businesses and society from getting the buildings that they need.
MANAGEMENT FOR DESIGN FIRST QUARTER RELEASE 2020
Business Conditions Survey: Confidence & Economic Outlook According to our recent Business Conditions Survey, there is an increased level of uncertainty amongst the leaders of architecture, engineering and design businesses compared to 12 months ago. There is a change in the levels of optimism about the economy and business conditions moving forward compared to 12 months ago. Only 15% of our respondents expect the economy to be growing over the next 12 months. The remaining respondents—slowing, declining or stagnant! HOW CONFIDENT ARE YOU ABOUT THE GROWTH PROSPECTS OF YOUR COMPANY IN THE NEXT 12 MONTHS?
10% Very Optimistic That Business Will Significantly Improve and Grow Cautiously Optimistic That Business Will Significantly Improve and Grow The Business Will Face Difficult Conditions
90%
Unlike previous years, only a very small proportion of respondents are very optimistic that their business will significantly improve and grow. (5% this year compared to over 30% last year and the previous years) And ominously, 10% of respondents believe that their businesses will experience difficult business conditions. This compares with the previous year where only a nominal proportion of businesses expected difficult conditions. Adding to this downturn in confidence levels, a high proportion (25%) of respondents expect their profit margin to decrease! This compares with 14% in 2018 and 7% in 2017. On a more positive note, 35% of our respondents expect to increase their profit margin, although this is lower than the previous year (45% in 2018). Looking out 3 years, one-third of our respondents expect the economy to be growing and two-thirds (65%) expect the economy to be slowing, stagnant or declining. Not confident! If you would like to purchase the full report, please click here.
WHAT DO YOU EXPECT TO HAPPEN TO YOUR PROFIT MARGIN OVER THE NEXT 12 MONTHS?
35%
40%
Increase Decrease Stay the Same
25%
HOW DO YOU PERCEIVE THE ECONOMY IN THE NEXT 12 MONTHS?
15%
25%
Growing Slowing Stagnant
40%
20%
Declining
LOOKING AHEAD FOR THE NEXT 3 YEARS, HOW DO YOU PERCEIVE THE ECONOMY?
5% 25%
35%
Growing Slowing Stagnant Declining
35%
What can your business financials tell you?
As a business leader you’re confronted with a myriad of financial information: your income, your expenses, your profit margin, cash position, and project performance—and that’s only the start! But over and above the numbers, what can these financials tell you, to enable you to make powerful business decisions? Take our finance assessment and evaluate your ability to read beyond your numbers and significantly impact the success of your business.
Business Foundations Most architects, engineers, and designers start their practices with little to no experience of running in building a business. Typically, the initial focus is on design, project delivery, and servicing client requirements—with a mind on winning new clients and new work. However, there is a myriad of elements of managing, controlling, and building a business that founders and principals require to become successful owners and leaders. So, what are these elements that will create and build successful Architecture, Engineering, and Design (AED) businesses, with satisfied and well-rewarded leaders? Our work with architects, engineers, and designers has identified common themes, which set practices up for success—The Business Foundations of Architecture, Engineering, and Design.
The foundations are: 1. Purpose and Direction 2. Leadership 3. Team 4. Systems 5. Project and Resource Management 6. Financial Control and Profitability 7. Managing Risk 8. Marketing, Communications, and Brand 9. Design, Innovation, and Delivery 10. Succession
1. Purpose and Direction Our research indicates that up to 70% of design business don’t have a clearly articulated plan identifying where their business is and where it’s heading. That’s seven out of ten people at the leadership level, who don’t have a clear vision for their business. So, if the leaders are not clear about where the business is heading, then how are their people expected to be on board and in line with the business’ direction! To start, you need a clear understanding of where your industry is heading. You should be at the forefront of the industry and have a picture of what will be required into the future. Secondly, you need a clear understanding of what you are great at and what your focus will be. For your business to thrive today and into the future, you need to be great at something that the market has a demand for. And a key element of that for architects and designers is market expertise. Your strategy needs to be built around what drives your business—what will lead you to success now and into the future. How does your company win work? How do you generate the work? What is your expertise? How are you positioned in the marketplace? How do you develop the concept and design? How do you deliver the work? What sort of people do you need to have around you? How do you become innovative? And finally, what sort of financial management control do you need? A strategy is built around the answer to these and other related questions. A strategic plan with clear and concise strategic objectives and clear plans for implementation, only needs be 3-4 pages. The key element is to have a clear path, something that you are all aligned with as a leadership team, that you’ve communicated with your key people, and everyone is on board with.
2. Leadership Architects in a leadership position are typically talented and experienced at designing, nurturing clients, and delivering projects. However, they often lack expertise around establishing, running, and growing a successful business. As a leader, you need to balance the time you spend in the business—which is doing the work—and the time you spend on the business and how much time you spend on yourself. As a rule of thumb, you should spend at least half a day, to a day, on your business each week. Whether that’s nurturing and mentoring your key people, developing systems or developing a marketing program. None of this comes overnight, this takes time, experience and learning from others.
Great leaders of architectural businesses: •
Collaborate
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Delegate
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Expect responsibility and accountability
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Empower people
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Promote trust in their people
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Constantly reinforce the value that they bring
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Have a focus on performance and profit
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Share information and rewards
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Have a clarity of purpose
3. Team Your team is comprised of the people that are in your business, as well as the team that is outside your business. And the people outside your business are just as important as the people inside your business. These are people like your mentors, your business advisors, your accountants, your lawyers, your consultants etc. Your responsibility is to find and nurture those relationships. When building your team, you need to hire for cultural fit first—and skills second. Finding people who are aspirational and share common attributes to your practice is most important. Quite often, the mistake businesses make is hiring for skills and not cultural fit and often that comes down to who you put in charge of hiring. There are typically 4 things that your people look for: 1. Who do I report to? 2. What do I need to do? 3. How will I do it? 4. And how well did I do it? Develop clear performance criteria around the expectations, and review performance against progress; what’s working and what needs to be improved. It doesn’t have to be complicated! Additionally, spending time with your key people on business management is essential. You need to educate and mentor—no-one else will do this for you. Perhaps a monthly management meeting, or directors’ meeting, where you can bring people in and expose them to conversations and give them responsibility for some of the actions that you require.
4. Systems Your system is a set of behaviours that are performed consistently in your business. It’s the way that you do things, it’s not a piece of software. Some of the systems you should have in your business include: •
Ensuring you have the right fee
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Managing your time and projects
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Tracking project performance
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Ensuring you will be paid
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Ensuring your people are fully utilized
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Managing your financials
These should all be systems—they should be performed consistently the same way each time. They should be a set of behaviours that you routinely follow. For example, this is the way we recruit, and this is the process that we go through. These are the questions that we ask, these are the qualities that we’re looking for, this is how we induct, this is how we review performance, etc. That’s your system. By having strong systems in place: work is more consistent, less re-work is required, profitability is improved with increased efficiency and scope control, less frustration is experienced, extra time is created for leaders to be entrepreneurs, and client management consistency is improved.
5. Project and Resource Management Project and resource management has far less to do with people than you’ve been led to believe. If you want to make an impact in this area, your effort needs to be on developing a consistent way of working and then reinforcing and supporting that approach. In our experience, the level of project management expertise in architecture, engineering, and design firms is “poor”—and unfortunately, this lack of expertise is not addressed early on. Ask yourself “How do you manage projects across the studio and each project?” Great project management is fundamental to business success in our industry. Your projects require a plan around the work required, tasks, start and end dates, the time it’s going to take, assignment of resources, milestones, per cent complete, etc. The more complex the project the more detail is generally required. You should be tracking your progress every week—as a minimum.
So, what is Resource Management? •
Who is working on what and when?
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Who is available when?
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Who is over and underutilised?
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What are the resource requirements moving forward?
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How does this tie into billings now and into the future?
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How do regular reviews happen?
Unfortunately, most architecture and design firms don’t have an effective system that they adhere to for managing resources across the studio. As a business, you should have a clear picture of the workload moving forward. An effective and comprehensive resource plan ensures you’ve got the right number of people to complete the work, but also have the right people to grow the firm.
6. Financial Control and Profitability As you may know, profitability is a very good indicator of the effectiveness of your business and your business management. Achieving a 20% profit—that’s income less expenses—(before tax) should be your benchmark. That’s realistically achievable for any AED business. A strong profit allows you the ability to take on the work that you want to take on, work with clients you want to work with, and say no to projects and clients. It allows you to attract, reward, and remunerate the best people, whilst also investing in marketing, technology, growth, and training. Strong financial performance and profitability allows you to be in control of your business.
Financial control is about having at your fingertips the measures or information that will drive, or should drive, your decision-making going forward. The ability to forecast your future work allows you to project out your resourcing—the resources that you’re going to require and typically, that means people. Now, all this information is irrelevant unless you review it. You need to set up a regular monthly meeting, with someone who can interpret the information and understand the financials.
7. Managing Risk While Risk Management might not be the most engaging subject for leaders of Architecture, Engineering, and Design businesses, it’s an essential concern that you can’t avoid—and something you need to manage effectively. But, what does Risk Management mean? •
Surrounding yourself with the right expertise
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Adopting strategies and systems to minimise your risk and exposure
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Effective quality control to keep yourself free of unwanted and unnecessary disputes
While this can be an extensive subject, key issues most businesses encounter are categorised into three main areas. 1. Business Structure and Legals 2. Clients, Fees and Fee Negotiation 3. Insurances Ask yourself, does our business have the appropriate expertise, the strategies, systems, and effective quality control to minimise and manage our exposure. While some risk is out of the control of the business, most of the risks that a firm might encounter can be managed, reduced or eliminated.
8. Marketing, Communications, and Brand Your marketing effort has a singular focus, and that is to win work. When thinking about marketing, you need to ask yourself whether this is a valuable use of your time and resources and whether it will move your business forward in your ability to win work. Further, you must think about marketing in two elements—business development and communications. Business development is how you’re going to win work. Communications is how you’re going to build and raise awareness about your business. As a starting point, you should have a marketing strategy with a documented plan that’s agreed upon amongst the leadership team. It should document key areas that will move you forward towards your plans. You need to articulate your value proposition, identify your keys to success, your revenue projections by sector and what investments you need to have in place. Another aspect of increasing market awareness is communications through social media. It allows you to advocate and develop an online community that will contribute to the positioning of your business moving forward.
9. Design, Innovation, and Delivery Effective design management should be one of the core values of your architecture and design practice. However, when Management for Design delves into this subject and asks business leaders to explain and articulate their processes, they tend to struggle with their response. What’s required is to find the right balance for your practice. Typically, the larger your business is or becomes, the more you will rely on a way of working that is consistent, methodical, and aligned with your studio culture—that’s business. Effective design management finds a balance between creative freedom and consistency.
10. Succession Firstly, there are two elements of succession: Leadership Succession and Ownership Succession. Leadership succession is around developing your leaders—the next generation—the people that are going to take on the role of growing, building, and controlling your business. Leadership succession is often far more complex and challenging and should happen before ownership succession. The problem with leadership succession in our industry is that it’s often more difficult than in other industries. Quite often the leaders are the key initiators of design and client relationships, and they’re not necessarily skills that you can educate or develop people on. These traits are inherent in leaders in our profession and therefore they find it difficult to let go of decision-making around clients and design. Leaders feel that this is where they can most effectively contribute to the business. However, the greatest contribution you can make in your business could be the development of those that take your business forward. There is a great personal and financial reward in leadership succession. If you can change your thinking around leadership succession, you’ll be ahead of many other AED practices. Start with transitioning your decision making, your client relationships, and your design decisions. Give your people exposure to business management and give them clear expectations and responsibilities.n
Our financial and business management experience can maximise the potential of architects, designers, engineers, planners and other creative professionals. We believe everybody should focus on excelling at what they do best. Talk to us about getting the most from your business. Email Robert Peake rpeake@m4d.com.au.
The Future of Engineering 2030 What does the future look like for our industry in 2030? How will our work change throughout the next decade and where will we be by the end of this decade? If you aren’t thinking about these questions now, you are already behind the pace. In this article, we identify some of the biggest changes we expect to see in the next 10 years and ways your firm can adapt and benefit from them into the future.
Development of Artificial Intelligence Artificial Intelligence (AI) is encroaching on our everyday lives—affecting what we do and how we do it. As these systems and technologies develop and become more reliable, they will be integrated into design processes with the power to solve complex problems and the ability to create limitless variations—replacing, enhancing, or replicating the work that was previously completed by the designer. Your firm must be prepared to embrace change and be flexible to new approaches to working. You need to be thinking ahead and be open to the possibilities of technology. To do this, you will need to stay current with new and emerging technologies every year, including software, applications, languages and programs. Artificial Intelligence will have the capability to think ahead and make more and more decisions that are currently performed by humans. Our machines will have the capacity to design, complete project planning, do the economics on projects, and assist in just about everything we do. Audio inputs will allow us to describe our concepts and designs verbally so that the system can then produce a myriad of physical documents and solutions. The role of the engineer will be profoundly impacted by technology over the next 10 years. The underlying methodology is that design is initiated and developed via sophisticated coding. Once the options are developed and tested the resultant solution can be codified, stored, repeated, and altered. The design process will not only make the design process far more comprehensive, but also far more efficient.
Gen Z’s will be taking over As the next generation – “Generation Z” - becomes more influential (and begins to take over) a new culture will emerge in your firm. This generation will have a new way of doing things that is quicker, easier, more considered. They will, however, be more demanding and have higher expectations. Conversely, clients will also have the same expectations—they want the project completed quicker, more effectively, more sustainably. They will demand that work is performed perfectly the first time, and they want to pay less for it.
As a leader of your firm, you need to be thinking of ways to address this and get ahead of the fast-paced changes that are evolving. Perhaps focus on incremental changes, such as eliminating time-recording and replacing this with the achievement of agreed objectives. Hours worked is irrelevant to Gen Z’ers. Ultimately, you must be willing to change your current business practices and embrace the new ways of working that an in-demand and changing talent pool will be seeking. In essence, they will be the leaders and drivers of change in the coming future. Leadership transition will be extremely important Ownership transition will be different in the next decade and it is something that your firm will need to have a strong focus on into the future. Research has indicated that the retirement (transition) age in the industry continues to increase, and leaders have become less willing—or less able—to transition their businesses to the next generation, while the younger generation doesn’t necessarily see the value of buying into existing firms. It is now time to rethink your approach to ownership transition. Your firm won’t continue to develop or progress without the involvement of new leaders. Begin involving “millennials” in key decisions for your firm, let them brainstorm ideas and ways to move your business forward. Have a regular “millennial” meeting, where you discuss things that will drive your business forward and improve the current ways of working and strategies. Entrust millennials now - engage them in leadership decisions. There is a great personal and financial reward in leadership succession. If you can change your thinking around leadership succession, you’ll be ahead of many other Engineering practices. Start with transitioning your decision making, your client relationships, and your design decisions. Give your people exposure to business management and give them clear expectations and responsibilities. The New Industrial Revolution Advanced technologies are changing the way things are designed and made. The changes are so profound that many people call it a new industrial revolution. Generative design, virtual reality, robots, interconnected systems of sensors, 3D printing or additive manufacturing, and biological synthesis will all play a part in the formation of the built environment of 2030. What are your firm’s capabilities, how will your systems adapt, and how are you upskilling and broadening your capabilities in these areas? As a leader in your firm, you need to be cognisant of the value you provide to your clients. Your firm is not the work you do, it’s the solutions you provide—regardless of how they are achieved. Where there is change there is opportunity. Rather than these technologies replacing jobs, the scope of engineering’s influence will continue to grow. As such, engineering is poised to experience a renaissance—new applications and jobs will be popping up around every corner, especially in disrupted industries.
M4D Business Systems Selector
Management for Design is excited to announce the launch of our Business Systems Selector, coming early next year. With this unique tool, architects, engineers, designers, planners, and consultants can enter information about their business practice, processes, and priorities, to find out which system software will be best for their business. To find out more and ensure that you are notified as soon as the Business System Selector goes live, please contact Callum Bruce cbruce@m4d.com.au.
Consult Australia Leaders Conference Now in its seventh year, the annual Consult Australia Leaders Conference has been designed to provide a unique learning, networking, and sharing platform for senior leaders from within built environment consulting firms in Australia (and the Asia Pacific region more broadly). Management for Design Principal, Robert Peake, attended this year’s conference, which featured discussions and workshops with a diverse range of speakers.
The theme of the conference was The Built Environment 2030 and covered topics including new technologies, digital standards, education, non-linear career paths, humanitarian considerations, diversity, and commercial structures. From the conference, a few key points that emerged.
Change will be a constant in the future of work. Craig Rispin, Futurist from Future Trends Group, shared his vision of the world and the engineering industry of 2030, highlighting several key trends. He mentioned that into the future many people will have up to 17 different careers over their lifetime and firms will move to people on-demand models. This changing nature of work was also reflected in a presentation from Kim Seeling Smith, CEO of Ignite Global. Research on the future of work. People are increasingly looking for employment that focusses on the experience, has purpose (do well by doing good), and encourages collaboration (the end of management). Reinforcing these themes was Ryan McCarthy, Managing Director of Stryker, who having already implemented sweeping changes, proposed that 3 out of 4 people are not being engaged in their role and the effect this has on productivity. He stressed that you need to “find people’s natural talent, empower them, and foster their strengths.” Technology is changing every aspect of the profession. Advancing technology was an overarching theme throughout the conference and a crucial part of the uptake of new technologies will be the adoption (or lack thereof) of new digital standards. This topic was addressed by a panel featuring Simon Vaux, Director Digital Engineering, Infrastructure and Place, Transport NSW; Neil Greenstreet, Manager Digital Technologies, Natspec; and Dr Liming Zhu, Research Director, Software and Computational Systems, Data61 | CSIRO. The panel considered the available digital standards - why they are there (and why there’s so many!), which ones we should be using, and is there still space for competitive advantage amongst all these standards?
Education is not addressing the needs of the industry. While this point wasn’t the focus of any specific presentation, it became clear that the current education for engineering students is not preparing them adequately for the industry. There is a lack of business, collaboration, and enterprise knowhow amongst graduates, which ripples out into the future of the industry. Additionally, universities are failing to attract a truly diverse range of students, to bring perspective and different points of view. It remains unclear, whether the need a shift in education will occur—it requires industry leaders to be more vocal about their requirements. After-all, technology aside, the future of engineering is in the people who are yet to even enter the profession.
Reading List Art’s Principles Arthur Gensler Art’s Principles reveals the blueprint behind one of the most successful professional services firms, giving career-minded individuals the tools they need to excel in business. The book covers the essentials of leadership, talent acquisition and operations, while outlining the creative strategies that propelled a small business into one of the largest and most admired in its industry.
When All Is Said & Done Neale Daniher Neale Daniher sat down to pen a letter to the grandchildren he’ll never get to know. And then he kept on writing. In 2013, the AFL legend was diagnosed with Motor Neurone Disease- a cruel and incurable condition. He had a choice. He could spend his remaining time focused on himself, or he could seize the opportunity to make a better future for others.
Man’s Search for Meaning Victor Frankl Internationally renowned psychiatrist, Viktor E. Frankl, endured years of unspeakable horror in Nazi death camps. During, and partly because of, his suffering, Dr. Frankl developed a revolutionary approach to psychotherapy known as logotherapy. At the core of his theory is the belief that man’s primary motivational force is his search for meaning.
Zero to One Peter Thiel The great secret of our time is that there are still uncharted frontiers to explore and new inventions to create. In Zero to One, legendary entrepreneur and investor Peter Thiel shows how we can find singular ways to create those new things.
