In an AEC Business Podcast, June Jewell, the president and CEO of Acuity Business Solutions, gave 8 ways that AEC companies can make more money in the year 2014.
1.) Adopt a profitability culture: Many firms hurt themselves because they aren’t focused enough on profits. It is crucial to set goals for employees, keep team members accountable, keep projects on track and make sure that everyone is educated about the ways the business makes money.
2.) Differentiate yourself by becoming a thought leader within your niche area of expertise: Become the expert in your field by producing marketing content, building a brand, being active on social media, and working with a PR consultant. Firms stand out if they can write and speak about certain new construction technologies. People in the industry go to those companies for their expertise, this can help differentiate you from the rest.
3.) Prepare better estimates: Budget estimates are key to project success. Estimates lead to the proposal which becomes your contract and that influences your scope and budget. Many firms are bogged down by old estimating methods like excel and templates. Having a more sophisticated estimating process helps you understand how your project is going to work.
4.) Good time management is critical to being profitable and efficient: Easy-to-use Timesheets and Daily Reports are of utmost importance and daily time entry is a crucial best practice. If employees are falling behind on Timesheets, your billing and job costing will be affected. Additionally, you are less able to capture extra services and it makes it harder to go back to a client and ask for more money.
5.) Manage your project scope: A recent survey shows that only 40 percent of AEC firms had a regular practice when the Project Manager sits down with entire team to discuss the project scope. You need to do this to make sure that your team is focused and knows what is included in budget. If you have fixed priced contracts and aren’t following the scope to a t, you will inevitably lose money. Regular meetings help team members understand their role, monitor their spending against budget in real-time and give them the ability to recover extra services.
*6.) Use a tech savvy system that offers a full suite of tools: *Avoid double entries and move to a system with a suite of tools to help you manage the entire lifecycle of your project.
7.) Prepare the future leaders in your company: Members of the older generation in the construction industry will retire soon and it is important they they do the ground work to make sure that those taking over have the appropriate business and project management skills. This is critical to a business’ success. Mentoring the younger generations will help boost profits and efficiency while preparing for the technological changes to come.
8.) Have a mindset in your company in which you are continuously focused on improvement: Take a consensus on what is going on in your firm, identify areas that need improvement and decide which things will bring you the greatest ROI (return on investment). It is best to pick a few things per year and focus on them. Be sure to measure the success of your goals. 3 key metrics are: win rate, utilization rate and project profit margin. Think of ways that your business could boost these indicators by one or two percent.
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