How to Lose Projects and Alienate Clients

Posted by A.J. Whitaker November 21st, 2011

There are lots of books, blogs, articles, and seminars aimed at teaching us how to win business and maintain happy customers. To balance this out, I thought it only fair to post some basic guidelines for helping you achieve the exact opposite results. Use these tactics on your clients, then sit back and and watch as the opportunities drift away!

  1. Issue lots of change orders. Nothing communicates incompetence quite like a consultant who cannot accurately scope a project, but then makes up for it by constantly coming back to the client and asking for more money.
  2. Don’t check your work. You’re good. You’re really good. People as good as you don’t need others breathing down their neck trying to scrutinize a design which is obviously perfection. What a waste of time! Besides, how can you possibly wait to turn everything in at the last minute when there is a rigorous quality control system in place? Let it go. I’m sure the surveyors will pick up any problems with the design before it goes to construction.
  3. Wait for clients to call you. Let sleeping dogs lie. No news is good news. If you haven’t heard from your client in a while, it must mean that they’re happy and everything is going well. Let your monthly invoices communicate your progress and leave it at that.
  4. Surprise them. Everyone likes surprises, right? Surprises make life interesting. Do your part to help your clients lead a more interesting life by springing things on them at the last minute. Didn’t realize that the agency processing fees were going to double after the new year? Surprise! No one mentioned that the sewer is running into the wall footing? Surprise! Some of the more interesting companies manage their workload as if it were one big surprise party. Fun stuff!
  5. Be inflexible. As a professional, you have the best solution to your client’s problem. All other options are superfluous. Keep things simple and just do things the way you’ve always done them. Dig in your heels and dismiss the ideas of others as tripe.
  6. Make excuses. Have an explanation ready for the problems that inevitably arise, preferably something that diverts attention away from your own culpability in the matter. If you look hard enough, you’ll find that there is always someone else to blame: employees, agency personnel, or even the client himself. Other good excuses include budget constraints, time restrictions, and competing deadlines.

Pretty simple. Who knew it was so easy to drive clients away? What’s amazing is that these practices are consistently implemented by countless companies, both large and small, every day. The results, while not always immediate, are virtually guaranteed. Please feel free to implement these practices in your own organization and when your clients eventually do call, just send them my way!

Tags: ,

Risky Business

Posted by A.J. Whitaker February 11th, 2011

No risk, no reward. Or so they say. Unfortunately, one of the byproducts of taking on risk is that, sooner or later, you’re going to get spanked. Failure, adversity, problems, trouble, difficulty – Whatever you want to call it, it’s no fun. In fact, sometimes it’s downright gut-wrenching.

Put yourself in the shoes of the engineer who decides to take on a big client, only to have that client turn around and sue the engineer for all he’s got. Even if the engineer has done everything he can to mitigate the risk (quality control measures, incorporating his business, purchasing professional liability insurance), the situation is extremely stressful and a potential threat to his very livelihood. Could the stress have been avoided? Sure. He could have chosen a career in paper shuffling. Not that there is anything wrong with that; however, if you strive to be truly successful in making a positive impact on the world around you, you’re not likely to get there by consistently traveling on the road of comfort and safety.

The most successful individuals are those willing to risk failure to achieve their goals. And fail they do. It is how they respond to such adversity that sets them apart.

Are there ways to mitigate the stress associated with the inevitable problems we will face in response to taking risks? Of course. In fact, the goal is to create an opportunity to actually grow and learn from the experience. The following are some pointers on how to make the most of an otherwise bad situation:

Maintain perspective. We have a tendency to blow things out of proportion when we’re confronted with stress. No matter how bad the circumstances, chances are that it could be a lot worse. Step away from the problem and take inventory of the big picture. Still got your health/family/friends? Count your blessings and see the problem at hand for what it really is – a minor blip on the radar screen of life; an opportunity to better yourself and gain some perspective on what is truly important to you.

Consider potential outcomes. Ask yourself, “What is the worst possible outcome that could come from this?” Whatever the worst case may be, remember that there are very few things in this life that are irreversible and the worst case rarely happens. What you’ll find is that if you prepare yourself mentally for the worst case scenario, you’ll better be able to deal with the less severe outcomes that are much more likely to occur.

Weigh your options. Reflect on your potential responses to the situation. What response is most likely to achieve the desired outcome? Who are the players that you’re dealing with and what is the best approach to working with them as individuals? Is there someone in your network that you should reach out to for additional help or counsel?

Take action. Problems don’t typically go away on their own and stress has a tendency to immobilize us. Don’t assume that everything is ok just because the phone is not ringing. Be proactive. Make the call. Write the letter. Do what you need to do to reach a resolution so that you can move on.

Assess the lessons learned. This step is the most critical. Look back carefully at the circumstances that lead to the problem in the first place. What was the root cause? What could have been done differently? What system or procedure can you put in place to help ensure that this never happens again?

How we respond to failure is a critical component of our personal and professional development. The same risk that leads to greatness can also beat us up at times. We can either let failure defeat us or we can use it as an opportunity to better ourselves and take us one step closer to achieving our goals.

Tags: , ,

Seeing Red

Posted by A.J. Whitaker January 26th, 2011

If you know me, you know that I’m a numbers guy. But, maybe not the kind of numbers you would think. I’m not talking about the kind of numbers that most engineers deal with – design calculations, field measurements and such. I’m talking about the numbers that really matter: the numbers on your monthly financial statement.

There is one number that stands out from all the others. It’s the one by which businesses either succeed or fail. It is the one that may determine whether you have a job or not. To make things more interesting, this number even gets color-coded. Black means you survived another month. Red means you’re in trouble. We are, of course, talking about profit.

Staying in the black has become a big challenge for engineering firms. Recession economies typically result in two heavy burdens that pull profits down:

  • Less work leads to greater competition, which leads to lower fees. Lower fees hurt profit potential.
  • Less work also leads to a reduction in “non-essential” staff like drafters and other production people. Unfortunately, these tend to also be the most profitable workers that a company employs. The result is a top-heavy organization that makes staying in the black even more elusive.

In general, there are two primary methods of improving profit margins and staying out of the red. The first is to increase income. While certainly more challenging in a down market, there are still plenty of opportunities out there for individuals willing to think a little differently about marketing and  business development. I cover this subject extensively in other blog posts, so we won’t dwell on it here. The second way to increase profits is to decrease expenses. This is never fun. Anyone want to volunteer for a pay cut?

There is one other method of boosting profits that I have found to be extremely effective. It’s simple to implement. It actually helps your business operations by freeing up your time. Best of all, it doesn’t result in that slimy feeling you get from laying off good employees and buying the cheap toilet paper for the staff restroom. Here is how it works:

  1. Identify those services you offer that can be easily handled by a subconsultant. Land surveying is an obvious one for my line of work. Others may include landscape architecture, dry utility coordination, or traffic engineering.
  2. Assemble a list of subconsultants who can provide the services you need. Include both large corporate firms and individuals working out of their garage. Organize this list, putting the best firms at the top – or those that you most enjoy working with.
  3. Call the owner of the first firm on your list. Tell him or her that you are interested in giving them preferred status on all projects going forward. In exchange, you will ’split’ whatever fee you are able to negotiate with your client for the services offered by the subconsultant. For example, if I can get a $10,000 fee for a landscape design, my preferred landscape architect would get $5,000. Under this scenario, your sub will likely do very well on some projects and not so great on others; it’s all based on market conditions, not necessarily what the sub thinks they are owed. The tradeoff, of course, is that this sub gets all of your work.
  4. If the first firm balks, move onto the next consultant on your list. Do this until you find a consultant who agrees to your terms. If no one bites (not likely in the current market), be prepared to adjust your terms slightly.
  5. Go land as much land surveying, landscape design, etc. work as you can find.

That’s it. The best part is that your profit margin on the subconsultant’s work is guaranteed; or maybe the best part is that you’re making a significant profit on work that you’re not even performing. Regardless, everyone is happy. A real win-win scenario. No more red ink.

Subconsultants can be a great source of financial leverage, especially in a soft market. Let’s not become so preoccupied with cutting fat that we neglect the opportunities right in front of us.

Tags: , ,

How to Turn Engineers Into Rainmakers

Posted by A.J. Whitaker November 11th, 2010

“All I want is a good engineer who can meet with clients and sell our services.” The words rolled off his tongue as if he really believed that these types of people actually existed in abundance and it was just a matter of hiring them.

This may come as a shock, but the truth is that engineers in general are not the most outgoing, gregarious, and extroverted individuals. For some reason, the qualities that tend to make a good engineer (math skills, analytic ability, the propensity to isolate oneself for hours on end to focus on solving a single problem) usually work in contrast to the qualities that make a good salesperson (magnetic personality, sense of humor, physical attractiveness). Is it any wonder then that the few engineers who find themselves able to maintain meaningful employment in a business development role are usually horrible at engineering?

There is hope, however. A few years ago, I stumbled upon a concept that, when properly implemented, can be very effective in transforming engineers into service-selling superstars. It’s a simple point-based system that helps keep business development activities on the top of the daily to-do list. Let’s face it, without clear objectives, we as engineers will tend to gravitate to those activities that bring us order and predictability while neglecting those things that make us uncomfortable (like cold calling). The beauty of this system is that it feeds the engineer’s need for order while pushing him or her to meet specific daily business development goals.

Here is how the system would work for a team of people responsible for bringing projects in the door:

1 point                 Connecting with a decision maker via LinkedIn, phone call, or email

2 points                Meeting in person with a decision maker

3 points                Submitting a proposal

4 points                Landing a project

  • Minimum of four points per day required.
  • Activity must be documented.
  • A weekly meeting or teleconference will be held to share leads and contacts, report on activity, identify networking opportunities, collaborate, and share business development techniques.

That’s it. Pretty simple, right? The program tends to work especially well in group environments where the competitive spirit can kick in. Prizes can even be awarded for the most points earned in a given week or month.

You’ll find that this program gets increasingly difficult as you work your way through your existing contacts. Notice also that no points are awarded for attending so-called networking events. Networking and industry functions are merely tools for meeting decision makers. It’s the follow-up that counts, not the amount of swag that you collect at a trade show!

So, give it a try and be sure to share your thoughts and experiences in the comments section below. Let’s show the world that engineers can, in fact, become effective business developers… we just need some numbers to work with!

Tags:

Secrets They Don’t Teach You in College, Part 2: All About Bob

Posted by A.J. Whitaker October 14th, 2010

I recognize that some of the concepts presented in the previous blog entry may seem somewhat abstract, so here is an example of how a fictional student, let’s call him Bob, put this plan into action.

Bob is an average college student studying civil engineering at Cal Poly. He is graduating next year and  knows that the job market will be extremely tough. He needs an edge; something that will set him apart. His friends are no help – they are discouraging and complain about how hard it is to just find Summer employment, much less a meaningful career. Some of them are talking about going to graduate school until the economy improves. Bob doesn’t want to be a victim of his present circumstance. He hears a great talk by a tall guy at an ASCE meeting and commits to stop viewing his career path as someone else’s responsibility. Instead, he chooses to run it as he would his own small business. As CEO of Bob, Inc., he is determined to become an engipreneur.

Bob knows that he is competing not only with his fellow students for the few jobs that are out there, but also with seasoned engineers who have a ton of practical experience. Bob has no experience. He realizes that the odds are stacked against him and this drives him to identify something – anything – that he can offer to potential employers that his competition can’t.

Bob starts doing some research. He quickly realizes that while a huge amount of his college coursework has been focused largely on structural engineering, most civil engineers are not actually employed in this field. There are not a whole lot of new bridges, skyscrapers, and dams being designed these days.  His research shows him that most of the civil engineering firms out there are focused either on land development, public works, or some combination of both. He also learns that most of these firms use AutoCAD software as their primary design tool. Bob starts wondering why he hasn’t been required to take more AutoCAD classes in school.

Bob reconnects on Facebook with an old friend from High School whose dad, Leo, happens to be a civil engineer. It turns out Leo was laid off from his job 8 months ago, but he agrees to take time out from his job search effort to meet Bob for lunch. Leo tells Bob that he has been trying to get up to speed with AutoCAD Civil 3D, Autodesk’s latest design software that is replacing their old Land Desktop software. Bob does some additional research and learns that many civil engineering firms have not yet made the transition to Civil 3D, either due to staffing issues or because the transition training is too expensive. Most of these firms are on a subscription plan, so while they have Civil 3D sitting in a box in their office, they’re stuck using the old, inefficient software because they have never invested in the transition setup and training. Bob has successfully identified his target market and a big pain point!

Bob spends the next 4 months learning everything he can about Civil 3D and, more specifically, the steps involved in transitioning from Land Desktop. He’s able to purchase a student version of the software pretty cheap and he spends 3 hours every morning before class, plus weekends, sharpening his skills. He scrapes together some extra cash and manages to attend Autodesk University in Las Vegas, where he meets other Civil 3D transition experts who turn him onto some great resources. In 6 months, he has developed his own 6-step program for transitioning from Land Desktop to Civil 3D – a unique service offering indeed.

For his senior project, Bob writes a white paper that details out his 6-step approach to the Civil 3D transition process. He teams up with a local engineering firm that agrees to let him volunteer to work with their CAD Manager to assist in their own software transition. He uses this experience to develop a case study for his senior project. He also receives very nice written recommendations from the CAD Manager and the owner of the firm. He uploads these, along with other templates and tools that he has developed onto a web site: civil3dbob.com. He adds a guarantee: “I’ll help you transition to Civil 3D in 3 months or it’s free.”

Bob tells everyone he meets about his new passion. His family and friends think he’s nuts. He practices his sales pitch until it practically rolls off his tongue. Bob is ready to go public.

In order to generate leads, Bob starts calling several contacts he met at Autodesk University who actually sell the software. Some of them don’t want to share any information about their customers with Bob, but others view it as a great way of helping their customers take their business to the next level. Bob ends up with a sizeable list of key contacts at engineering companies who are still bogged down with using Land Desktop. He meets several more at a local chapter meeting for the American Council of Engineering Companies. He follows up each new introduction with an invitation to connect on LinkedIn. His network steadily grows.

On his web site, Bob starts blogging about the transition to Civil 3D and why it’s good for business. Every time he posts a new blog, he Tweets about it and sends a brief email to his contact list with a personal note and a link to his web site. Finally, on a Friday morning in late Spring, Bob rents a small conference room in Orange County and offers a Free Course on “Transitioning to Civil 3D.” His network helps him promote the event and about 20 people show up. One of the people in the audience is a local business owner who invites Bob to dinner. By the following Monday, he has sent Bob an offer of employment.

In the weeks that follow, Bob receives several other job offers, all from companies hungry not only for his unique Civil 3D skill set, but for his entrepreneurial drive, self-motivation, and unwavering determination to succeed. As it turns out, these qualities are in even higher demand than good CAD skills! Go figure.

Does Bob’s story represent reality? While many of the details are made up, I believe there is enough truth represented here to provide a realistic glimpse into what is possible when one applies the principles of good business to their career pursuits. The workplace has changed. Much of what worked in the past to help us land secure, high-paying jobs right out of college is no longer valid. It’s time for students to stop relying on career counselors and HR departments to define their professional paths. It’s time to start thinking like engipreneurs.

Tags: , ,

Secrets They Don’t Teach You in College, Part 1: Be an Engipreneur

Posted by A.J. Whitaker October 13th, 2010

As presented to members of the student chapter of the American Society of Civil Engineers at Cal Poly, San Luis Obispo on October 13, 2010.

When I look back at my career and ask myself what information about the real world would have been most helpful had someone shared it with me while I was still in school, I always come back to this notion of the engipreneurial mindset. Readers of this blog know by now that an engipreneur is an engineer who runs their career as they would their own business. Engipreneurs are creative thinkers who seek to bring innovation and value to everything they do. No matter what job they have, the engipreneur owns it. They are technically adept, yet always mindful of the principles of good business.

If you’re a college student, becoming an engipreneur will provide the edge you need to identify and land the perfect job. Here is how you do it.

Research

1. Identify your competition. In the current market, this consists not only of other students in the same position as yourself, but it also includes out-of-work engineers with years of experience who are willing to take lower salaries in order to pay the rent. You can add to that the highly educated, and extremely cheap, foreign workforce in places like the Philippines that can operate remotely as contract labor. Intimidating? No way! Take a long last look at your competition because you’re about to make them irrelevant.

2. Identify your target market. Public or private? Structural, geotechnical, or transportation? Decisions, decisions. Before you choose, open a phone book (if you can still find one around) and look under ‘Engineers – Civil.’ What do you see? Recession or not, land development and public works (public streets and utilities) still employ a huge segment of civil engineers. This is a numbers game to some extent. If you want to increase your odds of success by appealing to a larger target audience, don’t limit your focus to the elite segments of our profession. Geography is also important. Do you think you’re going to get more job offers in Tulare County (population 500,000) or Los Angeles County (population 10 million)?

3. Identify the pain points of your target market. Pain points are problems for potential clients… uh, I mean, potential employers. Pain points represent business opportunities for the astute engipreneur. What are the problems that your target market is facing that they would give just about anything to resolve? Landing projects and cutting expenses are a couple of obvious ones. Do your research. Ask around. Don’t shortcut this step – It’s critical.

Development

4. Create a unique service offering. Look at the issues that you identified in the previous step. How are you going to solve these problems in a way that no one else can? What are you willing to invest in order to set yourself apart from the competition? Be creative and move away from expected norms. Yes, this step is as hard as it sounds.

5. Package it in an irresistible way. Just like a box of holiday candy, you need to draw your customer in. Put a big red bow on it to get their attention. Put a picture on the box to give them a look at what’s inside. Let them smell it so they have no choice but to reach for their wallet. Actually, I’m not sure how that last one applies, but you get the idea. Develop a prototype. Offer a guarantee. What if you gave it away initially? Put yourself in their shoes and figure out what it would take to make your services irresistible.

6. Practice selling it. Spend a lot of time creating a well-written, thoughtful script that meticulously communicates your sales message. Then throw it away. You need to go through the exercise of understanding your service and why people need it, but when it comes to presenting that message, you don’t want to sound rehearsed. You need to know your pitch so well that it sounds completely natural when you present it to people. Be genuine. Be passionate. Then practice on everyone, including strangers.

Execution

7. Make connections. You will probably have already made lots of great contacts during the research phase. From now through the rest of your career, you need to constantly build and maintain your contact database. Get out there and meet people. Attend events that your target market is attending. Use the social media outlets: LinkedIn, Facebook, Twitter, Blogs. Offer to take a decision maker to lunch. So few of your competitors are doing this consistently that you will naturally stand out from the crowd.

8. Get the word out. You can be the best engineer in the world, but you’re still going to be unemployed if no one knows that you’re available for hire. It’s time to start marketing. Use your contact database to launch an email campaign that highlights your unique service offering. Host an educational seminar and invite your target audience. Start a blog. Seek referrals and use them to promote your personal brand.

9. Over deliver. When all of your hard work finally pays off and you have landed your dream job, it’s time to deliver on your promises. Do it with gusto and give them more than they expect. Remember the people who helped you get there.  And most important, don’t stop being an engipreneur.

There you go. That’s not so hard, is it? Yeah, right. If it were easy, everyone would be doing it. In the next blog entry, we will look at an example of how it’s done.

Tags: , ,

Keep In Touch

Posted by A.J. Whitaker June 15th, 2010

It’s June, and that means that students everywhere are hanging up their backpacks and bidding farewell to their classmates until the end of Summer; or, in the case of graduating seniors, maybe farewell for good. I recall as a student that I used to partake in the practice of passing around yearbooks and exchanging written words of encouragement (or insults) with my friends. “Good luck,” “You’re a nerd,” and, of course, the ever-popular “K.I.T.” or “Keep In Touch.”

The problem is that those scribbled words in a yearbook were the last interaction I had with many of those classmates. Let’s face it – without the regular exposure to others that a classroom setting brings, the likelihood that I’m going to pick up the phone and start calling all of my old classmates for the sole purpose of keeping in touch is pretty slim. Enter the Internet and Social Networking.

Facebook, MySpace, LinkedIn, Twitter, email, IM, SMS… so many options these days for keeping in touch. It’s amazing how many old high school and college friends that I’ve reconnected with on Facebook. From a business standpoint, these tools have become a lifeline between me and my professional network. Nowadays, when you get an email from me, you also get a link to my Twitter and LinkedIn profiles. If I were to write in your yearbook today, instead of “K.I.T.” I would probably write “@ajwhitaker” or maybe “FB-Engipreneur.”

What’s remarkable is how many people in business fail to take advantage of these low cost tools that make staying connected with your network so easy. Last week, I heard of a position opening for which a former colleague of mine would be perfect. I knew she was out of work and looking for another job, however, when I went to check out her profile on LinkedIn, it still listed her as working at her old job with no current contact information. I spent the better part of two hours trying to hunt her down!

C’mon people! There is information about you on the Internet, whether you like it or not. Why not be proactive and take control of what impression you’re making with your online presence? Why not use this “modern yearbook” to your advantage? -Stay cool and K.I.T.!

Tags:

Beyond Survival

Posted by A.J. Whitaker May 12th, 2010

Survival. That’s what we’ve been focused on since the economy fell off into the great abyss a couple of years ago. Do whatever you need to do to land projects and then use whatever means possible to get the work done. Since all of your help is no longer around, the burden is on you to just make it happen. Nights. Weekends. Holidays. Drafting board. Slide rule. Abacus. Whatever. Just get it done.

Survival mode is great when your primary goal is, well, survival. But, survival mode is no way to run an organization long term, much less grow that organization into a sustainable, thriving enterprise. A person can only tread water for so long before they eventually sink. Growth and continual improvement is not just a nice goal for a business; in the information age, it is essential!

Building a top notch organization means moving beyond mere survival and spending time developing systems that facilitate smart, strategic growth. What better time to develop these systems than during a down cycle? As people are added to the team over time, they are equipped with the right tools from the start.

This week, I was asked by one of my architectural colleages to provide a budget for a potential new project. I get at least a couple of these requests each week which is, of course, a very good thing. The problem is that I usually spend an unecessary amount of time and effort essentially creating these from scratch – only to produce a budget that could easily be standardized based on some well-defined criteria.

So this time, I resisted the urge to reinvent the wheel yet again and forced myself to spend a couple of hours creating an interactive spreadsheet that automatically generates a budget statement based on some simple user input. It’s pretty slick, if I do say so myself. Turn on the check boxes for the scope items that need to be included. Answer a few basic questions (region, site acreage, building area, etc.). A basic fee is then calculated from the selected scope items and an adjustment factor is applied based on the other user input.

The result of this extra effort to create a useful system is a more consistent product that can be used by the whole team to generate accurate budgets in a fraction of the time.

Imagine the impact of implementing one new system each week for the next year – systems that increase productivity, automate repetitive tasks, and help us produce more consistent results.

Why bother?

It’s not about creating another tedious form, or learning new software, or implementing checklists that never get used. It’s about arming ourselves with the tools that give us a significant strategic advantage in the marketplace.

What systems are you working on to move your team beyond survival?

Tags: ,

Site Engineering that Actually Looks Good?

Posted by A.J. Whitaker May 4th, 2010

Check out these photos from a landscape architect that I met with last week. For me, it serves as a reminder of the responsibility that we have to work with the site planner and landscape architect during the conceptual design phase, rather than in isolation from him or her.  As much as it pains me to admit it as a civil engineer, people don’t really want to look at drainage inlets, graded swales, detention basins, and rip-rap-lined channels. With the increasing jurisdictional push for Low Impact Development, it’s interesting to note that along with sustainable stormwater management comes the potential opportunity to create a more aesthetically pleasing site!

infiltration-swale-2 dsc_9717

dsc_9760 dsc_5846

b dsc_9756

Photos courtesy Site Design Studio, Inc. All rights reserved.

Tags: , , , , ,

Do the Math

Posted by A.J. Whitaker October 6th, 2009

Engineers perform technical calculations every day. They are trained in the practical application of geometry, calculus,and differential equations. Yet, when it comes to basic business financials, engineers tend to seize up, shy away, or just pretend that the math of accountants isn’t a critical element of their business and career success. This may have been a tolerable approach when times were good and clients were clamoring for our services, but failing to pay close attention to the underlying financial data nowadays is professional suicide.

So, put away your HP48-GX, break out your kid’s solar-powered 16-botton calculator, and let’s do some math.

Don’t worry – we’re only going to deal with three simple numbers. They are as follows:

  • Income. This is money coming in. For engineers, it consists largely of collected professional service fees.
  • Expenses. This is money going out. It includes dollars spent for direct labor, subconsultants, indirect labor, and overhead.
  • Profit. This is the difference between income and expenses. Businesses don’t survive long without it.
  • Without proper financial planning, many firms make the mistake of letting their profits float. In other words, they get the work, they do the work, and they pray that there is money left over after all of the bills have been paid. Profit becomes the unknown variable. To express this approach mathematically,

    Profit = Income – Expenses

    Those firms that pride themselves at being a bit more financially astute, actually set profit goals. They subsequently focus on negotiating for fees that are sufficiently high to cover expenses and meet those profit goals. Basically, they add profit to expenses in order to determine what their income must be.

    Income = Expenses + Profit

    Unfortunately, both approaches are misguided. The problem lies in the assumption that expenses are pretty much fixed and that our fees are not dictated by the market that we serve. A better way to look at it would be

    Expenses = Income - Profit

    This approach has some interesting ramifications when we recognize that we have far less control over our fees than we would like to admit.  As engineers, we pride ourselves in providing a high level of value to our clients and are, therefore, able to justify maintaining a certain price range for our services. However, like it or not, we’re still participants in a free market system. As demand for our services decreases while, coincidentally, the number of competitors increase (what do you think those engineers that you laid off are doing?), the level of fees that we are able to secure will also go down. Of course, the opposite occurs when demand for our services goes up.

    Since profit is essentially fixed based on our financial goals and fees are largely dictated by the market, this last approach tells us that we must focus on controlling expenses. We’re not just talking about laying people off and conserving paper clips (although such measures may be in order). Rather, we must look seriously at the time, effort, and expense associated with the technical part of what we do. Perhaps, there is a more efficient, streamlined method of preparing drainage studies that hasn’t been discovered yet because we’ve been too focused on demanding higher fees and doing what we’ve always done. Innovation and creativity are at the core of effective financial planning.

    I was in school when our profession made the painful, awkward transition from manual drafting to CAD. It’s never an easy thing to abandon old ways and embrace such a dramatic change in methodology. But, somewhere along the line, I suspect that someone envisioned a better, more efficient way of generating plans on a computer, rather than on a drafting board. I suspect that someone did the math.

    Tags: , , , ,