President and CEO of Tectonic Engineering & Surveying Consultants P.C. (Hot Firm #89 for 2018), a 500-person multifaceted engineering firm based in Mountainville, NY.
By Liisa Andreassen Correspondent
“Years ago we tried the sales force approach,” Benvie says, referring to business development. “It didn’t work. Engineers want to deal with engineers. We operate on a seller/doer model and then have business development staff who support those efforts.”
A CONVERSATION WITH DON BENVIE.
The Zweig Letter: There are A/E leaders who say profit centers create corrosive internal competition for firm resources. What’s your opinion on profit centers?
Don Benvie: We operate with profit centers. We find value in them in that they allow you to pinpoint where your strengths and weaknesses are and where resources need to be allocated. Tracking performance is important because you can make improvements as needed.
TZL: What’s your policy on sharing the firm’s financials with your staff? Weekly, monthly, quarterly, annually? And how far down into the org chart is financial information shared?
DB: We publish financials monthly and distribute information to cost center managers, shareholders, and executive administration. In turn, they can share that information as they see fit. And, if anyone wants to see information at any time, of course, we will share. We run pretty much on an open-book policy.
TZL: The design-build delivery model appears to be trending upward. What are the keys to a successful design-build project? What are the risks?
DB: Success lies in the relationships you build with the contracting firms. It’s also key to have a clear grasp of the scope of the work. The risks happen when there is lack of experience with these types of projects. You need to have a good handle on things like what level of staffing will be needed on the construction side and accurate accounting of cost.
TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms?
DB: You need to provide challenging and interesting work along with growth opportunities. It’s important to encourage and mentor those with potential and to send them to executive level training sessions that not only teach project management skills, but also people management skills.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
DB: Like most other firms – we’re always seeking mid- to senior-level project managers. They are the lifeblood of the firm. We’re also looking for design engineers and construction inspectors for transportation, infrastructure, and general building projects. The main problem with finding inspectors is that people coming out of college are focused more on the design end rather than the inspection end. They see these jobs as less prestigious somehow. However, there are great opportunities for people who start on the inspection side. They can often open up a career path in a contracting firm, too.
TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
DB: It’s a long-term process. You need to identify key players and have a strong management structure. Some hurdles involved include being able to provide the right amount of financial capitalization so flow of income can finance ownership transition. Firms have to consider factors such as size of firm, profitability, and markets.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
DB: Years ago we tried the sales force approach. It didn’t work. Engineers want to deal with engineers. We operate on a seller/doer model and then have business development staff who support those efforts. These people are technically marketing, but they are part of the business development team. They work on marketing collateral, etc.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
DB: After Hurricane Sandy hit a few years ago, we got involved in disaster clean up. We’ve been finding more and more opportunities in the disaster/recovery market. It’s an evolving process. We work on the side that focuses on things like rebuilding, evaluation of structure damage, overseeing repair programs, and environmental permitting. Our geographic reach has expanded to Texas and Puerto Rico.
TZL: The list of responsibilities for project managers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?
DB: We insist they take their vacation time. In fact, we have a policy in place that limits the amount of vacation time they can defer. They basically have to ‘use it or lose it’ and not many people want to lose it. Also, if we need to add temporary staff or support staff to get a project manager through a specific crunch, we will.
TZL: What is the role of entrepreneurship in your firm?
DB: We have a flat management structure. There’s minimal micromanagement. People run their profit centers like micro businesses. We step in if there’s a problem. As a result, entrepreneurship is valued.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
DB: Transportation and infrastructure will continue to be strong. With or without federal support, states are recognizing they need to focus on these areas and will figure out a way to pay for it. Healthcare and renewable energy markets are also high-growth areas. Retail is cooling and oil and gas seem somewhat flat, but perhaps making a comeback.
TZL: Measuring the effectiveness of marketing is difficult to do using hard metrics for ROI. How do you evaluate the success/failure of your firm’s marketing efforts when results could take months, or even years, to materialize? Do you track any metrics to guide your marketing plan?
DB: We track hit rates between cost centers. Our main metric is looking at the number of proposals and then tracking their success.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
DB: Many years ago, during the dot-com bubble, we had lots of work in the wireless communication sector. When the bubble burst, we didn’t have good financial management practices in place. Our shareholders’ equity was negative and we were out of compliance with our bank covenants and had our credit revoked. Basically, we overestimated our revenue stream. Lesson learned: Don’t over or underestimate your revenue stream. We now employ strong financial practices that allow us to appropriately predict cash flow through the use of weekly dashboard reports that show exactly where we are with accounts receivable, billables, work in process, and more.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
DB: We’ve only done one acquisition. It was a division of a small firm in Connecticut that had architectural engineers who did transportation engineering. For us, organic growth provides the best opportunities. It’s those strategic hires – rainmakers if you will – that make a difference to the bottom line. Acquisitions do play an important role, but a lot depends on access to capital and the internal strategic growth plan.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
DB: Yes. It provides a good benchmark or baseline for future projects. Based on the job, we can scale up or down.
TZL: What’s your prediction for 2018?
DB: We’re planning to end the year on a positive note. 2017 was a break-even year for us due to things like delayed contracts and a slowdown in the wireless communications industry. Last quarter we booked as much work in three months as is typical for us in six to eight months.