It seems that our readers in A/E/P and environmental firms can’t get enough on project management. No one out there appears content with how he or she is handling it. Although my treatise a few weeks ago (TZL 157:April 22, 1996) was devoted entirely to the subject, a few more thoughts on the matter occurred to me since:Project managers will never be convinced that they are responsible for project profitability until top management is convinced of it. That’s right— you heard me. Sure, management in just about any firm we work with will tell you, “We want our project managers to understand that they are responsible for making a profit on their jobs, and to be accountable for it.” Sounds reasonable, right? But when you have serious discussions with a firm’s top management team on how to get that message across, you’ll hear management throwing out all kinds of excuses for why PMs can’t be responsible for profit. Things such as: “The project cost reports aren’t timely or are inaccurate;” “The people assigned to so-and-so’s job also work for three other project managers;” “They don’t have the equipment they need down there in the survey department;” “We can’t get the staff hired quickly enough;” “Our people aren’t properly trained;” or “Joe Blow over in the electrical department busts every budget before he gets one line on paper,” and so forth. Every time I hear this stuff I want to scream! Who, other than management, is in a position to fix these problems? Management needs to take away the excuses from the PMs. Because until it happens, PMs will always have a legitimate reason for failing to deliver the job at a profit. A prime-basis client relationship almost always improves an A/E/P or environmental firm’s chances of delivering the job within the fee budget. We can speculate on reasons for this phenomenon, but the fact is, it’s real. I can’t tell you whether it’s because communication in a prime relationship is not being filtered or because it happens much faster. Maybe it’s just that prime firms want a bigger share of the fee because they figure their efforts sold the job and they have had to bear a higher marketing cost than the subs did. Or perhaps being in a prime relationship forces a firm to have a better project manager than they might have if they were always subconsultants. There are many possible reasons, all of which point to the need for subconsulting firms to have a strategy to get more prime work, and to make decisions that are consistent with that thinking. Out-of-scope requests kill project profits faster than anything else. Every firm gets out-of-scope requests from clients. How firms deal with them distinguishes the winners from the losers. Some people feel that “service first” is the whole key to this business. Others realize that if that thinking is taken to an extreme, the firm will undoubtedly end up consistently doing more than they are getting paid to do. I believe that when out-of-scope requests come up, they should be handled immediately. Give every project manager a pad of “Out-of-Scope Request Forms.” Train them on when and how to use them without alienating the client. Then track their use and compare it to client retention rates and project profits. No one will ever be happy with his or her share of the project budget. This is a constant problem for project managers who work in multi-discipline, matrix-type organizations. Various people or work groups who have to work on a project are asked what it will cost them to do the work. These numbers are then adjusted (usually downward) by the project manager or principal either before or after the total fee is presented to the client. The problem is that this sets the stage for failure to perform within the budget because the budget is not what the department, group, or individual requested. To use a cliche, there’s no “buy-in.” Well guess what, folks? Until PMs or PICs start saying, “I’m sorry, but that’s the best we could get as a company, and you’ll still have to do the work within that budget,” we’ll continue to have problems with accepting poor profit performance on jobs. Get tough and push for a higher level of efficiency. The moral: If you want to make your projects more profitable, consider my advice. It works.Originally published 5/13/1996
About Zweig Group
Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.
Choosing a selection results in a full page refresh.