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
•
Look back at previous projects as a guide for creating new project plans and delivery milestones and relate this to your fee and scope
•
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?
•
Is your resourcing aligned with the project scope and fee?
•
Do you have an overall studio picture of resource allocation?
•
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
•
Unbillable work — always avoid tasks that are outside the scope of the project, particularly those that are unbillable
•
Skills — keep skills up to date to ensure managers are performing at the top of their game with the latest techniques and skills
•
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
•
Prevent errors by automating common tasks
•
Be flexible enough to accommodate your operations and project management frameworks
•
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. 2. Be open and emotional and compassionate, not thick skinned. 3. No matter how impossible it is, if you focus and really want something you can get it. 4. If there’s fire and passion then she’ll do it otherwise if it doesn’t move her she won’t. 5. Take care of your emotional health. 6. You have to work hard to get what you want. 7. When an opportunity comes along just grab it. 8. 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. 9. 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
•
Keep existing talent engaged
•
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
•
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
•
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 3. Build structures that simplify and minimise administrative tasks 4. 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
•
Reduce errors
•
Allow other business units to report on project and resource information
•
Speed up the reporting process
•
Increase accuracy, timeliness and access to financial modelling and forecasting
•
Integrate project management with other information for greater business operating transparency
•
Use automation and error checking to reduce costly mistakes
•
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.
