WHAT’S NEW
MANAGEMENT FOR DESIGN Summer 2017
The top 5 reasons your firm needs project information management 1. Overflowing emails While emails are a great tool they are also a large burden on your time. How do you keep hundreds of emails about dozens of projects straight? Which ones need a response? Which ones go in what files? Is your productivity tool interfering with your project success? 20–30% of the business day is spent on email related activity — that’s 2–3 hours per day. Firms with project management systems spend minutes, not hours, on their emails each day. 2. Knowing where your project files are Do you store your project drawings, correspondence files, submittals etc. in multiple locations? Are your files still stored physically and electronically for the same project? Is time being wasted working on an outdated version? Do you place as much priority on managing project files as you do project deadlines?
6 in 10 firms rely on network folders to manage projects, with inconsistent file structures, accidental deletion, drag-and-drop displacement hindering productivity and negatively impacting utilisation. Rather than waiting until the project is complete to start organising files, firms should be proactively managing projects throughout the entire project lifecycle. 3. Quickly finding critical project documents Is it easy to find the right files when a client calls with a project related question or do you have to call them back after spending time searching for the correct information? Does this impact your firm and its reputation with clients? When someone new comes onto the project is it easy to find all the necessary information in order to meet the deadline? How much time are you wasting looking for those files? It can take firms hours or days to track down the correct critical project information, wasting valuable resources and critical project time. By using project management, firms can find the correct drawings or documents, regardless of when a task was completed, in a matter of minutes. 4. Sharing and managing files internally and externally Sharing files across the office, with another office or external teams can be difficult — especially design files as they are quite often huge. Is more time spent trying to share files than actually working on the project? Is it difficult to find the right platform that works for everyone and won’t bog down serves or incur expensive data storage? Is it easy for your teams to collaborate on the most current version of documents and drawings? 75% of firms believe sharing documents is the key to improving collaboration yet only 9% of firms have a single enterprise-wide collaboration system. 5. Capturing your intellectual property One of your firm’s greatest assets is your intellectual property. Is your project information secure and protected? Can you easily find the documents you require during a dispute resolution? Do you have effective disaster recovery plans in place to protect your intellectual property? What information needs to be retained and for how long? Are you putting your business at risk with your project information management processes?
Management for Design in the press Over the past few months, Management for Design has contributed to articles on Source.net — a site focused on industry news & analysis in the construction, design and engineering sectors. Rob Peake has provided his expertise across a number of articles, discussing issues on how best to maximise billable hours in the workplace, how to successfully delegate new responsibilities to staff members and how to manage productivity to gain maximum benefits. Unbillable hours erode architecture profits In business, it is only natural to work on daily tasks that are not directly chargeable to projects. The overall success of a business largely depends on the ability to keep time spent on these tasks to a minimum but the most significant area of opportunity to improve is by maximising the benefits from time spent working directly on jobs. The best way to do this is to ensure you fully understand the scope of the project, be conscious of the limitations and flag any concerns in this area without undue delay. Having non-billable time take up 15–20% of the overall number of hours worked is nothing to be concerned about, however there are a few areas to look out for. Competitions play a big part in bringing in new work but it is important to set guidelines around the type of competitions entered and the amount of time spent on them. By analysing past projects and assessing new work coming in, if you’re able to predict the number of people likely to be needed for each project, it will significantly help minimise time spent on non-billable hours. To read the full article click here.
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Rather than waiting until the project is complete to start organising files, firms can proactively manage projects throughout the entire project lifecycle.
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What architects need to consider in succession planning The transactional aspects of succession planning are usually relatively straightforward but it is the development and transition to new leadership that often proves to be the greater challenge. Many practices struggle when delegating progressive levels of responsibility for design decisions and client ‘ownership’ to less experienced architects coming up in the practice. While managers may find it difficult to give up control it is important that they give those who would be ideally suited more responsibility and authority in their role. Your key people will end up frustrated and ultimately leave the firm if they are not assigned the opportunities they feel they are fully capable of. Finding the right person to take over can be a challenge — it will not necessarily always be the leading designer in your firm. While they have the technical capability of taking over, they often do not possess all the other skills and qualities needed to run a business. It is important to look out for strong characteristics such as accountability and responsibility and a passion to grow and develop the business while forming close client and staff relationships along the way. To read the full article click here. Productivity gains offer upside to architects There are several underlying problems as to why there are such low rates of accurate productivity measurement. First, many architecture businesses and consulting companies do not understand how to measure productivity and the extent of the benefits that come from doing so. This can be directly attributed to the lack of emphasis on this area in architectural education and professional development. It is extremely valuable to have systems and protocols in place so that critical information on productivity can be captured and assessed. Measuring
productivity in this way can give project managers a better understanding of the scope of projects and a stronger capability around managing tasks. It also gives them a greater ability to assess the performance on a given project and analyse how many hours have been worked to complete certain stages as compared to the original plan. To read the full article click here.
Controlling the chaos in your business Managing design and engineering businesses to ensure you are consistently making a profit One of the main assets of a design or engineering business is the knowledge and skills of its people. Similar to the projects they serve, the development and management of resources becomes increasingly complex as the business grows. It’s often said that project-based businesses become difficult to manage when all decision makers can’t fit around a conference table. Here are our recommendations to ensure profitable growth by improving the use of resources and gaining tighter control of business finances. 1. Leverage: how is the business structured in terms of the ratio between business directors and other client-facing employees? In design and engineering businesses in particular, business leaders are often client facing, specifically because it is their talent that is the face of a major project. To manage the spread of billable hours across a team, businesses will often structure with a number of high-performing client facing staff who report to each director. This in turn creates a layer of trusted and skilled employees who can spread the load of the billable hours created by any one client. 2. Utilisation: how do design and engineering businesses maximise billable time while avoiding burnout? Utilisation can be increased by billing more hours from higher-billed staff, however the ability of people to take on these hours needs to be managed carefully. Design businesses often run into problems when their highest performers work an excess number of hours because those hours are the most profitable for the business. Avoiding burnout for your best performers is critical to business success. It can make more business sense to hire new client-facing staff at a less senior level to take on more billable work in comparison to what
could be achieved by top talent working overtime. This strategy is likely to produce larger profits for the business without talent burnout. 3. Fees: should billable hours be determined by the firm or the market? The reality for design and engineering businesses is that fees are often driven by external factors, such as the competition within the industry and the fees the market will bear. Firms that are providing a premium service can refuse to compete on price on the back of a superior or unique project offering for which clients are willing to pay. 4. Salary levels: can a firm afford market rates for top talent, and if so, should it? While project-based firms certainly have control over what they pay their employees, businesses should consider the external marketplace and what competing firms are paying for talent. In times of overall market growth, underpaying talent creates a risk that you might lose them to a competitor. Fostering and nurturing creative talent beyond remuneration can also go a long way to promoting staff loyalty and excitement for the job. If businesses can broaden the skills of their staff without stretching resources, they will reap the rewards. Inefficient use of resources and poorly defined business strategies are two of the biggest problems faced by design and engineering firms. Left unchecked, these issues cause businesses to miss out on increased efficiencies, higher engagement and morale among staff and consistent profitability. Getting business efficiencies, strategies and systems under control will stabilise your business and allow you to focus on what you do best.
Director Sentiment research summary The Director Sentiment Index is a survey that looks at both Australian and Global economical and political issues that are important to Australian Institute of Company Directors (AICD) members and the wider director community. It is a comprehensive resource that assesses the opinions and future intentions of directors and their businesses. As we move into 2017, directors have shown concern for the stability of the global political markets following the results of Brexit and the US election of Donald Trump. The lack of certainty has caused directors to lose confidence in the health of the major global economies. The messy political arrangement in Australia is also largely affecting business outlook, with only 8% of members believing business decision making has been positively affected by the Governments performance over the last year. Further issues such as low productivity growth (26%) and a slowdown in China (25%) have been raised as the main economic challenges that Australian businesses are currently faced with. In the next decade, 38% of directors believe economic policy uncertainty will disrupt their business the most, with political instability (33%) also believed to be a big contributing factor. Despite the global instability, directors remain positive about business conditions domestically and the overall growth of their business. It seems that directors are keen to get on with developing their businesses further and taking more risks along the way — 34% of directors expect to increase investment and employ more staff in 2017. General business confidence is also at its highest since 2013. With only 18% expecting their business to weaken, the overall optimism that directors are showing proves a positive and encouraging sign as we move into the New Year. Directors’ priorities for the Government remains the same, with 44% of directors believing infrastructure to be the number one issue that the Federal Government should address. Renewable energy sources and regional infrastructure are the next two highest priorities that they’d like the Government to focus on. Unfortunately, directors are becoming increasingly pessimistic about the effect of the Federal Government’s current performance, with almost 80% believing the performance had a negative effect on consumer confidence. 75% of directors are equally pessimistic about the state of the current AGM system, with sustainability and long-term growth prospects considered to be the major issues that directors are most concerned about.
With so much global uncertainty and instability, it comes as no surprise that directors are concerned about these issues having a direct impact on their business over the coming year. Despite the many challenges that they face, it seems directors aren’t willing to wait for global Governments to get their act together and are getting on with the job. To read the full survey click here.
Managing your margins In business, firms are always looking for ways to improve profitability and maximise their margins. In our recent study, 80% of all consulting businesses said that they struggle to manage and protect their margins. Factors such as poorly devised processes and time consuming tasks can have detrimental effects on profit margins. Using multiple disjointed systems leads to ineffective financial control and takes up valuable time — time that would be much better spent on managing projects and clients. Such systems also make it harder to manage projects and get real time feedback on the overall health of your business and where improvement is necessary. So how do you ensure that you are part of the 20% of businesses that don’t struggle? By using one streamlined system. This will enable you to manage projects and find all the necessary information in one place and make informed decisions quickly. Having the capability to monitor how your projects are performing in real time allows you to identify any challenges early on in the process and avoid problems further down the track. Proactively managing your margins leads to client satisfaction, positively impacts your bottom line and allows you to make critical decisions most efficiently in order to successfully grow your business. To watch the video click here.
Director responsibilities and obligations Just as all businesses, architecture and engineering firms are obligated to adhere to strict rules and guidelines relating to the legal obligations of a company. As the director of a business, you can become personally liable for decisions made in your capacity managing your business. Therefore it is critical that you understand all the legal obligations of a director.
In order to limit your potential exposure to personal liability you should obtain proper advice in respect of the primary legislation that applies to the activities of the company and the obligations that are imposed by the legislation on both the business and the directors. Below are the main points you need to be on top of to ensure that your business is operating in line with legal obligations. From the moment your company is registered and you have obtained your ACN from ASIC, you must remain completely up-to-date on what your company is doing, and may need external professional advice to understand the fine print and make informed decisions. Always keep financial records and reports, so you can monitor your company’s monetary position and performance for tax purposes. Keep some financial records electronically (and make regular backup copies of them), but remember you must be able to convert them into hard copy so that you can provide them to anyone entitled to inspect them. It is only natural that things evolve, but you must keep ASIC informed of changes in your company’s details, such as: • Change of name • Change of registered office • Resignation of director or secretary • Change of officeholders or their details • Change of place you keep registers • Change of company review date • Issue of new shares • Negative solvency resolution • And many other changes. The Corporations Act requires you to tell ASIC about these changes within a certain time period. If you tell them after this time, you may be penalised. Personally, this is what the law expects from you: • Be honest and careful in your dealings at all times. • Know what your company is doing. • Take extra care if your company is operating a business because you may be handling other people’s money. • Make sure that your company keeps proper financial records and can pay its debts on time.
• Act in the company’s best interests, even if this may not be in your own interests, and even though you may have set up the company just for personal or taxation reasons. On top of what the company’s constitution or rules dictate you need to do as director, you must always be fully up to date on what the company is doing: • Find out and assess for yourself how any proposed action will affect your company’s business performance, especially if it involves a lot of the company’s money. • Get outside professional advice when you need more details to make an informed decision. • Question managers and staff about how the business is going. • Take an active part in directors’ meetings. Avoid using any information you obtain through your position to gain, directly or indirectly, an advantage for yourself or for any other person, or to harm the company; this may be a crime or may expose you to other claims. This information need not be confidential; if you use it the wrong way and dishonestly, it may still be a crime. You are unlikely to get in trouble if you are careful in dealing with the business and on its behalf to others. If you ensure that proper procedures exist and are followed in time; keep yourself informed about the financial position; give the interests of the company, its shareholders and its creditors top priority; understand your legal obligations and get professional advice when in doubt. Please note this article does not cover the whole of the relevant law regarding your obligations as a director of a small business. Obtaining appropriate specialist advice is recommended in respect of the matters set out in this publication. More information can be obtained from www.asic.gov.au.
READING LIST The Sale of a Lifetime Harry S. Dent Jr. From founder of Dent Research and Editor of Boom & Bust (www.dentresearch.com), Harry S. Dent Jr. has written an insightful and thought-provoking book that provides a unique look at where to find the biggest profit opportunities in the coming years.
Seeking New York Tom Miller Beautifully illustrated with line drawings and photographs, engagingly presented, and richly detailed, this charming guide traces the architectural and social history of Manhattan one building at a time.
Don’t Sweat the Small Stuff for Men Richard Carlson Over the past five years, Richard Carlson has shown countless families, lovers, and workers how to live in a more calm and productive manner. Now he turns his attention to men, with numerous simple strategies and life lessons that blend humour, warmth, and uncommon wisdom.
Disrupt Yourself Whitney L. Johnson Whitney Johnson wants you to consider this simple, yet powerful, idea: disruptive companies and ideas upend markets by doing something truly different-they see a need, an empty space waiting to be filled, and they dare to create something for which a market may not yet exist. The Pressure Principle Dr Dave Alred MBE From cultivating a no-limits mindset to unleashing the performance-enhancing powers of language, THE PRESSURE PRINCIPLE will help you produce your best in work and at home. Read it and you’ll never miss a shot again. Live What You Love Naomi Simson In Live What You Love ground-breaking Australian entrepreneur Naomi Simson will show you how to love what you do every day and live life to the full. Soon your work experience will become richer, your career path more clearly formed and your life more fully realised. A/E/C Quarterly Market Forecast Report PSMJ Resources, Inc. To help you chart out your firm’s future and take a first-hand look into a wide range of key client markets, PSMJ publish their quarterly report. It is the best upstream indicator of future workloads for architecture and engineering professionals. Click the link here to download the free Report.
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.
