PSMJ Tips: Set Expectations and Collect for Changes

For many firms, the difference between profit and loss on a project is the ability to collect for extras and changes. Give these seven suggestions a shot.

1. Tell clients up front that no project is ever without an extra change. Your clients should include a contingency for these in their financial plans.

2. Project managers should regularly review their contracts and projects to determine that the firm has not inadvertently exceeded the contractual obligations. 

3. Always tell a client when you are doing something outside the scope of work, even if you are willing to include that item in your current fee arrangement. If you don’t plan to charge for that change, tell the client of its dollar impact anyway. Leave the door open by stating you are not going to charge “right now,” but that you might need to come back for additional compensation if conditions change. 

4. Inform the client in writing of every change in scope, whether or not it will be chargeable. Reference the extra work as subject to the terms in your contract. This may be important for professional liability reasons.

5. In the pre-project meeting, carefully review the scope of work. Make sure the client knows what is not included, especially if it is an exception to normal procedures. 

6. Help avoid disputes by developing a scope checklist and reviewing it with the client. Quantify as many scope items as possible. 

7. When you must bill for an extra or a change, bill promptly and at rates that deliver a profit by themselves. 

The strength of every A/E/C firm is its project managers. Every practice must develop highly skilled project managers to deliver projects successfully. PSMJ's A/E/C Project Management Bootcamp, which has trained more than 30,000 top-flight project managers worldwide, dramatically improves the performance of project managers.

This fall, PSMJ is providing 5 locations to give your project managers the tools and confidence needed to join the ranks of the world's most successful project managers. Register today!

Can't make it to one of our Project Management Bootcamps this Fall? We just announced our NEW Spring 2013 dates! This Spring PSMJ will be coming to 15 locations all across North America and Canada, join us!

August Billings Stabilize After Four Straight Declines

Billings at U.S. architecture firms improved slightly in August, after four consecutive months of decline. The Architectural Billings Index registered a score of 50.2 for August, indicating a minor increase in design billings. Inquiries for new project activity also improved, showing its strongest gain since the first quarter of the year.    The Architecture Billings Index (ABI) serves as the leading economic indicator of construction activity, and reflects the approximate 9-12 month lag time between architecture billings, and actual construction spending. The monthly ABI scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. Although improvement has been minor, there have been significant changes in design firm activity based on region. With a score of 51.2, firms in the West reported their first monthly increase in billings in five years, offering the possibility that firms in this region may finally be working their way out of the downturn. Conversely, firms in the Northeast and Midwest reported weak conditions in August, after reporting generally positive conditions over the past year.  Billings based on company specialization were again mixed in August. Those specializing in the institutional sector reported only their third monthly increase in the past 18 months. Residential firms saw healthy gains, providing further evidence that the residential construction sector is in recovery, however, commercial/industrial firms reported their fourth straight monthly decline. This was a surprise after eight straight months of improvement.  Economy still sputtering Softness in design activity at architecture firms is reflecting the slow pace of the national economic expansion. Job growth in August was disappointing, with only 96,000 net payroll positions added nationally, well below the 225,000 added on average each month during the first quarter of the year. Construction employment hardly changed at all in July and August, and manufacturing employment saw a rare decline in August. Given this backdrop, it was surprising that the national unemployment rate dropped from 8.3% in July to 8.1% in August. The reason was due to a surprisingly large drop in the labor force: a net loss of 370,000 persons nationally in August on top of 150,000 in July, as more people either stopped looking for work, retired, or left the labor force for other reasons. The weak economy has generally kept inflation under control. Consumer prices have been growing at about a 2% annual rate for most of the year, with wholesale prices rising a bit more. The recent upturn in gasoline prices is likely to push up inflation in the coming months.  Weak employment growth, a high national unemployment rate, and volatile gasoline prices have affected consumer confidence scores, which were lower in August than in January. However, the University of Michigan reported an uptick in consumer sentiment in its preliminary September release, which could point to an increase in consumer spending in the months ahead.  Statistics By region, the ABI breaks down as follows from July to August: Midwest is down 45.3 from 46.7, South is down 52.2 from 52.7, Northeast is up 45.5 from 44.3, and West is up 51.2 from 45.3. By market sector: Residential is up 53.0 from 51.4, Institutional is up 50.2 from 48.4 and Commercial/Industrial is up 47.9 from 46.6. This month, Work-on the-Boards participants are saying: •        There are a lot of tire-kickers, especially among small to midsize private sector players. The large REITS and developers are moving forward on projects without regard to bank involvement. — 11-person firm in the Northeast, commercial/industrial specialization •        I have projects waiting to start after the first of the year—not a practical thing to do as we are seeing great increases in material pricing, especially lumber. Also [there are] long delays in getting materials. Nothing is being stocked. —One-person firm in the Midwest, residential specialization •        There is worry over reduced federal funding for capital expenditures. We are competing for studies and planning projects that aren’t assured of proceeding to design and construction phases. —Eight-person firm in the West, mixed specialization •        The residential sector seems to be picking up with the inventory decreasing. Homes under 2,500 square feet [are] the direction many potential clients are moving toward at this time. —Six-person firm in the Northeast, residential specialization

PSMJ Tips: Proposals, Presentations, & Language Barriers

Type “language barrier” into Google and you’ll be surprised at the large number of entries describing terminology barriers in professional disciplines such as medicine or science. It exists in architecture and engineering as well, and must be considered when preparing proposals and presentations for a client or prospect whose first language may not be English, but Spanish or German, for example. Keep these tips in mind when dealing with language barriers in your proposals.

• Compose your proposal text in English. That’s how you think! Then hire a good translator to help you get the proposal text into the reader’s language. Hire a translator with technical expertise in your field, since the jargon used in architecture and engineering will have specific translations into other languages.

• Be sure the translator is familiar with the tone, feel, and appearance of proposals done in the target language. In some cultures, the broad American rule of one-third each language, white space, and graphics may not hold. In some cultures, the text is up front, and tables and graphics follow either in a separate volume or in a labeled appendix.

• Appearance must meet the reader’s expectations. A few years ago I transported a proposal clear across Ireland get it professionally bound by one of the country’s leading binderies before it was shipped off to the client.

• Steer clear of translator sites on the web. These sites generally may be accurate in word-for-word translation, but add little or no context, vernacular, or interpretation… or worse, add these items incorrectly! 

Here are several tips for managing language barriers during the presentation or interview:

• Know and obey the cultural dictates of introductions and business card presentations. Our casual American custom of “dealing out” business cards and handing them out in one hand is seen as an affront in some Asian cultures, where the proper way to proffer your card is with two hands and a slight bow.

• Use poster boards done in the target language. This is a powerful way to communicate during the interview without too much pressure. That way your translator can be sure the message is presented properly and accurately.

• Slow down your presentation, whether you are doing it in English or the target language. But do not shout, which is a common mistake Americans make when addressing an international audience or an audience in another language.

• Use the universal language: smile. A smile goes a long way and communicates volumes.

• Know the culture of the target audience regarding dress. In some cultures a red necktie carries a distinct connotation; in others, it is a yellow tie. Know whether it is acceptable to adopt a casual demeanor, such as by taking off your jacket… in some cultures it signifies disrespect.

Your goal is to have your audience listen to your message, whether delivered in written form in the proposal or in verbal form through an interview. By learning the distinctions of the culture, you can minimize the language and culture barrier.

For more vital information on how to effectivly approach business development, register for PSMJ’s Win Work Now: Three 1-Day Business Development Programs. Recharge your Business Development Program by actively participating in these highly focused, targeted programs in the three key Business Development areas - Business Development Strategies, Winning Proposals, and Powerful Presentations.

This fall, PSMJ is providing 3 locations all across North America and Canada to give your whole firm the tools and confidence you need to succeed in bringing in more work for the firm. Register today!

PSMJ Tips: Branch Managers - Mini CEOs

When a firm begins the transition from one leadership generation to another, the most important decision is deciding who will be the next CEO. A logical choice is a branch manager. These individuals are likely CEO candidates because they have been serving in such a position on a regional basis.

Successful branch office managers are good candidates because they:

• Operate the branch office as a profitable entity. They’re experienced in profit accountability, since they must demonstrate and achieve financial viability as a branch. 

• Manage all office costs. They have to consider the impact of all costs—profit as well as overhead—on operations. 

• Promote market awareness. They must know demand and need for the branch’s services. They must also be aware of the issues that concern clients. 

• Keep up-to-date on human resource issues. They often serve as personnel manager as well as “head” of the branch. 

• Understand what it takes to be a successful branch operation. Therefore, they’re able to evaluate branch office manager candidate’s credentials and potential for success.

A firm’s growth is often tied to its ability to successfully establish additional offices. Successful branch office managers have proven they can already do this. When you begin looking for a CEO successor, look beyond headquarters to branch offices where office managers are handling the “mini CEO” role.

You have a choice. You can be out front, you can follow the pack, or you can get trampled as your competitors pass you by. In December, at the 2012 A/E/C Industry Summit, PSMJ is bringing together our industry’s top leaders and most successful firms to give you a glimpse into what’s coming for our industry. We give you the tools and advice you need to prepare your firm and ensure your success in the future.

Just reserve your spot at this value-packed event by November 5, 2012 and you will instantly SAVE $300 on your registration fee...just in case you needed another reason to register now!

PSMJ Tips: New Project Delivery Methods = New Risks

The thought of a multi-billion dollar project stretching a decade or more sounds exciting. It keeps your employees working, guarantees revenue, and makes your firm’s status shine. More and more, projects of this size are being delivered as public-private partnership (P3s) or design-build, both of which can save money and cut time. But with these alternate project delivery methods also comes new risks and challenges. Here are just a few:

• Design responsibility shared by all. With design-build, the contractor becomes a partner in the design, whether through value-engineering or onsite detailing. With P3, it’s even more complicated. Make sure the design roles and responsibilities are crystal clear. 

• Lengthy warranties. Architects and engineers don’t typically carry coverage past the standard of care, yet contractors do. The partnered delivery methods, the coverage responsibilities get blurred. 

• Complex BIM coordination. It’s hard enough to coordinate the BIM process between a prime and subcontractors. Decide early who is responsible for hosting, maintaining, and setting the standards for BIM use and documentation. 

• Open to the liability of others. In a design-build, and particularly a P3, an architecture and engineering become signatories to other contracts, thereby increasing the chance of being involved in a claim. 

• Likelihood of increased scope. This is problem on all project delivery types, but for a project that may last more than a decade, the scope always has to stay closely in check. 

As with any contract or delivery style, it’s always wise to consult with your legal advisor(s) and liability insurer(s) prior to tackling any type of alternate project delivery. The strength of every A/E/C firm is its project managers. Every practice must develop highly skilled project managers to deliver projects successfully. PSMJ's A/E/C Project Management Bootcamp, which has trained more than 30,000 top-flight project managers worldwide, dramatically improves the performance of project managers.

This fall, PSMJ is providing 8 locations to give your project managers the tools and confidence needed to join the ranks of the world's most successful project managers. Register today!

Can't make it to one of our Project Management Bootcamps this Fall? We just announced our NEW Spring 2013 dates! This Spring PSMJ will be coming to 15 locations all across North America and Canada, join us!

PSMJ Tips: 8 Secrets to Creating a Business Development Mindset in Your Firm

Principals of thriving firms realize that success doesn’t come only from them. It’s always because of the contributions of all staff; not just the leadership. However, the principals may not realize that their staff can also be an extraordinarily powerful component of bringing new work into the firm. That is done by sharing and celebrating the business development efforts of the principals, and making it clear that all staff are expected to assist in bringing work to the firm. Here are eight tips for building a business development mindset in your firm:

1. Consider incentives or spot bonuses to each staff person who suggests a potential opportunity.
• It doesn’t have to be a ton of money, even a $100 or $200 gift certificate is a motivator.
• Present the reward in a staff meeting and celebrate the person receiving it – that will take it most of the way in getting others on board.
• Ratchet up the amount if a person does it again and again, and then make them a principal.

2. Remind Staff to Pay Attention.
• Train staff to be magnets for information.
• Explain to them how to think about possible connections to future projects.
• Have them keep their antennas tuned to business development frequencies, listening for key words like new company, expansion needs, outgrowing space, etc.

3. Teach Business Speak.
• Get a couple of additional business journal subscriptions to be shared by staff.
• Have them write down 3 key points about the market or the economy and add them to daily conversations with clients & colleagues.

4. Become Trusted Advisors / Share What They Learn.
• Share articles of interest or quotes with clients.
• After conferences or seminars, share highlights with clients.
• Have staff explain the design process to help clients understand and better enjoy the design process.

5. Implement a Customer Relationship Management (CRM) system.
• Same with Excel, ACT, Salesforce, or Oracle
• This will help to ensure that staff are properly acknowledged for their information and rewards.

6. Encourage staff to show small courtesies.
• Have them advise clients about upcoming events.
• Have staff send notes of thanks, and congratulations – hand-written if possible.
• Get staff to focus on remembering details of client’s lives, education, and family. A CRM system can help with this.
• Allow staff to send flowers or cards on special occasions, with clearly understood budget limits.

7. Don’t Intimidate.
• Encourage staff to speak in English more than “Architect.”
• De-mystify design.
• Be accessible, friendly, curious.

8. Be Where Clients Are.
• Budget for your staff to attend trade associations, specialty conferences.
• Encourage them to present at conferences, and be part of panel discussions.
• Educate staff to follow-up with contacts made at conferences.
 
Share with staff an overview of your business development activities. Don’t keep those efforts a secret. It’s not necessary to share details of potential clients or projects, but a weekly reminder will start to raise the bar. Employees can help sell, partly based on their regular contact with clients, vendors, and consultants, but they must communicate on the same wave-length as the principals, so create a storyline for the 30-second elevator speech. Drill it in to everyone by including portions of it in your conversation around the office.

For more vital information on how to effectivly approach business development, register for PSMJ’s Win Work Now: Three 1-Day Business Development Programs.This fall, PSMJ is providing 4 locations all across North America and Canada to give your whole firm the tools and confidence you need to succeed in bringing in more work for the firm. Register today!

PSMJ Tips: Keep Your Subconsultants in the Loop

Failures by your subconsultants can lead to serious liability claims and potential losses. Your first line of control over potential risk is a well-written agreement. But you can also avoid problems with proper communication. Make sure your expectations are clear, and follow the points below. Your subconsultants are an integral part of your team!

• Include subconsultants in project meetings. Including subs in team meetings helps them to feel like they’re part of the project team and to understand their role. Establishing good rapport with subs at the beginning of a project makes it easier to work with them during crunch times. 

• Share your standards. A pre-project meeting is a good time to make your expectations clearly known to subs. Presenting them with a detailed scope-of-work description, a set of correct drawings, and a written deadline will help them perform their job. It will help them understand where they may have deviated from your standards of performance. 

• If necessary, require the sub to perform the services in your office. This is important when coordination between disciplines and staff is complex, where quality assurance requirements must be maintained. 

• Support your subs. Ask your subs if there’s anything you can do to help make their part of the project delivery more efficient. Then follow through on their requests. Also paying subs on time will establish a good working relationship that will continue past the end of your project.

Do you want to be a more efficient and productive Project Manager? PSMJ can help. Don’t miss your opportunity to attend PSMJ's Project Management Bootcamp coming to the following cities this fall:

September 13-14, 2012 - Denver, CO
September 20-21, 2012 - Orlando, FL
September 27-28, 2012 - San Diego, CA
October 25-26, 2012 - Atlanta, GA
November 1-2, 2012 - Dallas, TX
November 8-9, 2012 - Vancouver, BC
December 6-7, 2012 - Boston, MA
December 13-14, 2012 - Las Vegas, NV