Percentage of Completion – Honesty Is Always The Best Policy

September 1, 2010 in Finance & Accounting, Project Management by Bill Kent | No comments

by Herbert M. Cannon

One of the biggest mistakes that far too many A/E firms make is in over-estimating their percentage of completion on fixed fee projects at month end.  The potential implications of this error are far reaching as it often results in overstating profit, inflated invoicing to clients and ultimately longer collection periods.

For fixed fee projects, these firms simply look at their monthly project report to see what percentage of the project budget has been expended.  They then proceed, with ruthless efficiency, to invoice the client for an equivalent percentage of completion – without any regard for the percentage of work actually completed. 

One can only imagine what the client’s reaction is when they receive an invoice for 50% completion when only 30% of the work has been accomplished.  The A/E firm then wonders why it takes the client 120 days to grudgingly process the invoice?

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The Importance of Time Sheets (Your CEO Needs to Read This)

August 31, 2010 in Firm Management by Bill Kent | 1 comment

by Ken Williams, CFO, Ruekert & Mielke, Inc.

There is a corporate tag line that you may be familiar with – “It’s about time.”  They have a good meaning for their tagline but in this post, I’d like to explore the importance of time and what it means to your firm. 

Your business makes money in one single way – It’s about time. It is all about selling your professional expertise, the time of your most valuable asset at your company. It is about reporting time, posting time, paying for time, reviewing time, billing time, and getting paid for your time. It is absolutely, “ALL ABOUT TIME.”

I work for a great company. The CEO and COO recognize the value of time when the CFO says we need to get time in “on time.” They give total support, not some token support to appease me. They are fully aware that we are running a for-profit business.

We are not a non-profit, we are not a charitable organization, and we are not a bank for our clients.

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Planning & Management Concepts for Project Managers

August 27, 2010 in Firm Management, Project Management by Bill Kent | No comments

by Howard Birnberg

Many observers of architectural, engineering, and facilities management organizations have noted how little planning designers undertake for their own benefit. Design and facilities managers continually preach to their internal and external clients of the need to undertake regular planning.  However, within their own operations, designers often lack an ongoing planning process, effective management systems, regular evaluation of operations and performance, continual training of their own staff, and a long-range focus.

The material that follows is only a brief overview of some planning methods and actions that should be a regular part of your organization’s activities. Additionally, a discussion of some key concepts related to effective management and leadership for project managers is included.

PLANNING CONCEPTS

Successful projects require a sound organization-wide project management (PM) system and plan. Equally important, individual project managers must prepare specific plans for managing each job under their leadership. There are a variety of types of plans and approaches project managers need to recognize as they undertake their daily activities.

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Axium “One of the Top Three Providers of Financial Software” in A/E Industry

August 24, 2010 in A/E Industry News, About Axium by Bill Kent | No comments

The Portland Business Journal recently wrote an article on Axium’s continued growth.  The following are some excepts from the article:

“Axium has grown to become one of the top three providers of financial software for architects and engineers, along with Tampa, Fla. based BST Global and Herndon, Va. based Deltek Inc. said David Burstein, director of training and consulting for PSMJ Resources Inc., Newton, Mass. based industry research and publishing firm.”

“Through six months, Deltek’s sales climbed 5.7 percent, far slower than Axium’s 20 percent.  Burstein said Deltek has reached its size by gobbling up competitors.”

The Recession’s Positive Effect

The article goes on to discuss how the recession is effecting the adoption of software for architecture and engineering firms:

“The company is also attracting businesses that are gun-shy about being caught by another recession, CEO Alan Mills said.  Axium’s software helps firms manage multiple projects and schedule in real time.”

“It also allows them to forecast the value of new projects out for bid. Gauging the benefit of future projects can help protect firms from struggling during a downtown.”

“We found a lot of firms say, ‘We don’t want this to happen again,’ Mills said.”

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Why Do Good Projects Go Bad?

August 24, 2010 in Business Development, Project Management by Bill Kent | 1 comment

by David Burstein, P.E. PSMJ Resources Consultant

To answer this question, a large engineering firm did a post-mortem of 50 projects that comprised  80 percent of its project losses. It surveyed the PMs and other key personnel on the project, asking a series of questions about the bid process, contract, scope, and schedule.

They found that most of these project overruns were caused by the following problems:

1. Fee negotiation (70%)

2. Change management (65%)

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PSMJ’s 2010 A/E Financial Performance Benchmark Report Results

August 20, 2010 in A/E Industry News by Bill Kent | No comments

Design Firms Report Profits Fall, Staffs Shrink, Work Disappears, and Overhead Costs Soar!

by Dan Daniels, PSMJ Survey Editor

The performance of more than 200 design firms responding to the 2010 PSMJ A/E Financial Performance Benchmark Report reflects a design industry that has definitely seen the impact of a severe economic slowdown and recession. The performance of the design profession, which peaked two years ago by establishing several new “all-time high” record levels, appears to be facing significant challenges in 2010. Consider the following comparison of key overall indicators as presented in Table 1:

1. Operating profits (before incentive/bonuses and taxes) as a percentage of net revenues dropped 19 percent to 9.49 percent. We expect this margin will continue to fall as a full economic recovery appears to be several years in the future.

2. Gross revenues decreased by 7 percent versus the 2 percent increase in the 2009 survey. This represents a substantial reversal in the growth rate for gross revenues as less new project work became available last year.

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Better Tracking of Marketing & Proposal Time – Manage Costs and Increase Profitability

August 19, 2010 in Business Development, Finance & Accounting by Andrew Sam | No comments

Does your tracking still look like this?

By Andrew Sam, Axium Certified Consultant

Effectively managing the business development and marketing costs of a firm is critical to a project’s profitability and a firm’s overall success.

In tough economic times, the business development and marketing efforts of an A/E firm have become more important than ever.  Axium gets an opportunity to work closely with A/E Firms and we’ve noticed that firms are paying more attention and devoting additional resources toward business development in an effort to fill up their pipeline.

With this shift in focus, and BD’s new found importance, it is only fitting for A/E firms to ensure that they are utilizing the best tactics to accurately manage their business development efforts.

There is, and should be, two distinct categories of cost to track and manage.

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Recorded A/E Financial Webinar

August 18, 2010 in About Axium, FREE Webinars by Bill Kent | No comments

Companies throughout the industry have structured their organizations into smaller business units or disciplines. Typically their general ledgers match this departmentalization. On paper this all looks good. However, the reality of getting the costs and revenue matched to the proper department is a nightmare for many accounting professionals.

This seminar focused on how to structure your organizations accounting system to accommodate all reporting needs including, incentive compensation without the need to departmentalize for revenue and direct cost. Reorganizations can be adopted and implemented within a few days, rather than months of planning, reworking, and scrambling.

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The Future For Architectural Firms

August 11, 2010 in A/E Industry News by admin | 1 comment

by Howard Birnberg

Given the current state of affairs, many would question if architects have a future.

Certainly, the marketplace has moved dramatically for the profession.   Historic “bread and butter” markets and delivery methods are comatose and show no signs of revival in the near future.  Firms that will survive and prosper will recognize that owners have many options  available that often do not include architects.

The future for designers will include much less design and much more programming, planning, financial analysis and related services.

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Do Contractors Constantly Criticize Your Design?

August 10, 2010 in Design by admin | No comments

by David Burstein, P.E., PSMJ Resources Consultant

During construction, the contractor usually has a lot more contact with the owner than you do. And they often use these contacts to bad-mouth you and your designs. Here are two things you can do to mitigate this problem:

1. Add this term in the front-end documents:

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