FINANCIAL MANAGEMENT: If you don’t track WIP, you’re flying blind on cash flow.
Most AEC firms track the collection rate of Accounts Receivable (expressed in days of revenue), but surprisingly few track Work-in-Process (WIP), even though WIP is essentially unbilled receivables. Ignoring WIP hides early warning signals like unauthorized scope creep, charges to jobs without contracts. billing delays, and other issues. You may think you have a collections problem when you actually have a billing discipline problem. Get more tips for improving cash flow in your firm at PSMJ’s Successful AEC Financial Management Workshop.
STRATEGIC PLANNING: If employees don’t know the firm’s vision, you don’t really have one.
A common reality in AEC firms: employees have no idea where the company is going because leadership hasn’t clearly articulated the future direction. That direction may exist very clearly inside the mind of the CEO or other executives, but not beyond that. A vision that lives only in the heads of Principals is not a vision…it’s a rumor.
TALENT OPTIMIZATION: A great compensation package won’t fix a weak employer brand.
Even extremely generous offers can fail if candidates don’t believe the risk of switching firms is worth it. There are many stories of firms offering ownership and exceptional pay to a candidate who still declined because she didn’t feel confident about making the move. If candidates keep saying no, the problem may not be the salary. It is probably the story your firm tells about its future. Get the latest insight on recruiting, compensation, and becoming a destination employer at PSMJ’s AEC TalentMAX coming to Austin, TX in May!
RISK MANAGEMENT: Conduct formal project risk reviews early.
Many project failures are predictable before the project even starts. Implement a pre-project risk screening process that considers factors such as: client reputation and payment history, unrealistic schedules, budget constraints vs expectations, onerous contract terms, and likely project complexity. Incorporate these considerations into your Go/No-Go scoring system before signing the contract or even proposing on the project.
OWNERSHIP TRANSITION: Start planning ownership transition the day you start the firm.
Most owners wait until retirement is close to start thinking about transition. For some, it sort of feels like planning their own funeral. But the reality is that ownership (and leadership) transition is a process that can take 10 years or more. If you’re just starting to think about ownership transition in your late 50s, you may already be too late. Don’t go it alone! Get the proven strategies for building an ownership transition plan that works at PSMJ’s Legacy by Design: AEC Ownership and Succession Strategies Workshop.
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