Edwards Deming once said “It is not necessary to change. Survival is not mandatory.” Consultants start new projects with a strong desire to meet or exceed client expectations and earn a reasonable profit, but the consultant is often left feeling disappointed. How do you avoid “bad” projects and increase your profit profitability margin?

Select The Right Clients And Projects
Some clients are difficult to make profitable, but there are some proactive steps you can take. Use your business contacts to investigate prospective clients, and inquire of their customers, suppliers and business associates. Have your legal counsel check court records. For existing clients, use your client relationship management system (CRM) to  document profitability, idiosyncrasies, attitude toward professional advice, and additional information. With respect to project pursuit, consider similar past projects and how profitable they were. Track project profitability by customer, geography, and discipline to determine your sweet spot, and focus on winning those types of projects.

Negotiate A Fair Contract
Working with the right clients makes negotiating the contract easier. Terms should include appropriate liability limits, processes for pricing and negotiating scope changes, work stoppage clauses with appropriate fees, automatic fee increases for work beyond a certain time period, and audit clauses.

Have A Solid Budget And Schedule
Start the project by having a rigid schedule and budget. Have written policies for creating estimates along with quality technology tools and a clearly defined scope of work. Look at past results as a starting point for the next project. Use resource planning tools to align staff availability with project needs.

Client dynamics, personalities and politics, the technical capabilities and availability of your team (both internal and sub- consultants) and external factors such as permitting and underground conditions should all be considered.

Continuously Monitor Progress
With today’s technology tools, you can monitor projects from your desktop. Institute daily time keeping, and you will have real-time data on the effort being expended.

Develop and deploy dashboard indicators that provide project information on a real-time basis. Instill a return and report culture in your organization. It is the individual team members’ responsibility to report their progress to managers periodically and for the managers to report similar information to project principals.

Finally, require regular team meetings where coordination, conflict and other matters impacting budget and schedule can be discussed.

Have A Written Policy For Changes
Your written policy should establish clear lines of authority for determining when a request for a fee increase is appropriate, criteria for making that decision, and the responsibility of the individual professional for identifying work that is out-of-scope.

All projects will have bumps along the way. Many can be avoided with these simple steps leading to more profit and less frustration.

About the Author: M. Scott Hursh is Stambaugh Ness Architectural and Engineering Industry Group managing partner. He  s recognized as a leading professional in financial management, tax and government contract consulting for architectural and engineering firms.  He is highly experienced in the application and interpretation of the Federal Acquisition Regulation (FAR), the AASHTO Audit Guide and the Cost Accounting Standards (CAS).  In addition, he has helped companies to minimize their tax obligations using prudent deferral strategies, timely elections and often overlooked credits and deductions.

Scott will present this topic at the annual A/E/C Industry Summit sponsored by PSMJ Resources, Inc. Stambaugh Ness is a Platinum Sponsor of this event set for Dec. 2-4 in San Francisco, CA. Register now to take advantage of the hundreds of boot camps, roundtables, webinars, and conferences offered.