In any business, having the right systems is critical. Yet many architects, engineers and consultants throughout Australia lack the systems required to deliver optimum outcomes in their practices.
According to a recent survey conducted by financial and business management consultancy Management For Design (M4D):
- Less than one in five architecture, engineering and consultancy (AEC) firms have a formal and functioning system to manage resources
- 44 per cent of firms do not have a resource management system in place, and of those which do, the level of effectiveness of these systems is very low
- 60 per cent have no system for managing customer relationships (or if they do, the system is not considered to be effective)
- More than 40 per cent lack a formal document management system
- Microsoft Office programs such as Word and Excel remain the most common platform for managing contract administration.
Of those who do have systems in place, there is a lack of enthusiasm about the value of these. Only two finance and accounting packages achieved a ‘very effective’ rating whilst no systems across project control, resource management, CRM and document management were consistently rated as ‘very effective.’
Cautioning that the results reflect a higher proportion of smaller firms (with up to 10 people), M4D managing director Robert Peake says problems revolve around several areas.
First, there is a lack of clarity and performance surrounding the benefits of practice management systems in general. Where these deliver optimum results, Peake says, leaders within the firm understand why they are in place, what the business is attempting to achieve and how these systems will help to drive outcomes.
Often, however, this is not happening enough. Accordingly, practice leaders do not have a clear picture about what they are trying to achieve through use of these systems and are not in a position to articulate the value their practice is generating from the effort which is involved.
Second, there is a lack of successful examples to follow. According to Peake, many practice leaders would benefit from learning from others who had effectively implemented systems, especially in terms of resource management and project control. However, Peake says cases of this happening are few and far between. This leads to confusion about where to go for advice, what systems to implement, and who will assume responsibility for implementing them and realising the benefits of the investment required.
Third, Peake says there is not a strong culture within the broader industry surrounding business performance. Many architects, he says, are driven primarily by creativity and design outcomes. As a consequence, they afford insufficient attention to the commercial aspects associated with running and building their own business.
Take, for example, client relationships. Many architects, Peake says, are not great at articulating and managing the limits around the scope of their services. Combine this with a lack of embedded processes for managing the design process and managing work outside the scope and it inevitably leads to unsatisfactory outcomes, he says.
Finally, there can be a lack of leadership from the top. Often, Peake said, principals delegate responsibility for implementing and driving systems to others. This creates problems the situation whereby principals themselves fail to ‘walk the walk.’ Many principals, for example, are the worst performers in their practice when it comes to completing a timesheet. This then creates a discord between systems that are the foundation of the business and the examples being set by practice leaders.
Without robust systems which are used effectively, Peake says practices reach a scale where leaders are not able to maintain their finger on the pulse in respect of their business.
He says having clear objectives when implementing systems for practice management is essential.
“Typically, where it is successful (practice management systems implementation), the leadership understand and acknowledge the benefits that it can have,” he said.
“I often have this conversation with leaders about project control systems and I ask them why they want to do it. Often, they haven’t got clarity around that. That (the lack of clarity surrounding objectives) is typically a key part of the reason why they embark on the exercise but won’t necessarily get the results they could achieved; they are not sure what results they are looking for.”
Scott Osborne, chief executive officer of architecture, engineering and construction business and project management software firm Total Synergy, cautions about any suggestion that today’s design firms do not have systems in place. Even basic processes such as managing clients through a spreadsheet or email application, managing files through severs or Dropbox, job costing using Xero or even using manual checklists all constitute ‘systems’ which help within the management of practices, he points out.
The issues which the M4D survey highlight, he says, refer to packaged software systems. In this regard, Osborne describes a discord between the needs of smaller practices and the offerings of many systems which until recently had focused around medium and larger design outfits. From the viewpoint of smaller practices, high-end enterprise resource planning systems such as Deltek and BST are ill suited to their needs as these are expensive and difficult to set up, as are generic ERP systems such as SAP or MS Dynamics.
As a result, he said smaller practices feel there are left to either adapt to generic industry systems, cobble together poorly fitting ‘best of breed’ solutions or develop their own systems in-house. Each of these, he says, have problems. Generic systems do not always fit in a congruent manner with design related businesses whilst in-house systems require ongoing investment.
A drawback of the best of breed approach, meanwhile, is that firms can end up with separate systems to handle timesheets, document management and customer relations management which do not easily ‘talk’ to each other and are difficult to integrate together. As a result, firms which adopt this approach often find they have to enter the same data into multiple systems. This not only takes time but also creates opportunities for errors and leaves practices grappling with multiple sources of potentially conflicting data.
“We know that more than 90 per cent of all built environment design firms have fewer than 25 staff, which effectively rules out the budget, the expertise and the capacity to operate the high-end ERP style systems from the international vendors,” Osborne said.
“These systems impose on small businesses the structures, batches, technology and infrastructure that is required for firms often with hundreds of staff. In our AEC vertical, an SME business is defined as ones with between 1 and 250 staff.
“There are massive differences between the requirements of a three to six partner firm with 30 to 70 staff and ones with 30 partners across 300 to 500 staff, let alone the one to five staff businesses that are ubiquitous throughout the industry.”
In regard to strategies, Osborne says it is important to use systems which are specific to the AEC industry.
Those operated by tradesmen, accounting firms, advertising agencies or graphic designers rarely cater adequately for the financial business models of building design professionals, he says. Nor do these systems assist design practices to collaborate; manage documentation through transmittals, version control, image management and communicated RFI’s and instructions; or to acquire projects and manage resourcing and teams.
As for what will encourage better practices, Peake says these will be driven by commercial pressures associated with growing competition and a ‘survival of the fittest’ phenomenon which will be driven by firms competing for projects in environment of downward pressure on fees. He says universities have a role in educating architects as do professional bodies such as the Australian Institute of Architects.
As creative professionals, architects and engineers deliver value to their clients.
To maximise their commercial returns, however, effective practice management systems are critical.