Structural Solutions: Add True Value to Command Fees You Deserve
Many years ago, I left the security of the engineering firm I worked for right out of school and ventured out on my own. If you had asked me when I was hired after graduate school, I thought I would retire at that company. But that wasn’t the case, as I felt compelled to start my own company and try to do something different.
Although I was fortunate enough to leave with some clients, and some active projects, it was painfully obvious I now had to put the marketing hat on if I was going to grow my budding business. More staff meant more mouths to feed, and new work wasn’t going to waltz itself in the door without some effort on my part.
For several years, my company continued to grow. Fortunately, I had established myself as a respectable engineer during my tenure at the other firm, so it was a little easier to talk with new clients. My firm was taking on new types of work and expanding its experience, trying to avoid having all our eggs in one basket. With more engineers, we could handle larger projects and larger clients. Then seemingly out of nowhere, September 2008 arrives, and the world as we now know changed forever.
Just like everyone else, we did the best we could to survive. We did any type of work that could pay the bills, trying to leverage our experience where we could to garner more projects. It was a difficult time to say the least. The hardest part to understand was that none of us—architects, engineers, contractors—had done anything wrong. We were the victims of a system gone totally wrong, and what happened was out of our control.
Looking back now and reflecting on what transpired since then caused me to think differently about how my firm should continue to move forward. The economy hasn’t just changed the types, sizes and quantity of projects available. It also changed the engineering community, particularly how it gets work, and I don’t think that change has been for the better.
Fewer available projects to bid on and a desperate need to keep staff busy led to a fee war. It seems logical at first, and we’ve all seen it. There’s always someone willing to work for less. Everyone believes they will figure out a way to work faster or more efficiently and recover margins or profitability that way. Some maintain profitability simply by doing less work. But there’s a limit to how low fees can go before it negatively impacts our profession. And more importantly, it starts to commoditize us.
Focusing on Value
I’ve never been willing to compromise what needs to be done to produce a good design and a buildable set of construction documents. So I have refused to participate in the “bottom feeding” for lower fees as best I can. Have we lost projects because of that stance? Yes. Does it frustrate me that the “system” isn’t willing to pay my firm for the work I think we’re due? Yes. But as suggested by Plato, “necessity is the mother of invention.”
I think the “necessity” here is making a decent living, being able to provide the necessary design services for the right fee, and being able to legitimately put our PE seal on the complete design of a building—not just the easy part while delegating the rest of the design to someone else. The “invention” solution for my firm was to add tangible value to projects.
Tangible value isn’t “my staff has more masters and Ph.D. engineers than yours” or “we work in BIM” or “we produce better drawings” or “we answer questions quicker during construction than anyone else.” Many of those things are easy to say and perhaps easy to demonstrate, but their value is difficult to prove. They’ve also been said so many times with mediocre results that most clients are numb to those concepts. Even if you can convince someone you can deliver those “values,” it’s difficult to put a dollar amount on it, and at the end of the day, money is what it’s really all about for our clients.
However, with some serious soul searching and research, my firm found a way to add tangible value to our projects and leverage the assets of our people. We changed the way steel is delivered for our projects. Not only have we virtually eliminated RFIs and change orders, we’ve shortened the time from fabricator notice-to-proceed to start of fabrication by eight weeks. We established an internal process that maximizes electronic transfer of data and improves communication with the detailer. And we’ve developed case studies that clearly show we saved time and money. Now we have our clients’ attention.
Our answer to adding value may not fit with every firm’s culture, but find something that adds tangible value (time or money) to your projects, something that no one else is doing, something that leverages the assets of your firm and tackle it. Separate you and your firm from everyone else. If you are doing what everyone else is doing, you will get paid what everyone else is getting paid. Add tangible value to your projects, and it will become easier to get paid appropriately for what you’re doing.