LAST WORD
The last WORD
A ‘no surprises’ culture
Neil Davidson asks what we can learn from the delivery of the London 2012 Olympic stadium?
The Daily Telegraph recently reported that the Olympics Stadium was finished on time and under budget, with the project completed in less than the assigned three years. But, architecture and engineering firms, face the challenge of replicating this same success on a more regular basis - to deliver engagements within the budget set for improved profitability, growth and cash flow, so what can we learn from the Olympic Stadium’s success?
surprises’ culture as a secret to their success. Aligning project estimation, execution and existing capacity is the key to avoid making ‘guesstimates’ on projects that often lead to over or under resource utilisation ‘surprises’ and take projects over budget. According to our Architecture & Engineering
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Neil Davidson is the UK managing director at Deltek, a global provider of enterprise software and information solutions for professional services firms.
2012 Clarity report, architecture firms’ profits spiked to 7.2 percent in 2011, up from 4.1 percent in 2010. While this is encouraging for UK firms, as a sector these are still some of the smallest profit margins received amongst professional services organisations (PSOs) worldwide. This reinforces the need for architecture firms to have a clear insight into future resource utilisation to drive benefits to the bottom line and identify where cost savings and improvements can be made. For PSOs, salaries comprise up to 90 percent of a
company’s operating costs yet many architecture firms today do not have a proper overview of their capacity situation more than a week or two ahead, making resource planning a near-impossible task and leading to spikes in resource demand and potential reductions in profitability. Architecture firms must have a company-wide capacity picture for at least three months ahead as this will identify
enior figures from the Olympic Delivery Authority (ODA) and delivery partner, CLM, highlighted the importance of creating a ‘no
where available billable hours lie and prevent the cost of hiring unnecessary resources. However, firms face the challenge of changing the way in which they work to achieve this; often they compile crucial data on individual spreadsheets leading to inaccurate or presumptive figures for forecasting future resource needs. Resource Management (RM) software permits real-
time transparency into availability and revenue across all employees, providing a framework within which architecture firms can easily and effectively plan, implement and deploy their people skills. Resource data can be broken down by level and by day, helping project managers to pack more work into the schedule, bring projects in on budget and on time and increase annual revenue per billable consultant. Our calculations show that if a company operates a 100- man business and is able to capture and bill just one extra billable hour per month from each employee, it can boost the bottom line by £180,000 a year. A clear insight into available billable hours,
permitted by RM, will also enable forward thinking architecture and engineering firms to identify future opportunities to package up resources and sell additional value-added services such as research into cost saving materials or intricate design ideas not included in the original scope. Without this clear picture of staff utilisation architecture and engineering firms are at risk of scaling the business while increasing unnecessary people costs, with over use of contract staff being the biggest enemy of profitability. The time is now for architecture firms to follow the
example of the Olympic authorities’ ‘no surprises’ approach and ensure transparency into resources is one of the first considerations before beginning a project. Without this, architecture firms are in danger of basing their business on ‘guesstimates,’ missing critical opportunities to increase margin and to ultimately improve their bottom line.
ArchitectNews.co.uk | Architects Choice | 47
Learn more about the London 2012 venues at the RIBA Design Stories exhibition.
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