Archive for the ‘BJG’ Category
Posted on September 5, 2008 - by Pete
Cost vs. Value
We recently submitted a proposal for a project of a type with which we are very familiar. I thought (and still think) that our fee was very fair and was the appropriate fee given the amount of time necessary to perform the tasks in order to assure that our client had a successful experience. Three firms of similar size and expertise provided fees. Our fee was in the middle. We were 10% lower than the third firm but we were 40% higher than the firm that gave the lowest fee.
When I evaluate contractor bids on our projects, I generally feel that we prepared a good set of documents if we get 4 or 5 bids with a total spread of 10-15%. Here we have a case where the work level is not as fully defined as it will be when the documents are done so a wider spread is probably acceptable. Maybe 20% total spread between three numbers might be reasonable. 50%, however, seems odd. What other elements might contribute to this spread?
It is possible to perform design services to a variety of levels of quality and it is important that all design firms understand the quality that the client wants. In this case, all three firms have worked for the client in the past and should therefore have a good idea as to the quality required so lack of understanding of the client’s needs should not be an issue.
There are, of course many ways to break a design fee apart. In particular, some firms exclude services that the client will need from their scope and then charge the client extra for that service when asked to add it. I really hate this approach because I think it gives the entire design industry a bad name. It does, however, make a firm’s initial proposal look very attractive to a potential client. If clients get used to this, it may even be possible to keep a client happy while doing it because they may just assume it is the way the industry works. I like to think professional design firms are better than that. The public, however, tends to evaluate all professions by the lowest standards they see (for example, lawyers). Firms that take this tack are therefore responsible for lowering the reputation of our entire industry.
A firm could be in dire financial straits and would need to take a job at any fee just to keep the doors open. If this is the case, I would think we would need to look back on what the firm has done over the last year or two that caused them to get into this condition. If they have been doing a poor job managing their business, they probably are going to fail eventually and this sort of pricing is only going to hasten the end. When they do fail, the client is going to be left holding the bag and the industry’s reputation will suffer some more.
A design firm could use inexperienced people on a project and thereby reduce their costs. This would probably be a disaster for the client since it takes a lot of experience to know what goes into putting a building together. It might be possible for the firm to make a buck even while the client struggles to keep their project going. Another idea that can only result in lowering the reputation of our industry.
I am also confused why firms feel the need to lowball fees given the demographics of our workforce. Even when the economy is as slow as it is, finding quality employees for design firms is very difficult. We live in an age where there is more work than can be performed by the staff available to the industry. Basic economics says that when demand exceeds supply, prices rise. Why then would any firm feel pressured to levels that are inconsistent with quality work?
Productivity is one of the great buzzwords of the last couple of decades and I’m sure that we have become more productive as an industry. Unfortunately, a December 2004 white paper by Haskell indicates that productivity in the building industry as a whole only increased our productivity by about 33% since 1966. This is, by the way, well below the gains of the US economy as a whole, but that is a discussion for another blog article. Anyways, given the minimal productivity gains we have experienced, it seems unlikely that any particular firm is hugely more productive than any other. In addition, I assume that firms of similar size will be even closer in efficiency that the industry as a whole. So I don’t think that efficiency can justify the difference in fees in this instance.
A firm might give lowball fees in order to “buy” their way into an industry or a geographic location. If this is the case, the firm probably won’t survive in the given industry or geography since they will have created an unprofitable fee expectation for their prospective clients. I don’t see how this can be good for our industry either.
So, what is the answer? In this particular instance, I really don’t know. I would be interested to learn if the firm in this case consistently gives lowball fees or if this is a one-time aberration. The answer to that question would go a long way to understanding what the issue is. In any case, I really don’t understand why anyone who goes through the extensive education and experience necessary to lead a design firm would then have so little respect for what they do that they are willing to risk our industry’s reputation by giving lowball fees and subjecting us all to the potential problems discussed above.
Posted on August 18, 2008 - by Pete
Key Performance Indicators
All businesses have Key Performance Indicators (KPIs). The purpose of a KPI is to provide a number that can quickly and easily give you a feeling for how well your business is doing. For example, I have a friend who sells Cellular Phones and Service. One of his KPIs is number of people walking in the door. Since he knows how much, on average, he makes every time someone walks into one of his stores, when his foot traffic starts to increase or decrease, he knows that he needs to adjust his business plan accordingly – either increase marketing, hire additional staff, reduce costs, whatever.
Now, this may surprise a lot of people who work with architects and engineers, but Architecture and Engineering are businesses also. Therefore, we need to have KPIs in order to manage our activities. One of BJG’s most important KPIs is Utilization. Utilization is the ratio of time working on projects to total time worked. BJG has a companywide target Utilization Rate of 62%. However, the Target Utilization Rate for individual BJG Staff Members varies significantly. The maximum Utilization Target is about 80% and the lowest is 5% or so for administrative staff. While the 80% maximum may seem low, it is important to consider that Total Time includes Vacations, Personal Time Off, Mandatory Training, etc. so 80% really doesn’t leave a lot of time for non-billable tasks when one is at the office.
What makes Utilization effective as a KPI is that is that I can track BJG’s profitability fairly accurately by tracking Utilization. When Utilization drops, it is time for us to ramp up our marketing. When Utilization gets too high, we know that we need to hire more staff or our current staff will start to burn out. The other great thing about Utilization is that we can get results immediately and in real time – as long as people fill in their time sheets. I can plot companywide Utilization and compare it to monthly revenue and/or profitability and the graphs align nearly perfectly.
Another of BJG’s KPIs is Employee Retention. At BJG we strive to be the employer of choice for talented, motivated and ambitious design professionals - we work hard to make this a great place to work. If I am doing my job as the company’s president, BJG’s staff are engaged and excited about their jobs. Engaged employees generally don’t leave so I can track how I am doing keeping employees satisfied by tracking employee retention.
In addition to the above, BJG has a few other KPIs that we track such as client satisfaction, revenue factor and core value conformance. All of these help us run our business which, in turn helps us better serve our clients. When our business is running smoothly, we can really focus on being Responsive to our clients’ needs.
Posted on August 7, 2008 - by Teresa
Beach Day
The sites at our company meeting on July 22nd were much different than a typical meeting. The room was filled with flip flops, floppy hats, sunglasses and even zinc noses.
In pursuit of Core Value #10 - Have Fun, it was BJG Beach at Work day. Congratulations to the potato salad contest winners Cathy and Kim.
Everyone enjoyed the opportunity to relax a bit in the name of fun! Stayed tuned for results from our next “fun day” which will be coordinated with National Bad Poetry day!
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- Las Vegas through the video conference
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- Pleasanton at the Beach
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- Jon with his beach bod
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- Kim and Kara
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- Noko, winner of beachiest look
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- Monica at the beach
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- Jim at the BBQ
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- Kara, Mary, Kim and Cliff
Here is a presentation Monica made about Beach Safety tips!
Posted on August 4, 2008 - by Elliott
Our Online Toolkit
To have a successful blog, we need to interact with potential readers in as many ways possible. In this post, although a little off topic, I will share the ways we are trying to gain eyeballs.
Delicious
Delicious defines itself as
a social bookmarking service that allows users to tag, save, manage and share web pages from a centralized source. With emphasis on the power of the community, Delicious greatly improves how people discover, remember and share on the Internet.
When an interesting link gets past around the office we make sure to put it into our delicious bookmarks, which can be found here: http://delicious.com/bjgisresponsive. Readers can subscribe to our bookmarks, become our friend through delicious (that way we can share links directly to one another). I am also working to get our new links posted on our blog once a month for more crossover activity.
Twitter
Twitter is a
service for friends, family, and co–workers to communicate and stay connected through the exchange of quick, frequent answers to one simple question: What are you doing?
What does that mean you ask? I think of Twitter as a chat system/blogging platform and social networking all rolled into one. Your entries are related to 140 characters (pretty hard sometimes). You can “follow” people and then get their updates almost immediately. With twitter, you can have conversations with people halfway around the globe that have common interests.
At first I didn’t know how to find good quality people to follow. Twitter, at the time, did not have a search function. But a website called summize.com did. Summize, which recently was acquired by twitter, built a search function on top of twitter using twitter’s api (application programming interface, a fancy way of saying twitter opened it’s data up to summize).
Using summize, I searched for key words (revit, leed, usgbc, architecture, etc.). Whoever said those words, I “followed”. The true twitter-ers want a conversation, not spam pointing them to your blog. That is the difficult part, but also the fun of twitter.
Come start a conversation with us. http://twitter.com/bjgisresponsive
Posted on July 25, 2008 - by Elliott
July Engaged Employee
George is our engaged employee of the month for July. He has given numerous hours to help make the new Moana Pool in Reno a reality. Most recently, he manned the grill at a BBQ fundraiser. Congrats, George!
Posted on June 30, 2008 - by Pete
Responsiveness – Not Just a Slogan
I just read an article in the June 4th edition of the ReD REPORT (www.theredreport.com) regarding the disconnect between Nevada Real Estate Developers and Nevada Power – the power provider in Southern Nevada. There are a couple of reasons that I thought the article was worthy of a comment. The first one was that the author went out of the way to mention that most developers were unwilling to comment on the record. It is implied in the article that they are all afraid of retaliation from Nevada Power if they say anything negative. This fear was juxtaposed in the article with comments from Nevada Power about their initiatives to reach out to developers.
Another interesting contradiction in the article involves Nevada Power’s mission statement “Be responsive to customer growth by performing the right service, on time, the first time”. Nevada Power then talks about their 10 step process for getting power to a facility, the need for developers to “understand” Nevada Power’s processes and the requirements of their application form which appears to require developers to perform research into 10 possible conflicts which would delay getting power to a site Looking at the list, it appears that only Nevada Power would be able to determine if conflicts exist.
The gist of the article is that Nevada Power, while claiming to be responsive, is anything but. Given BJG’s mantra of Responsive by Design, I implore all of our employees to make sure that they are being responsive to our clients and the other members of the team. Furthermore, if any of our clients, partners, fellow construction team members, etc. feel BJG is living our mantra, please contact me at (775) 827-1010 or pblakely@bjginc.com.
Posted on June 1, 2008 - by Elliott
June Engaged Employee
Marshall volunteers many hours at the Nevada County Humane Society. Good job, Marshall!
Posted on May 27, 2008 - by Teresa
Everything I Know About Business I Learned From Running
