Imagine- Achievement vs Effort

Posted on by johnlwheaton1

A VISION for those in Professional Services:

The standard form of pricing professional services work among architecture and engineering firms still mostly involves some form of “gross up” cost estimating based on predicted labor investment at a defined labor rate. Even when setting fees on a “top down” basis or “cost of construction,” there’s still a “bottom up” exercise in regards to budgeting labor. Almost all firms “monetize” their time in some way by also filling out time sheets. The hours are loaded into the accounting system by project, by phase, by labor code.

Re-imagining

Let’s just imagine for a moment instead, a professional services business based only on results and value. There’s no time-sheet in the traditional sense. The business is not selling their time for a labor rate, but is focused solely on outcomes.

What is the issue? The time-sheet, recording time by increment, by labor code, by job number, on an hourly basis, is focused through the lens of effort– a justification model, “People like us focus on monetizing our time, documenting that effort, billing for it, while we hope to get the right results on the project.”

The opposite is a business focused through the lens of results- an achievement model, “People like us produce results like these for fees like this.”

Imagine:

  • Everyone is paid a salary – no hourly workers at any level.
  • There’s no discussion about “billable time,” only expected outcomes within time frames.
  • The focus is entirely on an achievement and income model:
    • “People like us produce results driven by value, scheduled completion dates, project milestones and deliverables that are billed at pre-determined values.”
  • The expected work week is to “complete the targeted work”- no exceptions. Work status is either “done or not done,” or “on-track or off-track.”
  • Jobs are billed based on percentage basis according to the fee and progress against the deliverable, not the time accrued.
  • There’s no accounting for time, but only revenue, only outcomes. We determine the percentage complete based on the results achieved vs the results planned. We set the fee based on the value to the market, region, project type, client.

What about Time and Materials ( T & M hourly) work, you ask? Perhaps there needs to be an exception for certain activities, but then why not charge more for T & M work than for fixed fee work. (We can’t achieve the margin a fixed fee can allow when we bill T & M.)

Alternatively, we simply stop working entirely on the effort-based model of billing for time. No T & M, ever. We work for clients that value the fixed fee model. For those clients that aren’t willing to pay a fixed fee we take the position of, “People like us produce the type of value where we believe a fixed fee is the only reasonable approach.”

Imagine this business, where everything is results, outcome, achievement driven rather than time-effort driven. Imagine piloting a project or a group that tests this approach.

Imagine quoting projects from the top down only, “We think a project like this should cost this much”. Our thinking is centered on the mindset of, ”Our business costs this much to run per year so we need to sell X-times that cost in executable backlog to be completed within this time frame”

Imagine.

SWOT Analysis – Threat to Opportunity

Posted on by johnlwheaton1

Threats that are defined in our SWOT analysis can actually be opportunities in disguise. Recently in a SWOT analysis review with one of our branch offices, the leader was reviewing a legitimate threat that influences our office’s ability in that market to procure work with certain clients.  I immediately noted that the threat was actually a veiled value proposition, an opportunity. If we could sell the clients on what we know about that space in the supply chain, we would actually do the supplier causing the threat a favor, and make more value for our clients as well. It’s just a different pricing paradigm on the front end in order to achieve a better bottom line for them in the future. It’s a win, win, win if discerned and communicated correctly. Now comes the hard work of communicating the value and overcoming entry barriers; getting referrals; designing a pricing structure and a delivery method.

Some threats are hidde opportunities. Like a “no” in sales and “risk” in innovation. We need to go beyond the surface and figure out if these things are worth pursuing.

Have you dug below the surface?

Sometimes it Seems Random

Posted on by johnlwheaton1

It was 7 or 8 years ago. I was cranking out decent miles on a trail run. I heard his footsteps approaching while leaning into a hill. He was stride for stride but not passing. I sensed this might be an unusual experience for him, but I didn’t like to get passed on my runs; stupid I know, but it’s a part of me; a throwback to my competitive running days. He finally pulled up next to me and we started to talk. (It’s a “runner thing.”) He had relocated here from Arizona. His wife’s family lived in town and she wanted to be closer to them while raising their kids. He took up running as an adult. He did triathlon’s as well. We cruised through 7:30 miles for the rest of the run and had some fun getting to know each other. We talked throughout. He was in fund-raising, business development, lead generation. I was in the business of engineering and construction. I sensed some connection between us.

Fast forward to present; just a few days ago in fact. My fatigue and the cold air led me to the local Starbucks this particular morning. And there HE was at the front of the line. The same guy. He reached out and said, “Hey do you have time for a visit?” I said, “Yeah for as long as it takes to get my drink.” (I was in a rush.) He rolled his eyes, pulled me to the front of the line, and said “Tell me what you want to drink.” Obviously he meant business. He wanted to talk.

Let’s rewind; two weeks ago.

He had emailed me via LinkedIn asking if I’d ever thought about employing a business development professional to advocate our business, open doors, and build relationships (yes, of course.) I’d asked him why, and questioned if he was still in his present job. He informed me that he was. He was looking to the future and to more possibilities.

Rewind again, this time to a month or two ago. We “randomly” cross paths (again.) This time it was just outside the trail entrance on the road. He was running and I was finishing a power walk. He’d recently started training again. I jumped in with him for a bit. It was totally spontaneous. He talked about his most recent position as a business developer for a General Contracting firm. I knew where he was working through our LinkedIn connection, and through his messaging from time to time. He mentioned how he’d helped to increase the GC’s bid opportunities from $2.5M to $12M.

I’d lost track of him before this, between the initial run on the trail and now, except for an occasional encounter at the grocery store, on social media, or around town at random. Now our paths seemed to be continuing to cross. I know more about his background because every time he changed jobs, he let me know. Every time he changed he got closer and closer to what I do; the business of engineering, design and construction. He’d been in fund-raising for a non-profit,  development for a college engineering department, and one prior construction company gig; business development, people stuff, talking, finding a fit, opening doors, designing connectivity; this is what he loves. It’s who he is. It’s a lot of who I am as well, but CEO duties in a growing organization make it harder and harder to build 1-1 relationships myself unless they are very specific and have high potential in scaled opportunities.

My quick encounter at Starbucks turned out to be a 20 minute conversation while I finished my mocha and he drank his coffee. He talked about his goals. We discussed my business. We talked about roles, philosophies, his and my approach to client and business development. Back and forth, back and forth.

I find it more than “random” that I bumped into him at Starbucks. I find it more than random that our paths have gently crossed over the years. I find it not random. People encounters are unique. They aren’t always planned and aren’t typically scripted. It’s important to take notice when recurring themes and people continue to present themselves. This got my attention. I wasn’t looking for it. I didn’t plan it. I was just going about my daily business. There’s a message for me in this perhaps, regardless of what it is or what I do with it.

We never know what relationship or interaction may turn out to be something of significance. Something that changes the way we think; the way we view life; how we interact. I am not sure yet what will happen from this. I’m still reflecting.

Sometimes strategy is planned and initiative. Sometimes is spontaneous and reactive; “opportunistic.” It’s important to watch, to listen, to stop for a moment, to reflect on what might really be happening; to decide what we want to do with it.

The Triangle

Posted on by johnlwheaton1

I bought a TRIANGLE for the office. You know, the musical kind. The type you play (ding) in an orchestra. It’s a percussion instrument. This one’s more like a “dinner call Triangle,” but I think you get the picture. Its got that bright sound.

In the office we “ring it” every time we win a new project, or a new phase is added to an existing project. Tami does it at the front desk. Everyone can hear it.

Sure people can check the joblist if they want, and it gives a live report of everything that’s active. But it’s boring. There’s something tangible about the triangle. It’s audible evidence that something good just happened. It reminds people who don’t always get to see the big picture, that cool things are happening; that new business is coming in. Now I’m looking for a GONG to ring. It’ll be for really big projects over a certain dollar value, or for new work with new clients. That’ll get people talking.
The reaction is fun and it creates a festive atmosphere. It gets people talking. It reminds me of being called for dinner when I was a kid.

 Isn’t that what new work is like anyway? Like dinner time for the business?