I was told once, and only once that I can recall, what engineering is about. A university lecturer told a bunch of us 1st year students that engineering is all about forces and energy and the management thereof. After that bit of sage advice we were off; into bending moments, shear forces, Bernouilli’s theorems and the mysteries of thermodynamics.
Sadly, we were never told how the engineering industry works and what keeps it working. Well, it’s simple really. As with all businesses; it’s all about the money.
Now, I’m prepared to believe that the particular group of undergraduates to which I belonged, way back then, were the only ones who didn’t get the message. And that all my engineering colleagues know exactly how important the money-go-round is. But, I’m not prepared to believe that for very long. Why? Because one only has to be around engineers in the workplace, for a short while, to realise how sparsely populated their professional conversations are with references to money. It’s as if cost and price are side-issues that get in the way of doing the job properly.
Money in business is a big subject with many sub-headings and specialisms. There’s financial accounting, management accounting, cash flow planning, investment planning, budgeting, taxation planning and so on and so on.
So, let’s focus in on one subject only; value for money.
I once asked a friend of mine, who worked for one of the big 4 management consultants, why their fee rate was 3 times mine. In other words, why his firm’s clients valued his time at 3 times the price they put on mine. He said that his firm told their clients, as often as reasonably possible, how much money their services were either going to save them or make for them. Talk about the glaringly obvious. What client cares about Bernouilli’s theorems when the professional services they’re buying are going to make them a million dollars?
Now, here’s the thing; clients see designers and contractors as a pre-cursor cost, which has to be spent, before their cash flow turns positive and they can get their hands on that million dollars. And my observation is that, as an industry, we are poor to average in getting them to change that perspective.
We’ve all seen, or been involved in writing, lovingly prepared tenders with CVs, experience statements, methodologies, organisation charts, schedules, plans of every description and cost sheets. Very seldom do we see value statements in those documents such as would be made by my friend the management consultant. Ah-ha, you might say, Harry’s lost the plot here as our clients don’t ask for value statements in their requests for proposals or tender documents. And, in any case, our clients always go for the cheapest price.
My response to the first point is; so what? Let’s tell them anyway. What have we got to lose? My response to the second is that, as an industry, to some extent, we’ve conditioned our clients to think that way by consistently focusing on cost not value. Of course, there is competition between bidders. Of course, our clients have competing calls on their available investment funds. Of course, clients don’t always have joined-up organisations that take a systemic view of tenders. But, aren’t these grounds for us, either as individual entities and/or collectively as an industry, to lift our game?
To see, at a very, very basic level, what lifting our game might look like compare these two statements:
“We will design the facility you require using the appropriate codes and standards and employing suitably qualified staff at all stages of the design development.”
Really sets the pulse racing doesn’t it? Or;
“Our long experience, in designing the types of facilities you require, will ensure that the whole of life costs (WOLC) of operating that facility will be amongst the lowest in the industry.”
Now you’ve got my attention – or at least that of the CEO or the finance guy who is on the tender review team. Of course, I am assuming that you can back up the WOLC statement with some evidence and a description of some key issues that will contribute to the proposition you are making.
The points here are that the second statement is (a), looking at the client’s problem from their perspective and (b), making a proposition rather than just responding to the client’s tender check-list. Suddenly, the client might to start to think you are on their side and that you might not be just a lousy front-end cost but a business partner.
Now, there are plenty of old cynics in the industry who can put up all sorts of reasons to explain why this kind of approach will never work. So, here’s an idea; why not start putting together the counter arguments against each one of the cynics’ reasons?
Technically, each of our businesses advances through innovation. Why not innovate our businesses into a better commercial position too?
We’re all smart, financially and commercially savvy people. Right?
Harry Roberts
President of EA UAE Chapter
THE VIEWS EXPRESSED IN THIS ARTICLE ARE THE AUTHOR’S AND DO NOT NECESSARILY REPRESENT THE VIEW OF MR ROBERTS’S EMPLOYER OR OF ENGINEERS AUSTRALIA