WHAT S NEW - m4d.com.au€¦ · WHAT’ S NEW Winter 2015 Are your business systems ... To begin the process of deciding what’s right for your business, answer the ... Utilise business

MANAGEMENTFORDESIGN

WHAT’S NEW

Winter 2015

Are your business systems maximising your potential?

Most organisations use multiple business management applications to run their business. If you are an architect or engineer you use applications to design and deliver your projects, plan and manage projects and people, monitor and report financial performance. As the business grows applications are added that get the job done but don’t necessarily talk to each other.

While an integrated system may manage most of your activity, rarely will it handle the industry specific operations. What can and should be integrated, how do you make the integration decision, what systems do you use and at what point do you deliver a return on your investment? How can the functionality sufficiently meet the requirements of the organization? And how do you measure this?

To begin the process of deciding what’s right for your business, answer the following questions:

• Should your finance department share client, contact and project data with business development?

• Is it a requirement to forecast income and profitability?

• Does your time keeping system talk with your payroll system or your invoicing system?

• Is your project life cycle process streamlined?

• Should your executives have real-time visibility to financial metrics?

• Do you know if your employees are under or over utilised?

• Do you know if you have enough work to sustain your firm for 6 months?

• Do you have a clear understanding of what your business will be like in 12 months?

Then ask yourself these questions and you will get closer to where you are and what you need:

• Are your project leaders required to plan and monitor their project performance?

• Does the performance of individual projects matter to you?

• Do you want to attract and retain the best people?

• Do you use studio wide resource planning and are you still doing this in ad-hoc spreadsheets?

• Should you record and track your business development activity?

• Do you need to accurately forecast your future income and costs?

• Should you have only one place where you keep client and project information?

It’s not that difficult to make the decision about what is right for your business. But do you have the willingness and drive to embed in your business a culture of ‘great business management’? How important is it to:

• Put in place solid business foundations?

• Maximise the financial performance of your business?

• Ensure that all of your projects are managed well?

• Know that your Project Leaders are using proper project management tools?

• Ensure that you are maximising the potential capacity of your people?

We are often surprised at the level of indifference to — or lack of knowledge of — what the critical business management principles are. Ask yourself: ‘are you running a business’ or ‘are you delivering projects’? It’s a fundamental question that all business leaders need to ask themselves. Where do you sit on a scale of 1–10 with your business foundations? One of the key principles of a great business is great business management systems. Systems that enable you to control and build a sustainable business.

So what does your business system look like?

Your business systems need to:

1. Be designed for project based businesses

2. Integrate the key business information into a ‘single source of truth’

3. Provide real time visibility and analytics on demand

4. Enable great project management

5. Optimise resource utilisation for profitability

6. Adapt to changing business requirements

7. Adhere to government reporting requirements

8. Provide an executive-level view of project and company health

9. Allow for seamless transfer of information.

Do your systems tell you where you are heading not just where you have been?

Ideally, your business systems will have a positive impact on every aspect of your business, from business development to project control, forecasting and invoicing. Your systems should allow Customer Relationship Management

(CRM) data to seamlessly integrate into project planning and contract management. Collaborative project management and tracking tools should work in tandem with back office support applications such as accounting, communication management and financial management.

A strong industry-specific Business Management System should give you the tools you need to make better decisions through improved visibility, insight and control across all components of your projects and the business as a whole.

Business health check in 3 easy stepsThe end of the financial year is not only a time to get your business accounts in order, it’s also a time to take stock of your business and to give it a thorough health check. It’s a time to bring out the microscope and have a close look at what is and isn’t working. From staff to processes, the end of the financial year is a good time to evaluate how your business is holding up.

1. Look at your numbers — and your number crunchers

Financial statements and accounting reports are all very good and well, but on their own they don’t tell you all that much about your business. Sure, you can see what’s going in and what’s coming out, but where’s the context?

It is crucial for any design and engineering business to benefit from the skills of a qualified and experienced Chief Financial Officer and they should be more than just a number cruncher. This is an integral part of your business that should be provided by someone with the strategic skills and intelligence to do more than just accounting. To really contribute to the business, your CFO should be able to contextualise the financial information and to make an informative analysis to aid senior decision makers.

What do your numbers look like? Are they telling a story beyond the numbers in a financial report? Is your CFO able to interpret the data in a way that provides value to the business? If the answer is no, then this is a good time to review the usefulness of the data available to you and to make changes to ensure that your numbers are more than just numbers.

2. Invest in high performing employees

Nurturing employees with a good cultural fit with your business’s aims is integral to success. If your staff aren’t 100% behind what the business is trying to do then they will not make good long-term assets and they will possibly not last long anyway. Trying to convert an ill-fitting person into a loyal employee can be a waste of effort on both sides for a goal that will never come to fruition.

Your first impulse should not be to hire an extra person to fill in the gaps left by an underperforming staff member. An underperformer left in place can damage an otherwise thriving business — a problem that places project-based design and architecture firms at increased exposure to risk. Culling cultural misfits will allow you to spend more time focusing on the development of employees who show initiative, interest and who will be long-term assets for the business.

Identify your best employees early and reward them. It is also worth having a look at the level at which each employee is performing. Identify areas for improvement and ways in which you can get the most out of each member of your team. Knowing where everyone stands will aid decision making around staff retention and staff cuts.

3. Business processes — dotting the ‘i’s and crossing the ‘t’s

An evaluation of your business processes doesn’t have to mean throwing out existing processes and starting again. Look at your systems and workflows and make tweaks to optimize processes already in place. Small changes over time will make a big difference to business performance without having to reinvent the wheel. Get you team involved so that the people doing the work take ownership for the streamlining process. This will motivate and involve staff as well as increasing efficiencies.

Successful Business Succession

Planning for succession is just the first step in a chain of events that culminates in new leaders embracing a key leadership role within the business.

There is no one formula for succession, but the goals of any leadership change are similar — to retain the core values of the business, to retain and build on your client base and skills capability, and to keep the business operating smoothly according to its original vision. Having said that, if you aren’t clear on who your next leaders will be — who will sustain your design values and capability, who will nurture your clients and who will drive the business going forward — you are not on your own!

The vast majority of design and engineering practices have no succession plan in place whatsoever. Management for Design routinely finds that only one in 10 businesses have a plan in place. Of those that do, execution typically occurs in an ad-hoc and spasmodic manner. No amount of management advice will change this but, in our experience, those businesses that have successfully transferred the leadership to new principals and directors have spent many years building and cultivating a culture that enables succession to occur seamlessly. Leadership transition is an evolution.

In our latest Business Journal, Robert Peake outlines the key issues and strategies, and warns of problems you may encounter. Read more at: http://bit.ly/1HwVOPb.

Scheduling tips for architecture & engineering businessesAccurate scheduling is a delicate balance, which when it goes wrong, can have a negative impact on the perception of your business. Have you struggled with projects falling behind schedule and over budget? Do you have systems in place to accurately predict scheduling needs? Are you applying scheduling logic to your processes? We’ve summarised the main points you need to know to ensure that your projects complete on time and within budget.

“The vast majority of design and engineering practices have no succession plan in place whatsoever. Management for Design routinely finds that only one in 10 businesses have a plan in place.

”

Scheduling fundamentals:

1. Start from the finish: this is the most obvious point for project-based workflows. For architecture and engineering businesses, projects will usually have a prescribed finish date rather than a prescribed start date. All scheduling must be done backwards from the finish date to ensure that deadlines will be met.

2. Chart out the project elements in detail: break the project down into its component parts so that no element is forgotten. Don’t worry about getting into detail here, every stage of the project should be documented for both schedule and budget forecasting, however don’t let the detail get in the way of the big picture — ensure that detail is broken down in a logical and consistent pattern and that the overall project goals are always in sight.

3. Track actual timeframes: keeping track of how long each project stage actually takes in comparison with your scheduling estimates will make it easier to accurately predict the required lead time for future projects. This means recording all time-related data for each project and being able to access data quickly for immediate analysis both on a project-by-project basis and also in comparison with all projects in your system so that your business has intelligent and reliable data to call on when needed.

4. Assess analytics regularly: it’s one thing to track all of this data, but if you don’t do anything with it, it’s just numbers in a machine. Make a commitment to reviewing project scheduling data across all business projects and measure against business objectives.

5. Utilise business systems to take the headache out of the number crunching. Scheduling systems should be linked to other systems within your business. Integration of systems makes them more likely to be used and also increases the usefulness of the data collected.

If you business needs help with scheduling projects and people, send us an email at [email protected] for advice.

Each issue, Management for Design selects reading material that may be of interest to design businesses. Our winter issue selection follows:

READING LIST

The Business of Design: Balancing Creativity and Profitability

Keith Granet

Keith Granet debunks the myth that business sense and creative talent are mutually exclusive. This book

provides all of the necessary tools to create and run a thriving design business — from billing and human resources to branding and project management to

marketing and licensing — in one easy-to-use guide.

The Goal: A Process of Ongoing ImprovementEliyahu M. Goldratt and Jeff Cox

Written in a fast-paced thriller style, The Goal contains a serious message for all managers in industry and explains the ideas which underline the Theory of

Constraints developed by the author.

Lean In: Women, Work, and the Will to LeadSheryl Sandberg

Written with both humor and wisdom, Sandberg’s book is an inspiring call to action and a blueprint

for individual growth. Lean In is destined to change the conversation from what women can’t do to

what they can.

MANAGEMENTFORDESIGN

Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems.

By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.

The Naked CEOAlex Malley

Gain insights from a successful CEO who’s lived a big life. Learn how to dream big and have the courage to pursue

your passions and be willing to fail in that quest. Take the practical tips and apply them to your own career.

30 Lessons for Living: Tried and True Advice from the Wisest Americans

Karl Pillemer

After a chance encounter with a remarkable ninety-year-old woman, renowned gerontologist Karl Pillemer decided to find out what older people know about life

that the rest of us don’t.

A Brief History of TimeStephen Hawking

Was there a beginning of time? Could time run backwards? Is the universe infinite or does it have boundaries? These are just some of the questions

considered in an internationally acclaimed masterpiece by one of the world’s greatest thinkers.