PEPP National Activities
Eric West, P.E., PEPP Southwest Region Vice Chair
On February 23-25, the PEPP Executive Board and others met in Tampa, Florida, for a working meeting. Since NSPE no longer has a winter meeting, PEPP chose to combine several activities that previously occurred in conjunction with both the winter meeting and the Annual Meeting. The result was three days of interaction on the following topics:
Budget and Planning Committee
Products and Services Planning
Council of Principals
Young Engineers Advisory Council
To summarize the discussion for you, here is what I took away from the meetings:
With regard to PEPP’s national budget, we continue to depend on the sale of EJCDC documents for most of our revenue. We constantly discuss how to refine and improve upon this product. We also monitor how that money is expended. At the core is the idea of spending our resources on new or existing products and services that will bring value to our members and grow that membership.
In light of that goal, we spent a considerable amount of time discussing our products and services. From EJCDC contract documents to HR and CFO Roundtables, from QBS awards and grants to communications, from the Council of Principals concept to Young Engineer activities, no stone was left unturned during this discussion. All of these items have committee chairs who report to the board each conference call so that we can keep tabs on how they are going.
The Council of Principals conducted a session one afternoon, with two enlightening presentations on bettering communications with employees and leading change. This portion was open to the public, and a few engineers from the Tampa area joined in. COP is still in its infancy, but holds a lot of promise for value to the PEPP member in the future. A session at the NSPE Annual Conference in Denver has already been set for the morning of July 28.
The YEAC also met to discuss its current projects. This committee creates its own products geared toward the young engineer in Private Practice. Past projects have been popular, and we are currently finishing a presentation on Engineers in Elected Office and writing a document on the key motivators of young engineers.
Professional Liability/Risk Management Brief — Project Records
Richard B. Garber, Vice President A/E/C Risk Management Services, Victor O. Schinnerer & Company, Inc.
Project Records Retention
Proper management and retention of project records does not mean saving everything. Systems must be efficient and procedures clear and simple so that the records retention process does not interfere with other administrative functions of an office.
Keep Permanent Project Records
An effective records retention policy should be in writing and should:
- Identify records by category;
- Describe the length of time for retention;
- Designate the method of storage and destruction; and
- Establish a protocol for determining if documents not easily categorized are to be retained or destroyed.
Firms should determine what they consider to be permanent project records. Every project has temporary documents— those used to develop final instruments of service. These documents include report drafts, handwritten logs and diaries, rough calculations, and draft sketches. Temporary documents should be discarded when a superseding document is created or when the project is closed.
Permanent documents include interim documents that are provided as milestone submittals or contract deliverables. This category should also include all final documents, project correspondence, meeting memoranda and minutes, internal memoranda, logs, journals, and calendars. Handwritten telephone memoranda or site visit notes are considered final if they are not superseded by typed versions.
Professional services agreements, contract drafts, and any subsequent modifications should be maintained as well. In many instances, the final contract terms can be clarified by looking at what each party proposed, what objections were recorded, and what compromises were reached.
Firms also need to develop a timetable for when specific types of documents should be destroyed. It is essential that the destruction system is logical and that firms keep to the schedule.
Preserve Special Project Records
Priority should be given to saving files for those projects in which new building products, systems, or methods of application were used. Documents indicating that professional services, recommendations, and judgments were in accordance with the applicable standard of care and the professional services contract are basic to the retention process. Also, firms should retain files for any project that suffered an unusual number of design, construction, personality, or financial problems.
Determine the Retention Period
Establishing a disposal date for records is ultimately a business decision of the firm. One of the main factors to consider is the length of the statutes of repose in the states governing projects. Keeping project records for at least one year past the longest applicable statute of repose is prudent. Government projects may include detailed record-keeping obligations, and various federal, state, and local agencies have established rules that govern record keeping. Firms may also be committed by contract to retain project records for a specific amount of time for the client.
Maintain Records Retention Procedures
Firms should develop procedures based on the firm's specific needs and abilities to enforce those procedures over time. A sound records management and retention policy adds to the credibility of the firm should questions arise concerning a possible lack of documentation on a specific project. Such a policy often leads to reduced exposure or to the early resolution of disputes. Retaining well-prepared project records may even provide the firm with the ability to turn a possible claim into an opportunity to provide additional services to a former client.
Statements concerning legal matters should be understood to be general observations based solely on our experience as risk consultants and may not be relied upon as legal advice, which we are not authorized to provide. All such matters should be reviewed with a qualified advisor.
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Victor O. Schinnerer & Company Inc. is managing underwriter for the CNA/Schinnerer Professional Liability Insurance Program commended by NSPE/PEPP since 1957.
Recognize Your Firm and Peers Through the PEPP Awards Program
PEPP presents several awards each year to recognize noteworthy contributions to the consulting engineering field. Members may nominate individuals and organizations for the following PEPP honors. The awards will be presented during the PEPP 50th Anniversary Gala at NSPE's Annual Meeting.
All nominations are due to the Awards Committee by April 30. The Awards Committee selects a winner with concurrence from the PEPP Executive Board.
The PEPP Award is given annually to an individual who has made an outstanding contribution to the advancement and recognition of the role of private practice in serving the public interest. Any individual, except a current PEPP officer or PEPP Awards Committee member, is eligible.
PEPP Professional Development Award
The PEPP Professional Development Award is presented to employers that exhibit exceptional career development initiatives and employment practices that advance the engineering profession.
Local chapters or state PEPP divisions may nominate candidates for the PEPP Professional Development Award. The PEPP Awards Committee selects the recipient(s) and any honorable mention recipients.
PEPP Merit Award
The PEPP Merit Award is presented to PEPP members serving in liaison functions or on joint activities, or to any other member who has made significant contributions to PEPP. In addition, the employer of a PEPP Merit Award recipient is recognized for the support the consulting engineering firm has given to the profession through the activities of the PEPP Merit Award recipient. The Awards Committee, with the concurrence of the PEPP Chair, may name as many PEPP Merit Award recipients as it feels are deserving of the honor.
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Get More Visibility for Your Firm
Link more business to your future while receiving the following benefits as a PEPP Sustaining Firm:
Exposure: NSPE's Web site receives more than 1 million hits and over 20,000 user sessions each week.
On-line Reference Source: PEPP Sustaining Firms listed in detail, including specialties; searchable by state. Let owners and other customers and partners find you!
Recognition: PEPP Sustaining Firms are listed in an issue of PE magazine (Circulation is 60,000)
Provide support to the industry and profession: Thanks to PEPP, NSPE members have a variety of benefits, including standard contract documents, continuing education programs, political advocacy, professional liability products, and much more.
Become a PEPP Sustaining Firm Member by Registering Online Today!
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Top 10 Things You Can Do to Increase Your Profits Today
Herbert M. Cannon, president of AEC Management Solutions Inc.
10. Commit to Understanding the Economics of Running an A/E Firm
Every week, I meet design professionals who somehow have managed to stay in business with little or no understanding of what it takes to consistently produce a profit. They have no idea how little effort is required to learn the basics of running a professional service firm. They believe that working longer hours is the only way to produce a profit and stay in business. Worse yet, many of them make the excuse that quality design and making a profit are inconsistent goals. I have worked with some of the top design firms in the country, and I can tell you without hesitation that making a healthy profit is not at odds with top quality design.
There is a substantial amount of literature, seminars, videos, and workshops on this subject. If you don't know how to calculate your net multiplier, overhead rate, or utilization rate and the impact on your bottom line, you need to take a few hours to study the subject. Feel free to contact me if you would like to be pointed in the right direction.
"Raise your expectations for the information produced by your accounting department."
|-- Herb Cannon |
9. Recruit Better Employees
At the end of the day, all we have to produce our product is our employees. If we have lousy employees, it only makes sense that we will be unable to produce quality work. If we want to produce quality design and make a healthy profit, we need to commit ourselves to finding and hiring the best possible staff.
The biggest mistake many firms make in hiring is waiting until they need people before they start the recruiting process. One of the keys in recruiting better employees is to always be recruiting and interviewing. Once you identify someone you would like to have on your team, you can either upgrade your current staff or add them on if the workload permits. If you don't have the workload to justify the new hire and you are happy with your current staff, you can often keep them in a holding pattern, until you have something available.
8. Be Willing to Lose a Job on Price
Do you pride yourself on never losing a job on price? If so, you are undoubtedly pricing your services too low. The A/E industry as a whole consistently under prices its services. In fact most firms could easily raise their prices 8% to 10 % without losing any of their current clients.
How do I know? I present my seminars and workshops to hundreds of design professionals every year and I always ask two questions. "How many people raised their fees at least 10% in the last year?" Typically about 15% to 20% of the audience raises their hands.
Of that group I ask, "How many of you lost a project or a client?" Everyone then puts their hand down, and I ask the group "Who hasn't raised their prices in the last year? Why not?" I have yet to get a good response.
Do yourself a favor and ask yourself the same question — and then raise your prices.
7. Have Your Accounting Department Produce Timely and Useful Information
Raise the expectations for the information produced by your accounting department. Too often we set our sights too low on what is expected from our accounting department. Work with the accounting staff to set achievable goals for producing timely and useful information.
Remember that in order to achieve this goal, everyone in the firm must cooperate by submitting timecards every Friday and approving draft invoices the day they are received. We can set high expectations for the accounting department, but they are not miracle workers. If they don't have the required information from the staff, then they can't produce the reports we need to manage our company.
6. Act Upon This Useful Information
You invested in accounting/project management software. You hopefully hired qualified people in the accounting department. They produced the information you need to run your business. Use it! If the project is over budget, brainstorm to figure out why. Maybe we are producing out of scope work? Maybe the schedule has been extended? Maybe we are receiving conflicting design direction from the client? The bottom line is that we need to figure out why we are over budget and develop a plan of action to get it back on track, otherwise don't even bother to produce project reports.
5. Hold People Accountable for Their Results
One of the biggest problems we have in this business when it comes to producing a profit is that we don't hold anyone accountable for the results they produce. We produce the project reports and can easily see that certain project managers always under perform financially. They consistently over run budgets; they have problems meeting the project schedule and often have difficult client relations. Other project managers consistently over achieve. They always produce a profit in excess of expectations; they meet their schedules and their clients love them.
When it comes to raise or bonus time, we tend to overlook the shortcomings of our under achievers and minimize the contributions of our over achievers. Let's do our best to turn this around by explicitly stating our expectations for all employees. Then we can monitor his or her performance, give feedback as needed, and provide the necessary training to make everyone a top performer. At the same time we can financially reward our top performers (see item #1).
4. Fire Your Worst Client
You know who your worst client is. We all have them. The one who negotiates the lowest possible price then mercilessly expands the scope and refuses to increase the fee. They call up on Friday afternoon at 3pm, demanding extensive design revisions by 9am Monday morning. In short, they produce 80% of your aggravation and 0% of your profits (at best).
When it comes to paying, they always question every line item 90 days after receiving the invoice. After you revise and resubmit the invoice, they claim they lost it, or never received it or the other signatory on the checking account is on vacation for a month, or they are looking for some previously undisclosed third party partner to put in their share, they can't find their lucky pen to sign the check, and the list goes on forever.
Let's get rid of these guys. I don't know about you, but I only plan on working for another 20 years or so — and I certainly don't have enough time left in my career to deal with this aggravation.
3. Fire your Worst Employee
You certainly know which employee I am talking about. While driving into work on Monday morning you wistfully daydream about how wonderful your life would be if this employee would only resign. Maybe this is the week. They have been with you forever, and years ago they might have been a decent performer, but time has passed them by and now they are nothing but an under performing drag on the entire company. They complain about everything, criticize every new company policy, act as the clubhouse lawyer, and no one wants them on their team.
Deal with this person today. Give them a nice severance package, a good reference, and send them on their way. It is addition by subtraction.
2. Renew Your Commitment to Satisfying Your Existing Clients
It's not price;
It's not quality of service; and
It's not overall dissatisfaction with their current A/E firm.
What is the number one reason that clients stray to other A/E firms?
It is the perception that the client is no longer important to the A/E firm. Yes, we all want to be loved and to feel important. Our clients are no exception.
As the economy heats up and we pursue those exciting new projects with exciting new clients, let's make sure we take the time to make our clients feel special. If we don't, someone else certainly will.
1. Establish a Real Incentive Compensation Plan
Most incentive compensation plans that I have seen offer very little incentive to the employees. They are difficult to understand and even more difficult to explain. They are too politically correct and subjective in nature.
The details of a successful plan are beyond the scope of this article, but they are based upon the following principals:
Successful plans include the following elements:
- Are not subjective in nature;
- Are easy to administer;
- Are easy to understand and explain;
- Payments are made quarterly to emphasize a more immediate cause and effect; and
- The incentive payments are substantial.
Incentive compensation plans do reward
- Economic results; and
- Exceeding economic performance standards
Incentive compensation plans do not reward
- How long you have been with the company;
- How much we like you;
- How much you need the money;
- Non-Economic Contributions to the Company;
- How hard you work;
- How many hours you work; and
- A cheerful disposition and willingness to be a team player.
For more information on this topic to learn how to acheive your 20%+ profit, attend the Pathway to Profit 2-Day Seminar.
March 15-16 New York / April 12-13 Chicago /June 7-8 Portland / June 21-22 Las Vegas.
Herbert M. Cannon, president of AEC Management Solutions Inc. and publisher of AEC Managing Partner Newsletter, is a management consultant, seminar provider, and speaker exclusive to the A/E industry. He is available to speak at company meetings and conferences. For more information, contact Herb via e-mail or visit his Web site.
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Attend the Financial Management Roundtable
We invite CFO's to attend the NSPE/PEPP 2007 National CFO Roundtable, May 3–5 in Arlington, Virginia. Join us in a supportive learning environment that provides a valuable national forum for CFOs (and Principals) of A/E/C firms to network, benchmark current activities, identify trends, and discuss emerging issues.
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Contact the PEPP Executive Board
Steve Theno, P.E.
|Immediate Past Chair
Larry Britt, P.E.
Kevin Skibiski, P.E., F.NSPE
Pete Koval, P.E.
|Vice Chair, Northeast Region
Randy Rakoczynski, P.E.
|Vice Chair, Southeast Region
Dan Dawson, P.E.
|Vice Chair, Central Region
Mark Davy, P.E.
La Crosse, WI
Vice Chair, North Central Region
Kevin Nelson, P.E.
|Vice Chair, Southwest Region
Eric West, P.E.
|Vice Chair, Western and Pacific Region
Steven Dyrnes, P.E.
|Young Engineer Representative
Dawn Edgell, P.E.
Kim Granados, CAE
1420 King Street
Alexandria, VA 22314
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