Engineering Inc. - March/April 2008 - (Page 19)

Bottom By Jim Parsons StrategieS Sound financial management tactics help firms ‘beyond the numbers’ ound financial management seems a natural complement to the practice of any engineering firm. Both deal in absolutes—one follows fundamental rules of budgeting and financial reporting while the other utilizes scientific principles to formulate the design of structural components. n Effective financial management, not unlike effective design and construction, requires more than a reliable tally of numbers and transactions. It requires superior management, period. Too often owners and managers adopt strategies that are ill-suited to the way their firms conduct business, or fail to maximize a firm’s unique advantage. “Expenses in all professional services firms are directly and 100 percent related to delivery of services,” explains Jim Steiker, president of Philadelphia-based Shared Equity Strategies, Inc., a consultant to A/E firms on financial matters. “In addition to overhead, firms also have the costs of developing service lines, marketing, hiring staff ahead of the curve and so forth—things that are usually not well accounted for.” The project-based nature of A/E work is another important factor, according to T. Wayne Owens, managing director of Deemer Davidson Prather, PC, a Duluth, Ga.-based accounting firm. As such, financial management involves project-specific contracts, time, staff, subcontractors and other direct costs. “All this needs to be effectively integrated into the firm’s information and reporting systems to give managers perspective,” Owens says. Barring a project-centric approach, “management might assume that one thing is causing them to lose money when it’s actually something else,” says former ACEC Chairman Jeff Daggett, a senior vice president of WHPacific, Inc., an engineering/ architecture/management services firm. A Strategic Foundation Any number of elements can influence the quality of an A/E firm’s financial management strategy. But for financial tools and resources to be used effectively, firms need a sound foundation upon which to apply them. For that reason, Owens says, the bedrock of good financial management is strategic planning. “You need a three- to five-year plan that states your goals and how to get there—the rate of growth, client and project types, geographic markets and so on,” he says. “That ties in to the firm’s annual business plan with a budget for achieving those objectives, which in turn ties in to project managers’ incentives, compensation and professional development goals. All three must be develMARCH / APRIL 2008 ENGINEERING INC. Derek Lea 19

Table of Contents Feed for the Digital Edition of Engineering Inc. - March/April 2008

Engineering Inc. - March/April 2008 Table of Contents From ACEC to You News & Notes Market Watch Legislative Action Election Preview BIM Bottom-Line Strategies From the Ground UP 2008 Annual Convention Primer Across the Federation Business Insights 2007 ACEC/PAC Honor Roll Membrs in the News

Engineering Inc. - March/April 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.