Engineering Inc. - November/December 2008 - (Page 22)

Strategies in a Downturn here’s how to stay competitive in tough times: Track your backlog. Your backlog is a key indicator of your firm’s current and future financial health. if it begins to drop, take action early and make adjustments before there’s a crisis. check the backlog on a monthly basis. Conduct due diligence. know who you’re working with; know their financial status and the likelihood that they will complete a project. upfront research eliminates trouble down the line. Cross-train staff. during a downturn, companies that have invested in training can shift workers between domains and sectors. engineering skills often are transferable, though a basic understanding of the field is necessary. Consider mergers and acquisitions. in some cases, consolidation results in a sum that’s greater than the individual parts. a weak firm might benefit by gaining cash and marketing muscle; strong firms can fill niches while securing resources at a discount. Outsource. One way to reduce staffing demands is to tap outside engineers, architects, designers and project managers. Organizations must cultivate talent pools and understand that, if used too heavily, outsourcing can result in an inadequate core of internal expertise. SOMOS/GeTTY iMaGeS Embrace information technology. a well-designed iT infrastructure can trim costs and boost Don’t play efficiency. during Recruit and economist. it’s fine a recession, it can reshuffle. it may to look at leading Forge alliances. help a company gain economic indicators look for opportunities seem counterintuitive, a clear competitive but an economic and internal numbers. to work with other advantage. With downturn requires But nobody knows firms where there’s the emergence of new thinking and for sure how the a complementary Software as a Service more defined economy will behave. fit. This approach (SaaS), organizations strategic knowledge. instead, focus on helps organizations can put top-tier consider recruiting internal benchmarks land larger projects systems in place while new talent for key and strategies. look and enter fields that minimizing upfront strategic positions. to become the most otherwise might be investments. efficient firm possible. off limits. Diversify. Gaining exposure to different sectors, such as transportation, energy, infrastructure, health care and commercial development, can buffer the effects of economic malaise. it’s also wise to diversify projects between public- and privatesector clients. At the same time, Kogan says, it’s wise to examine a top employee’s value and to take into account the relationships they’ve forged as they’ve established their career. The loss of a senior executive with years of experience and key industry connections could result in a downturn in bookings, billings and bottom-line results. “It’s important to make the right cuts rather than the easiest cuts,” he says. On the Money gets to the RFP stage. “We try to examine the social and economic implications of projects—and know the decision makers behind them,” he says. TSP also uses strategic alliances and outsourcing to leverage the strengths of other firms and improve its agility. “We are always looking for individuals or firms that have specific expertise we can use to mutual advantage,” Morcom says. “We feel it is a way to bypass hiring more staff and expertise. We can adjust dynamically Equally important as managing people is managing finances. The ability to oversee expenses, billings and cost overruns is vital. At TSP Inc., a 150-person Rapid City, S.D., firm that specializes in education, health care and infrastructure projects, the emphasis is squarely on fiscal performance. “Revenues have dropped over the last few years, though the company is healthy,” says Robert Morcom, the firm’s managing principal. Still, Morcom says, the downturn has forced TSP to examine its balance sheet more closely. “We’re now far more selective about clients and the business we go after. We don’t want to wind up with projects being put on hold,” Morcom explains. As a result, the firm examines prospective customers’ financial resources more closely, including credit ratings and past payment histories. The firm also works to establish solid relationships with clients before it 22 ENGINEERING INC. NovEmbER / DECEmbER 2008 W TSP inc. e’re now far more selective about clients and the business we go after. We don’t want to wind up with projects being put on hold. rOBerT MOrcOM to business and economic conditions.” This approach also allows the company to manage its payroll more effectively and maintain more predictable labor costs. Economic downturns call for tighter management, agrees SSR’s Barrick, but firms don’t necessarily have to batten down the hatches in the face of an economic storm. He says his firm continues to look for opportunities to improve its business. “If we can make a selective and strategic acquisition at an attractive price—perhaps a discount—it certainly makes sense to explore the option. One way an engineering firm can buffer the effects of a weak economy is to diversify and have a presence in different sectors.” Still, these executives say they are jittery about 2009 and 2010. Explains Mandel: “It is going to take some time for the economy to sort itself out.” In the meantime, some firms are likely to shutter their doors or find themselves the target of an acquisition; others are likely to lay off staff and close offices. Savvy firms, Kogan says, will continue to invest strategically in staff, offices and IT. “Every company must deal with the situation differently. The common thread is that organizations must engage in strategic planning. It is a makeor-break issue.” n Samuel Greengard is a business writer living in West Linn, Ore.

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Engineering Inc. - September/October 2008 Contents From ACEC to You News & Notes Market Watch Legislative Action Engineering Goes Back to School Winning the Talent War Mastering A Hard-Luck Economy Education Makes the Grade in Green Construction 2008 Young Professionals of the Year 2008 Fall Conference Highlights Technology Members in the News One On One

Engineering Inc. - November/December 2008

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