You’ll be happy to know that the 40^th annual Deltek AE Clarity Study found that AE firms’ financial metrics increased across the board. However, what you’re really wondering is how your financial metrics matched up against the findings of the AE Clarity Study. By comparing your metrics with the study findings, your firm can see what it must do to ensure it has an even more successful future when compared to past performance. Here are some financial highlights from the 40^th Deltek AE Clarity Study.

Hurdles that Firm Financial Leaders Experience

A shocking reality to many firms is that finding and retaining top talent is becoming very costly. In fact, this challenge was introduced to the survey this year, and it was the largest one faced by financial leaders last year. To put this into perspective, it typically costs a business 1% to 2.5% of its total revenue to hire and onboard a new employee according to a study by MIT. For a firm with over $1 million in revenue a year, this is an astonishing amount.

However, there are other standout challenges firm financial leaders faced. Some of these included business development challenges such as increasing profitability and managing firm growth. But when closely reviewing the Clarity Study financial findings, human capital management issues were very common. Succession planning and ownership transition ranked as the fourth leading challenge for financial leaders.   

Key Financial Findings from the Deltek AE Clarity Study

Overall, the 40^th Annual Deltek AE Clarity Study found that the majority of firms are improving their financial performance. For instance, the study found that firms have increased their operating profit on net revenue by 1.2%. On the other hand, firms experienced only a 0.4% increase in utilization rate and a 0.05% increase in net labor multiplier.

Surprisingly, overhead rate changes affected firms differently depending on size. Whereas large firms experienced a decrease by 5% in their overhead rates, small firms reported an 11% increase. However, the increases are most likely associated with firms making investments back into their companies and their employees. Other reasons for these increases may be related to inflated office space costs and the general increase in the cost of doing business. Keep in mind, this is just a summary of the financial findings, and you will find more details in the actual report.

Finding Ways to Overcome Financial Hurdles

During the study, firm financial leaders were asked to rank their top three initiatives to overcome the hurdles they face. The majority listed business process improvement as the most important. This makes sense, as a more streamlined business process will quickly cut hidden costs. The study next revealed that firm project managers often lack financial understanding. Therefore, firms are increasing financial training for project managers to create more profitable projects. Lastly, financial leaders want to improve business forecasting which will also help with human capital management.

Benchmark Your Firm Against the AE Industry

The Annual Deltek AE Clarity Study is a great tool that allows AE firms to compare themselves to others in the industry. What makes this study so significant is that it uses information from over 700 companies of all sizes with over 2,500 individuals responding to the survey. As a result, the information contained in the study represents the entire AE industry. So, take advantage of this free study to discover how your firm measures up to the industry standard.

Projects are the life blood of the AEC industry. Efficiently run projects yield the most revenue and are thus essential to firm success. Fortunately for these firms, Deltek Project Information Management (PIM) provides project management and collaboration tools designed to help employees access critical project information and keep teams connected throughout the entire project lifecycle. Let’s check out what PIM can do for your firm.

Access All Project Emails in One Place

Employees spend 2-3 hours per day on average on email related activities according to a study by Dr. Michael Einstein at MESMO Inc. With Deltek PIM, project employees can easily add project related emails and communications into one central location allowing all project employees visibility into all email communications. Now hours are no longer lost managing and organizing project emails from other sources, since PIM provides a central location for the most up to date project emails. Project employees can utilize PIM to improve productivity, not impede project progress.

Simplify Document Management

Deltek PIM helps firms maintain hundreds of files across all aspects of their business in one location, giving companies the organization and intelligence to run their business smarter. All drawings, correspondence, and submittals are accessible by all team members at any time. Even more, PIM allows project teams to share large files in the office or with external team members while maintaining security and control. With PIM, there is no more worrying about setting up accounts or dated FTP sites so deadlines remain on track.

Take Information Management to the Next Level

Most importantly, Deltek PIM integrates with your Deltek ERP solution to improve how your firm manages schedules, budgets, resources and files for every project. Furthermore, PIM enables project teams to manage project documents while in the field. As a result, project employees can stay on top of everything that has been done or needs to be done at the site including uploading site photos, managing inspections, updating punch lists, and more with mobile access.

Make More Revenue Using Deltek PIM

Deltek PIM offers firms the chance to stay organized and run projects more efficiently. With PIM, team members will have access to all important documents with up to date details in one place throughout the entire project lifecycle. Therefore, project managers can ensure their projects are completed on time and on budget. How can PIM help your firm?

At the beginning of 2019, Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) jointly implemented the Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Essentially, ASC 606 now requires forms to recognize revenue from contracts with customers when goods or services are transferred. For professional services firms that use their expertise to sell their time, this has a significant impact on how firms recognize revenue.

About FASB ASC 606

With the new guidelines in ASC 606, firms must recognize revenue in their income statement during the period in which the revenue is earned and not when it is billed. Since professional services firms manage projects that can span across multiple periods, they might not bill until the project is complete. As a result, firms must use a form of percent complete for the project to determine how much revenue to state on their income statement for that period. For example, if during a specific period a firm completes 25% of the project, they must recognize 25% of the revenue that will be earned from the contract for that period.

There are three distinct ways to calculate percent complete:

1. Billing Percent Complete
2. Financial Percent Complete
3. Physical Percent Complete

Billing Percent Complete

Using billing percent complete is the most common method. Typically, this is driven by the project manager during the invoicing process. There are two options:

• Overall percent applied to the total contract value
• Percent complete by phase used to invoice based on the various components of scope/deliverables and these phases are broken down using either internal or external contract value

For many firms, this also drives revenue or earnings. Furthermore, it is recommended for people to review the current FASB 606 regulations. This will explain why earning what you invoiced may not be an acceptable solution any longer.

Financial Percent Complete

Another common technique is the financial percent complete. The formula for this method is job to date/job to date + estimate to complete. This indicates how much of the total estimate at completion has been spent or burned. When applied to the contract value, we can calculate revenue. Deltek Vision can facilitate this calculation using Resource Planning.

Physical Percent Complete

Lastly, physical percent complete can be utilized. This is usually calculated when the user or project manager has entered and can provide the following:

• Compared to financial percent complete, indicated whether the project’s progress is tracking with the financial burn
• When begin to drive earned value
• Have control earnings based upon contractual stipulations such as deliverables which can accelerate or slow down earnings and at the same time drive Work in Process (WIP) in tandem but that is separate from invoicing

Which Form is Right for Your Firm?

Let’s do some homework. Using a project your firm is executing, calculate/stipulate all three forms of percent complete and compare them. Then write a business case elaborating on the project’s health from these three statistics. You might surprise yourself with the results.  

Measuring your firm’s achievements and shortcomings are important to ensure continued future success. However, many firms are unsure of what factors indicate the health of their business. Also, some firm leaders believe one indicator, such as financial reports, is more important than other areas like talent management. Well, that is not necessarily the case. Let’s take a look at some of the indicators your firm should use to make informed decisions to improve business performance.  

Employee Recruitment and Retention Rates

One of the largest factors affecting the growth of architectural and engineering (A&E) firms is human capital management. Having the right people working on the right projects has a significant impact on the profitability and overall success of an A&E firm. From highlighting experienced staff members during the RFP process to actually delivering the project, talent affects all aspects of your business. Looking at recruitment rates, employee turnover rates and several other talent management metrics is essential to evaluating and measuring success.

Measuring Business Development

Wasted time on winning new business is very costly. Measuring win rates, revenue from top clients and net revenue growth will prevent wasted time. For some, this seems like a logical thing to measure, but many firms don’t track this information and they should. If you’re tracking these numbers and they continue to decline, then you know you have some major issues. You can quickly change this trend by evaluating what types of projects you’re winning and losing, and why.

Financial Metrics

Without a doubt, financial metrics are extremely important. Knowing things like total employee cost, overhead rate, and total payroll multiplier are necessary to keeping your finger on the pulse of your business. Diving deeper, measuring performance using metrics like operating profit on net revenue, utilization rate and the net labor multiplier from previous years can provide a clear picture of the performance of your firm. If these numbers slip in a negative direction, other metrics mentioned in this article could provide useful insight.

Overlooked Technology Needs

Historically, the A&E industry has been hesitant to adopt new technology. As a result, firms continue to use outdated technology that lacks the abilities to keep up with the changing A&E industry. This has become the number one hurdle for little firms to keep up with larger and faster growing firms. A&E firms need to evaluate their current technology.  Are your systems connected or is there a lot of manual entry from one software tool to another? Is your software up to date? Being behind on technology can greatly hinder your ability to even measure performance indicators.

Comparing Your Firm to Others

Ok, let’s assume your firm will measure these metrics and keep track of them. Even better, it will use current metrics and compare them to historical metrics to notice trends. However, does it compare itself to other A&E firms to determine where it stands in the industry? Well, it can. Make sure to download the Deltek A&E Clarity Industry Study to see how your firm stacks up against your competition. The Deltek A&E Clarity Industry Study is created in collaboration with ACEC, the Association Consulting Engineering Companies Canada, SMPS and AIA. The data collected comes from 386 US and Canadian firms and draws from over 250,000 data points.

With growing global political tensions, trade wars and volatile markets, one would assume that mergers and acquisitions (M&A) activity would slow down. However, this has not been the case.  As a result of US tax reforms and a reduction in the US regulatory climate, firms are retaining larger amounts of cash reserves. Furthermore, according to a recent Deloitte survey, M&A activity will continue to increase throughout 2019. Here are some reasons for this trend.

Need to Diversify

Architecture and engineering (A&E) firms must diversify their service offerings to continue to win new business. Diversifying in the A&E industry is usually in reference to purchasing or merging with another firm that has a different set of skills. For instance, an engineering firm specializing in soil science has a desire to offer a different service like water control which requires it to acquire or merge with another firm. Therefore, M&A activity will continue to grow to meet these needs. 

Generate Firm Growth

Historically, firms have used excess cash flow to pay down debt, purchase shares back or simply retain cash reserves as a backup. However, A&E firms are now finding that acquiring another firm is a simple and lucrative way to grow business. Essentially, this allows a firm to increase its market share and acquire a competitor’s client base.

Demographics are Changing

Many A&E firms are private companies owned by baby boomers. These owners are starting to look for an exit strategy, and an easy solution is to put the business on the market. By doing so, owners can request for bids to purchase their firms and obtain a fair market value. As a result, owners can capitalize on their success and enjoy retirement with a nice-sized nest egg.

Preparing Your Firm for a Merger or Acquisition

A&E firms desiring to take the M&A path need to make sure they have their internal records clearly documented. This includes providing understandable project financial reports, presenting any risks a buyer should evaluate, and having records that are easily auditable. Lastly, and probably most importantly, firm leadership should communicate their intentions and the expected results of the merger or acquisition with their employees. Is your firm ready?

Do you have an idea that hasn’t been done before? Full Sail Partners can leverage our expertise to help build a custom solution to your specifications. Just let us know what you have in mind and be as detailed as possible. It will be worth the effort since it will expedite getting your project to reality. Here’s all you need to do:

Go to Our Website

First off, just go to the Full Sail Partners website then click on the Services tab. Next, click on Deltek Product Solutions. At the bottom of that page, we have a link for “contact us today” for unique business needs. Just click there and it will bring you to the list of questions to help us understand how we can help.

Motivations for the Custom Solution

The first few questions let us know the gist of your idea including the type of project you have in mind. Is it report driven, data driven or something else? What has brought you to needing this custom solution? Finally, are there certain necessary components that need to be part of your custom solution?

Give Us the Details

We want to understand exactly what you are looking for with your idea. So, in this next part we need as many details typed into the box as possible. Also, we want to know if your Deltek Vantagepoint or Vision is hosted or if you are maintaining it on site. Full Sail Partners does Vision hosting, therefore if you are one of our clients already that is even better.

Send Screenshots

Lastly, screenshots of what you are looking to accomplish are a big time-saver. They give us a good visual of what you have in mind for your custom need. There are directions provided to help you get that screenshot to us. If there are any additional mock-ups or samples of your idea, send those to us as well.

Submit and Full Sail Partners Will Get Right on It

Custom solutions are available for Deltek Vision and are becoming available for Vantagepoint to help your firm get the most out of your ERP solution. The process is easy and the effort very worthwhile. We are looking forward to seeing what out of the box ideas your firm has today!

For those of you reading this, I’m glad that you have a desire to expand your knowledge. While you might be a great accountant, business development person, project manager, HR professional, or C-level executive, you might not have a high level of IT knowledge. Yet, you are the professionals that must use your company’s business software solutions. Therefore, you need to ensure these business solutions are allowing you to be more productive. So, let’s see if your current business software solution is a quality one or not.

Simple to Understand

This sounds like a no brainer-but how simple is the software solution you use? Simplicity is more than a friendly user interface. When thinking about simplicity, you need to imagine inputting data and extracting actionable information.

Even more, it means being able to share information with others within and outside your firm. Taking this further, how many clicks does it take to get to your destination? And let’s not forget being able to easily obtain support from the software provider with quick resolution for your problem.

Pleasant User Interface

Software companies have entire teams of professionals dedicated to human-computer interaction, or in other words, how humans interact with machines. A quality user interface does make a software solution simpler, but more importantly, it entices users to want to use the solution. A software interface should be visually appealing and provide an intuitive environment. The better the user interface, the more likely employees will adopt using the software.

Integrates with Other Software Solutions

The fact of the matter is that businesses usually use more than one software to deliver services. For example, business intelligence (BI) software, like Entrinsik’s Informer BI tool, is becoming a leading software product used by companies to better analyze data. However, a core software must be able to integrate with a BI software to be able to extract the data.

Moreover, businesses also often use piecemealed together systems that are created as a business grows and/or a new gap needs to be filled. As a result, these individual solutions must be integrated together so they can communicate. If they are not integrated, employees will then have to manually input information from one system to another which waste time and is more prone to errors.     

Get Your Job Done More Efficiently

Does your current solution meet the needs of your business? Does your software help you better serve your clients and streamline your business processes? Lastly, will the software solutions you use be able to grow with you and your firm? If the answer to any of these questions is no, let Full Sail Partners help!

Compensation can directly impact the engagement and productivity of your talent. Without engaged talent, project-based firms will have a difficult time delivering successful projects. Retaining quality talent is a necessity to firm success so a well-planned compensation strategy is crucial. Let’s look at some components of an effective compensation strategy.

Budgeting

Salaries usually make up the largest part of the overall budget for project-based firms. Using Deltek Talent Compensation, budgets can be set up for each part of the compensation review cycle. They can be further broken down by level so reviewing managers will know how much money is available for compensation. There should, however, be some flexibility for outstanding efforts.

Rules and Guidelines

Rules and guidelines help employees to understand compensation plans. Having specific pay grades clarifies salary differentials. Employees can see what the expectations are for each level such as required certifications, education or professional experiences. With the guidelines in place, managers can make compensation recommendations using approval workflows.

Salary Audits

Staying in-tune to the market value of positions with your firm is important. Market data can be uploaded into Deltek Talent Compensation to show details about the current status of an employee in relation to the market. This allows managers to see how competitive their firm salaries are compared to other similar firms.

Total Rewards Package

Employees need to see all parts of the compensation package. The base salary is just one aspect of the package. The health benefits component is significant in the rewards. Additionally, any short-term incentive pay like commissions or bonuses or long-term incentive pay such as stock options make a heartier, more desirable compensation package.

Be Visible

Deltek Talent Compensation provides insight into all aspects of the compensation plan. Employees want to see that they are being paid fairly and that reasonable expectations are established for their positions. Employers need to stay on budget yet stay competitive in the market. With a visible technology solution in place, all needs of the employee and employer are met.

Implement a Comprehensive Compensation Strategy Now

With unemployment being at a historic low, not having a visible strategic compensation plan will affect retention of top talent. While putting such a plan in place may seem overwhelming, it doesn’t have to be. Once your firm has established the key components of your compensation strategy, communicate it to your employees. With top talent buy in, retention will no longer be an issue.

Project-based firms do experience challenges during the project lifecycle from ensuring a project remains on schedule to keeping the client satisfied. With these challenges, however, there is one common denominator…communication. Communication is key to the success of a project whether it’s with the client or with your own project team. One of the most common forms of communication is email, but if you’re not included on every email that pertains to a project, how can you know what is going on? With Deltek PIM, the communication problem is solved, and your firm will reap the benefits.

Centralized Email Communication

With a simple click, an email can be stored within the project in Vantagepoint or Vision. Therefore, every employee working on a particular project can quickly access the email communications that contain important information about the project. This saves time and improves project communication. With Deltek PIM, an employee might notice a change to the project and can quickly search through the emails to see who made the change and why.

Improved Decision Making

Using Deltek PIM increases the collaborative work environment since everyone has access to project related communication. With more insight into the project information, team members can make informed and quick decisions. The impact of this efficiency is significant for project-based firms in the form of a higher profit on each project.

Quick User Adoption

If your firm is already using Deltek Vantagepoint or Vision, PIM easily integrates with these project management platforms. Even better, this integration makes it easy to use which increases user adoption. As a result, an investment into Deltek PIM offers value since firm employees will actually use this product as they are already managing projects in Vantagepoint or Vision.

Deltek PIM Does More

Not only does Deltek PIM provide centralized email, but it also allows for all project related files to be stored directly in the project in Vantagepoint or Vision. With PIM, you can store emails, all types of documents, easily organize drawings, and improve sharing since all these things are in one location. If you haven’t seen PIM, make sure to check our webinar listing page to view upcoming and past PIM webinars.