At a recent American Council of Engineering Companies (ACEC) meeting, the talk at our table was about the value gap. Clients and municipalities are cost-conscious, and rightly so. They are mandated to get the best possible price for a project.Engineering firms, on the other hand, must provide competitive pricing in order to compete in the marketplace. But the lowest price doesn’t accommodate the cost of value. That’s the value gap. As described at the ACEC lunch, the cost of value is the work that a firm does to ensure that a project is successful. Work that is often invisible to the client and frequently unbilled. For example, firms manage vast amounts of project data. They carry the cost of hosting the data, keeping it secure, and tagging it so it’s easily retrieved. Project data management is a valuable service. Yet firms rarely bill for it because clients don’t associate the cost of this service with the value it provides. Firms end up owning relationships with entities hired by the client. Think public utilities or construction companies. The firm takes on the responsibility of collaborating with the entities they had no hand in hiring. To ensure that the project succeeds, the firm keeps the client informed about, well, everything: work order changes, potential cost overruns, delays and so on. This level of collaboration and communication consumes firm resources but clients don’t equate the cost of this service with the value they receive. As the conversation died down, firm owners and project managers shrugged their shoulders, agreeing that they just couldn’t be competitive if they included the cost of value in a Request for Information (RFI). They’d be out of the running. And that’s bad for business. In his seminal book “Managing the Professional Service Firm,” David H. Maister devotes an entire chapter to How Clients Choose [a firm]. It’s entirely relevant to closing the cost-value gap. Maister writes, “From the buyer’s perspective, the two stages [of selecting a firm] are experienced as qualification and selection.” Master goes on to say that qualification is a rational, logical process based on the evaluation of a firm’s competency. Firm selection, on the other hand, is much more personal and intuitive. It is largely based on the firm’s ability to be helpful to the client. As Maister puts it, “Give me some new information.” Information that I [the client] will find useful, that will help solve my problems. And it has to be the kind of information that I can believe in, that’s documented and demonstrable. . If you’re trying to manage people, projects, and billing with spreadsheets and disconnected applications, it’s a time-consuming hassle to collect accurate data. This applies equally to your firm management and your ability to document costs and demonstrate value to your client. In their paper, “The Industry Software Revolution,” authors Brian Feinstein and Trevor Oelschig write, “The value of running your firm in the cloud is its ability to connect people on a job site or anywhere in the world with shared data in a collaborative environment.” Think about connecting your project delivery workflow with an online app. In order to sell your value to a client, you have to know what it costs you to deliver services. An online time and billing application can capture data at every point in your project workflow, as shown in this diagram. Many service professionals, regardless of industry, are experts in their particular field but they don’t start out as experts in managing a firm. An online time and billing application is kind of like an MBA in a box. Except there’s no box because it’s in the cloud. Regardless, this type of application provides real-time visibility into what’s going on with a client’s project. Exactly the kind of data that you need to communicate your firm’s value. Calling upon Maister one last time, here are 7 ways you can use your command of data to help you communicate your firm’s value.
- Tell the client something they don’t know.
- Be helpful beyond the specifics of the project scope.