Every company wants to be successful. Clearly. But what does success actually mean? And what does success mean, especially in an engineering office, in terms of key business metrics? Basically, the central business success criterion is the ratio of income to expenses. But of course that is far too simple and one-dimensional.
It is particularly important to take a holistic view of all areas of the planning office: from the professional preparation of offers to sustainable calculations, efficient project controlling and successful project completion. All of these areas must function well and smoothly so that you are successful and feel successful as an owner and/or managing director.
What sounds simple still poses a number of challenges for engineering offices today, because the effort involved with traditional methods and tools is disproportionately high. The digital world, however, holds new potential for convincing solutions. Why this is the case, what the opportunities behind it look like, and what factors determine business success modern workplace actually make up, read our large overview.
Definition of business success in engineering offices
There is no uniform definition of business success in the literature, either Business encyclopedia can be read under “Success”. Depending on the perspective and the viewing horizon, there are different calculation methods for success:
- Cost accounting:
Success = performance – costs - Profit and loss statement:
Success = income – expenses - Tax income statement:
Success = operating income – operating expenses
Income statements can therefore be based on either an economic or accounting period. If income exceeds expenses in the selected period, the engineering firm makes a profit. Conversely, if these are greater than the income, there is a loss, i.e. a business failure.
Challenges: Key figures in the engineer’s self-image
For the engineer, business success is only one of two dimensions of success. As Ulrich Welter aptly states in his paper “The Future of Engineering Offices in the USA,” engineers see themselves first and foremost as technical experts. In their own self-image, they are successful when they understand theirs Implement projects in a technically clean manner and thereby satisfy the client to the maximum.
This actually creates a paradoxical situation: If the engineer is successful in his or her self-image, the engineering firm is very likely to grow due to the high level of customer satisfaction. At the same time, the responsible engineer increasingly has to think about key financial figures in order to be able to be successful as an entrepreneur in the long term from a commercial perspective. This means that the better he or she is as a technician, the more the pure technician has to develop into a modern manager. This is the only way to ensure long-term success in the engineering office within both dimensions.
Examples of this paradox
What we just mentioned presents some challenges:
- Plan utilization:
The profitability of the company, high quality and, above all, adherence to deadlines in the individual projects must be guaranteed. This requires forward-looking resource and capacity planning. Utilization manually in chaotic paperwork or difficult to plan in Excel is not a solution. As a rule, it quickly leads to project and office managers avoiding this task as much as possible and the planning, if at all, is only implemented poorly. This leads to deadline delays, possible penalties, poor quality and generally dissatisfied project partners. - Set realistic goals:
Engineers usually have very high quality standards for their own work. In business reality, however, these demands must be weighed against the real conditions. For example, if the customer only orders a standard solution, developing a resource- and time-consuming special solution would not be economically viable. And that even though it would perhaps conjure up the optimal result. - Know your own skills:
generalist for standard solutions or specialist for special solutions? Knowing your own skills helps you win the right jobs and make the best possible use of your resources. However, engineers who are not aware of their abilities will always encounter stumbling blocks. For example, because offers are repeatedly undercut by competitors or they have to accept a lot of orders that are “unattractive” for them. Success in this context means, ideally, being able to choose which orders you would like to accept and which you would rather leave to a competitor. - Management as a cross-sectional task:
The conditions for engineering offices are becoming tougher: growing competition reduces potential profits and increases the pressure on quality standards. At the same time, due to the shortage of skilled workers, engineering offices are finding it more difficult to attract qualified staff and to make their businesses attractive in the long term.
Success factors: Criteria for company success
Three fundamental factors and the associated criteria determine the business success or failure of an engineering office:
1. Organization: Integrate structures and processes into the value creation architecture
Entrepreneurial success is based on Design of processes in the engineering office along a functioning value creation architecture. This connects individual actions within a project and relates them to the common overarching purpose. Management must optimize the following points at the organizational level:
- Employee management: How can you create optimal working conditions for your own employees?
- Utilization: How can company-wide utilization be organized efficiently in order to best avoid idleness or overload?
- Infrastructure: Which systems and Collaboration tools create the appropriate framework for consistent communication and Cooperation across the project between all internal and external project participants?
2. Business analysis: Using data and information
Companies use data collected through business analysis to optimize the existing value creation architecture. It is geared towards the needs of all stakeholders in the project and makes the following criteria essential:
- Ensuring availability of data:
In a growing company and an increasingly complex project structure, it becomes increasingly difficult to start at the right time the correct data get. A uniform Enterprise software provides all relevant data in real time, regardless of location. According to Autodesk study. However, there is a need to catch up here. According to their own statements, the majority of the US engineering offices see themselves at most in the middle range when it comes to digital transformation processes.
- Mediate between stakeholders:
Communication from top to bottom and from bottom to top is a breeding ground for conflicts that can disrupt the course of the project. But this can be avoided early on. Through proactive action and mutual exchange Learnings and continuous mediation between all stakeholders.
- To hand over knowledge:
The heads of engineering offices are subject to an evolutionary process: from pure technicians to Project and office manager up to the managing manager, who has to think about the relevant management aspects across all areas of the company. In order for the company to be economically successful in the long term, the corporate management experiences gained on this journey must be passed on to the successors.
- Enable continuous reporting:
Only if those responsible for the project have current data as a basis at all times can they intervene early on problems and make good decisions in the long term. The digital world offers excellent solutions for this. Central business software enables user-defined, continuous reporting of all business figures and values in order to be able to plan ahead successfully.
3. Organizational Behavior: Management of expectations and behavior in engineering offices
Organizational behavior refers to the management of expectations and behavior in the company. The following criteria must be taken into account:
- Transparent corporate culture
The aim of organizational behavior is to design the structures and processes of value creation in such a way that the expectations and actions of all those involved in the project are aligned with the achievement of the overarching overall goal. The best prerequisite for this is a transparent corporate culture. Here, all internal and external employees can view the respective project status and know their corresponding tasks and deadlines at any time and from anywhere. - Consistent contract and planning management
Good expectations management begins with defining the client’s expectations as precisely as possible. This begins with precisely defined contracts that are developed and implemented jointly by those responsible.
- Clear agreements and responsibilities
The more clearly responsibilities and expectations are defined, the easier it is to coordinate the actions of stakeholders and align them with the overarching purpose.
Measuring success via operational metrics
Business administration key figures are a central tool for management to ensure long-term company success. Entrepreneurial success can also be measured by how well management keeps an eye on its key figures. Because optimal corporate planning means that exactly the right number of orders, employees and resources are available at a given time and the engineering office can freely choose its orders.