Factor Blog for Architecture & Engineering Firms

When you give people access to large volumes of data, you have to offer guidance on what to do with it. Here’s how to handle all the data at your disposal.

When difficult economic conditions arise, our observation is that firms that put together the best teams for each project—regardless of what department a person is pulled from—get through the tough times in the best shape.

Our position on how much accounting detail should be added to Factor AE is that less is more. It’s been our experience that the high degree of complexity in many accounting systems starts to counteract the benefit of doing the accounting to begin with. Architecture and engineering (A/E) firms get drawn into situations where they start to experience “junk in, junk out” in regard to their data, and there are no understandable metrics being reviewed. Plus, even if there are metrics that can be understood, there’s no reliability in how they’re being calculated. However, the argument can be (and has been) made that there’s a functional side to accounting detail aside from metrics and performance tracking. One important area is the separating of labor and subconsultants (subs).

With an increasing number of architecture and engineering (A/E) firms having some or all of their employees working from home in the wake of COVID-19, there’s never been a more challenging or more important time to conduct accurate employee performance reviews—especially assessments that address the financial aspect of a person’s performance.

When the coronavirus pandemic forced architecture and engineering (A/E) firms to shift to remote working, it shed light on some critical failings in how companies view the technology they rely on. And while COVID-19 brought pain and suffering to businesses and families alike, there will be some lasting benefits from the lessons that A/E firms learned.

Historically, architecture and engineering (A/E) firms have been led to believe that in order to be successful, they have to choose between being practice-focused or business-focused. However, we now know that it is perfectly okay and often times, better, for firms to fall into the gray area

The math for deriving utilization rate is easy. However, the real-world application of this simple formula to people—in particular those who work for architecture and engineering (A/E) firms—and their productivity isn’t nearly so clear cut.

Financial management systems for architecture and engineering (A/E) firms understandably focus on profitability and budgets. However, in some instances like the sharp decline in revenue that firms are grappling with as a result of the COVID-19 pandemic, cash flow is temporarily the top priority.

Effective project planning has always been important for architecture and engineering (A/E) firms. The stresses put on them by the COVID-19 pandemic have made it even more critical that they can schedule the time of their team members, keep the plan accurate, and use that information to make smart business decisions.

We can’t tell you how many times through the years a financial management role has been deemed “non-essential” to the success of the firms we’ve worked for or with. That is, until the time that the effectiveness of a firm’s financial management can make the difference between the business surviving and folding. Now, as the world struggles with a pandemic and the aftermath, is one of those times.