BUSINESS NEWS WARE MALCOMB ANNOUNCES EXPANSION IN CANADA Ware Malcomb , an award-winning international design firm, announced that the firm has opened a third office in Canada. The office, located in Ottawa, at 1420 Blair Towers Pl, Suite 104, Gloucester, Ontario K1J 9L8, will serve to support Ware Malcomb’s growing client and project base across Canada. Ware Malcomb first entered the Canadian market in 2007 through an acquisition, and Principal Frank Di Roma has successfully led the growth and diversification of the firm’s business in Canada since 2010. “We already have a strong presence in Toronto and Vaughan. This third office solidifies our Canadian presence and allows more
accessibility to clients seeking our expertise,” said Di Roma. “It’s an exciting time for our region, and we look forward to the opportunities and dynamic projects ahead of us,” said Christina Kolkas, Director, Interior Architecture & Design. Specializing in architecture, planning, interior design, branding, civil engineering and building measurement services for commercial real estate and corporate clients, Ware Malcomb has completed more than 1200 projects in Canada and currently has active projects in six provinces across the country. Select recent work in Ottawa includes: two projects with Avenue 31, providing
architectural design services for a multi-storey industrial facility and providing architecture, interior design and branding services for a 100-acre, six building industrial park; and a project with Broccolini providing architectural design services for a one million SF distribution centre. Established in 1972, Ware Malcomb is a contemporary and expanding full service design firm providing professional architecture, planning, interior design, civil engineering, branding and building measurement services to its clients throughout the world. Ware Malcomb is recognized as an Inc. 5000 fastest-growing private company and a Hot Firm by Zweig Group.
MARK ZWEIG, from page 11
often as utilization and labor multiplier data, it is, in my opinion, the most important number of these three to understand. It shows what kind of revenue a firm can bring in relative to the cost of its biggest expense – labor. It’s sort of like a selling price versus cost of goods sold number in a manufacturing business. It’s much more difficult to manipulate than utilization or labor multiplier, because costs are what they are (you can get that from payroll) and revenue is what it is. The one way it is subject to manipulation is when management is able to decide how much revenue is earned on a particular project for a given period of time. Sometimes large, complex projects are billed to clients at various percentage of completion milestones, and those milestones are not always easily identifiable. So, if an individual PM “decides” a project is 35 percent complete, 35 percent of the revenue for that project is recognized and counted. If it is months later when top management figures out the project was really only 25 percent complete at that time because 75 percent of the work was yet to be done to finish it, the revenue factor will then take a hit. But if project managers are over-accruing revenue on new projects by then, the manipulation may not be so evident. The game continues until there are not enough new jobs to over-accrue revenue on, and then a day of reckoning occurs. Still, in spite of this potential problem, tracking/reporting/ reviewing revenue factor is, in my opinion, super-critical. And although I have said it before, I will tell you again: I was taught the wisdom of tracking and reporting revenue factor from the late, great David Robertson, whom I worked with as a consultant back in the early ‘90s when he was at that time CFO at RS&H in Jacksonville, Florida. Theirs was a fantastic story of an incredible financial turnaround of the company that was buying itself back from a publicly-traded company. But that is a story for another day! The bottom line is this – not only do you need to monitor and report on the right performance metrics for your firm, but you also have to explain what these numbers mean to each of your people AND be on the lookout for manipulation if you want the exercise to be fruitful. It’s important stuff if you want your firm to be successful over the long haul! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at email@example.com.
In any case, hammering on utilization rates is something most companies in this business either regularly do, will do in the future, or have done in the past. Some companies even post this information on individuals for everyone to see. The problem with “utilization shaming“ is twofold. First, not every employee is in a position to do anything about their own workload of billable projects to charge their time to. And secondly, while hammering on utilization continuously can give you a temporary burst of higher utilization, it can also lead to lower labor multipliers because individuals who don’t want to look bad simply charge their time to what should be billable projects, whether or not they are actually accomplishing anything that advances the project. That’s just gaming the system to look good as individuals, but doesn’t help the firm at all. 2)Labor multiplier. Labor multiplier is defined as net service revenue divided by direct raw labor. The important aspect of labor multiplier is that it’s a reflection of what clients really think the services your firm provides are worth. That drives the numerator in the equation up. But it is also a reflection of how good of a job management is doing with organizing projects and getting people into the best roles they can relative to their cost versus what clients will pay for those people’s time. And, it is a reflection of the firm’s marketing, selling and negotiation skills, and savvy related to the contracts they are able to get their clients to sign. The problem with management over-emphasizing labor multiplier is that it, too, can be easily manipulated by intelligent employees and project managers. To increase it, all one has to do is work on a job but not charge their time to it. This practice is known as “protecting the multiplier.” Of course, it is a fundamentally dishonest thing to do, but that doesn’t mean it doesn’t happen regularly in firms in our industry. There have been extreme examples from the past of companies whose top management insisted that no project would fall below a certain labor multiplier number or the axe would fall on the manager. They got the labor multiplier numbers they insisted on but also tended to see their utilization numbers decline, so the net effect of their multiplier “push” was zero. It looked like they got paid well for their time but didn’t do enough of it (low utilIzation). 3)Revenue factor. This number is defined as net service revenue divided by total raw labor, whether that labor is billable or not. While not tracked and discussed nearly as
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THE ZWEIG LETTER AUGUST 16, 2021, ISSUE 1404
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