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TED MAZIEJKA , from page 5

with, when we ask to see backlog, it is one column of data. When we ask to see backlog over the year or life of the project, it is non-existent. When firms try to extract as a PM/staffing of resource exercise, it takes weeks, and upon review of the information, the data is no longer valid, projects have accelerated or been put on hold and the whole exercise has wasted valuable and precious time of PM and financial management staff! So, as the song goes: “Time is on my side, yes it is.”* In the A/E/P world it can only be if you capture it daily and accurately and use it to make predictive and forecasted decisions! TED MAZIEJKA is a financial and management consultant for Zweig Group. Contact him at tmaziejka@zweiggroup.com . *Written by Norman Meade; performed by The Rolling Stones, 1964.

could then enter that data for the PM, in real-time! ❚ ❚ Share the critical metrics. If the staff is given critical performance metrics and senior leadership presents them in a consistent format monthly, the im- portance of time card input becomes tangible to firm performance and proj- ect performance. ❚ ❚ Ensure integrated data. The most powerful and useful tools are those that allow time card entry to impact resource allocation, budgets, sched- ules, and performance. By the firm investing in these highly valuable and time saving systems for the PMs, proj- ect management no longer requires hours of data manipulation to deter- mine where the firm is headed. BACK LOG PERFORMANCE – HOW PREDIC- TIVE? Backlog, or the value of fees remaining on projects, should be ac- cessible with the push of a button in an integrated project management system. In most firms that we work

records, but the inaccurate entry of time can distort overhead allocation. Especially under these types of contracts, the firm’s overhead rate is evaluated for the derivation of the overall fee and profit. If inaccurate labor is posted to overhead and not direct costs or projects, it distorts the overhead labor and ultimately the overhead rate!

So, what are some ways to get everyone in the firm to hit this critical deadline?

❚ ❚ Lead by example. Senior leadership of the firm has to set the example, and they need to embrace the importance of daily entry. Those leaders could provide a great example by pulling out their mobile devices and asking projects managers as they visit – while practicing management by walking around – about the project task they would like their time to go to. They

VALUATIONS , from page 6

structure of equipment and software, good cash flow and access to capital have longer staying power and are better po- sitioned to respond to new opportunities and market cycles. On the other hand, undercapitalized firms are more vulner- able and, therefore, of reduced market value. ❚ ❚ Strong skill levels. The design, technical and manage- ment skills of a firm’s staff directly influence the quality of its work, the premium fees it can negotiate and its risk management. Evaluations of a firm’s QA and risk manage- ment programs, professional training programs, awards, pro- fessional recognition, management resources, and experience are strong indicators of the firm’s overall technical, design and management skill level. ❚ ❚ Appropriate lengths of time current owners can, and will, stay during a transition. The value of professional ser- vice firms is closely linked to leaders. Firms with well-planned transitions that ensure effective, uninterrupted leadership are worth more than firms without. On the other hand, owners who remain beyond their productive years (or at the expense of the development of incoming owners) reduce the firm’s market value. ❚ ❚ Amount and quality of intellectual capital. Firms with the expertise, resources, and tools to give them a strong marketing edge over their competitors; deliver higher-quality services; and produce high-quality work more efficiently will command a higher value than firms lacking such intellectual capital. ❚ ❚ History of litigation and claims. The value of firms with a history of litigation, settlement claims, or bad debts, or whose book of business might cause a buyer’s insurance premiums to jump will be discounted to account for higher risk profile. Check out the latest valuation survey by Zweig Group at: zweiggroup.com/surveys . With the survey data included in this report and Zweig Group’s exclusive Z-Formulas, you’ll be able to quickly determine your firm’s worth.

❚ ❚ Find out where you fit in. Once you have a valuation range, you can develop a more precise fair-market value by ranking your firm against others. You’ll need to determine criteria and then if you rank extremely high across the board, you can safely use the high end of the valuation range. On the flip side, if your firm ranks low, use the lower end of the range. ❚ ❚ Assess ability to obtain new business and deliver it prof- itably. The quantitative factors commonly used to value a firm assume that a firm’s recent history is a good indicator of its future. While this assumption is true to some degree, these qualitative factors also affect a firm’s ability to garner future work and generate future profits: ❚ ❚ Reputation in the marketplace ❚ ❚ Ability to differentiate itself from competitors

❚ ❚ Quality and depth of portfolio ❚ ❚ Extent of contacts and resources ❚ ❚ Current and potential market penetration ❚ ❚ Skills and experience of its key people ❚ ❚ Breadth of client base and geographic reach

❚ ❚ History of repeat clients ❚ ❚ Special areas of expertise ❚ ❚ Delivery methods and efficiencies

❚ ❚ Steady growth and healthy backlog of work. Firms that have recent and steady growth and a healthy backlog (usually six months of work or more) command a higher value than firms that do not. When looking at backlog, the amount of work under contract is more valuable than work not yet under contract or awaiting authorization. ❚ ❚ Resources, assets, and cash flow. Firms with a solid infra-

THE ZWEIG LETTER AUGUST 31, 2015, ISSUE 1118

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