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O P I N I O N
Getting better fees
I have always said that the most important aspect of A/E project management and one that is rarely discussed is how to get a better fee in the first place. That makes “management” a much easier task! We have worked with firms in this business that had average labor multipliers above 4.5. It can be done, and you can do it!
More than 35 years ago, when I worked as the director of marketing at Carter & Burgess, we had a principal who sold millions of dollars of work. It was the beginning of a difficult period for the firm as the DFW area economy was just starting to get hammered. This principal was always quite proud of himself and bragged about the volume of work he sold. The problem was the way he sold was he gave the work away for such low fees anyone could have sold it. I used to tell my boss that I could sell as many dollars for 85 cents as he wanted. Then, of course, the ongoing challenge was how we could do the work and not lose money. It’s crazy. Why go through all the work and then not be able to make anything because your fees are so low?
Here are some thoughts on how to improve your fees: 1)Use your marketing and BD budget and skills to drive demand beyond your ability to meet it. Then you can let go of the clients who won’t pay you decently because you have better-paying clients who want your services. This may seem obvious but most firms don’t understand the linkage between marketing and BD spending and the long-term results you can get from it. 2)Restrict who can commit the firm to do any project at a particular fee. This is a huge problem in this business, especially for smaller firms but even in mid-size and larger firms, too. Anyone is allowed to quote fees and commit the firm. Very dangerous. You want those who understand the importance of a proper fee looking at every single fee proposal and contract before they get signed.
Mark Zweig
See MARK ZWEIG, page 4
THE ZWEIG LETTER JULY 27, 2020, ISSUE 1354
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