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HR | FINANCE S U P P L E M E N T S Pages 9 - 12

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Observations on the A/E business in the new economy Mark Zweig offers five examples of the effects of volatility. T his economy we are in is tough! I’ve lived through a bunch of recessions but have never seen anything quite like this. As you plan for the new year, I thought I would share some of my observations about how A/E and environmental firms are being affected and how they are dealing with this economic volatility: 1) It’s getting harder and harder to just be a design firm. The fact is that more and more clients need much more from their design professionals than a set

of plans and specs they can let out for bids. Better construc- tion cost knowledge is essential. Financing assistance may be needed to make the project a reality. Getting the facility built and commissioned is what clients may REALLY want. Not every firm is able to come to the table with the kinds of services

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Mark Zweig

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F I R M I N D E X AECOM................................................................ 10 Baskervill............................................................... 4 Chambers Group, Inc........................................... 11 DOWL HKM........................................................... 6 ESI Consultants, Ltd.. ............................................ 3 KPA Associates, Inc............................................... 4 Matern Professional Engineering, Inc................. 11 McDonough Bolyard Peck. .................................... 9 MSA Professional Services................................. 11 Steven Schaefer Associates, Inc........................... 5 Valerio Dewalt Train.............................................. 5 West Yost Associates............................................ 5 Firm spending on human resources has been affected by the economic downturn of recent years. ZweigWhite’s 2011-12 Operating Expenses Survey finds that total HR spending as a percentage of net service revenue has been on a gradual decline in the last few years, dropping from a high of 1.3 percent in 2007, to 1 percent in 2008 and 2009, and to a four-year low of 0.9 percent in 2010. This year, however, saw a slight increase with the median percentage of HR spending to NSR, rising back up to1 percent. – Margot Suydam, Survey Manager

its clients really need today. This is no doubt creating a situation where the larger, more diverse firms in our business are better able to compete in many cases. 2) Top-heaviness is a huge problem! It’s more and more common to see firm staff utilization rates in the mid-50s or less. The reason is top-heaviness. Firms cut from the bottom. Or, firms lost staff from the bottom and didn’t replace them. Either way, they have too many high-paid people who just aren’t that billable. This “condition” sure makes it hard to make money in this business! 3) Collections are a bigger and big- ger problem. It seems like more than ever, firms have ACPs (average collection periods) in the 90-day-plus range. This is due to a variety of issues – problems with clients who are struggling, certainly, foreign clients (and companies that have done well certainly have more of them), and service quality problems. For many firms, the poor cash flow is just now starting to affect them, four years into

See Mark Zweig, page 2

Not every firm is able to come to the table with the kinds of services their clients really need today. This is no doubt creating a situation where the larger, more diverse firms in our business are better able to compete in many cases.

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Sustainability; is it a choice anymore?

I N S I D E

xz top player: Forward-looking business attains success. Page 3

xz HR: MBP helps alleviate everyday stress. Page 9 xz finance: Updating the business plan. Page 11

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