Elemental

There were a lot of mergers and acquisitions in the last decade. Last year alone we saw DEGW merge with Davis Langdon, Parsons Brinckerhoff acquired by Balfour Beatty and Fulcrum merge with Mott MacDonalds. Earlier in the decade Whitby Bird, Hilson Moran and RYB:Konsult all, in different ways changed company ownership, mostly in order to reward their founders.

Building services consultancy is not the place to find get rich quick entrepreneurs. If it was, founders would be targeting IPO, and companies would be floating on the stock market. This doesn’t happen because consultancy is a fairly mature market and the average profitability of companies in the sector is low – somewhere between 5-10%. Typically, founders build up their companies because they love what they do, not because they want to become a millionaire. But the day (usually) comes when they want to retire. There is nothing wrong in founders wanting to exit a business and wanting to be rewarded for the work they have done in setting it up. But in the current economic climate, what options are available to them? And what of the staff who are left behind?

The tried and tested option used to be the partnership. It’s a common model in both architecture and consultancy. But I think partnerships are increasingly a less attractive option as employees increasingly cannot afford to buy into the company (effectively buying out the top layer of partners to finance their retirement). There are plenty still around – for example Gifford has 51 working partners, and as a company is 59 years old. The expansion in number of partners took place fairly fast over the past 2 years, and in theory defends them against predators.

But what if your staff cannot afford to buy out the top layer? What are your options then?

Merging with a larger organisation (who are interested in gaining the staff and probably your reputation) seems to have been the favoured route for consultancies in the noughties. Whilst good for the exiting founders (and despite protestations that the merger is in everyone’s interests, blah, blah, blah – they do tend to exit the merged company within 3 years), is it good for the staff?

Scott Berkun has a great post on why big companies can suck:

Status quo / Follower mentality – The bigger a company gets, the more it’s main attractive power for new employees is job security, rather than opportunity to grow, learn or take risks. The Innovator’s dilemma is real, and leaders who have big success are often the last to recognize when it’s time to move on. For anyone interested in progress, risk taking, change or growth potential, a large company is incredibly frustrating, as the dominant psychology is one of play it safe and political correctness. A running joke at Microsoft used to be that the best way to get a product idea to ship at Microsoft was to have a competitor do it first.

Some figures suggest M&A successes are as low as a third. Whilst this is US data, I suspect a similar picture is found in the UK. So not only do the staff gets disillusioned and leave, but the acquirer loses the key thing he bought – in a knowledge industry – your people are your assets.

So what will the next decade bring? There will undoubtedly be more acquisitions. Some disillusioned employees will leave and set up their own practices. But company structures may have to change to reward both founders and employees. Perhaps given the very low profit margins in the industry we would be better to look at alternative forms of legal enterprise (community interest companies)?

admin Management, Opinion Balfour Beatty, Fulcrum, Mergers and acquisitions, Mott MacDonald, Parsons Brinckerhoff, Scott Berkun

What caught my eye today, March 12th:

• Pay Your Air Share – via Freakonomics, libertarian carbon tax site from The Prometheus Institute in California.
• The best of Lifehacker in Upgrade your life – More lifehacks than you can shake a big pointy stick at. 107 tips with links back to the article. Or you could buy the book (but why when you have the list?)
• Pigouvian Taxes and Equity – Mark Thoma on perceived inequity of carbon tax re: rich and poor. The argument being that as a percentage of income the rich would be better off than the poor.
• Thoughts on Google’s 20% time – great article from Scott Berkun on Google’s famous 20% time. Note: Google do not have timesheets! The 20% is not actually recorded – but still seems to work

mel starrs News California, Google, libertarian carbon tax site, Mark Thoma, Prometheus Institute, Scott Berkun

Sustainability (the word) is suffering from chronic overuse. I propose we stop using the word sustainability and instead actually say what we mean. I’m by no means the first person to suggest this. James Evison, aka The Foreman at Contract Journal said the same thing last month.  Don’t get me wrong.  I’m not advocating cynicism or denial here, I’m saying that the word has ceased to be meaningful.

A quick search through my Google Reader feeds gives a search result of thousands of hits for the word.  Narrowing the search down to ‘definition sustainability’ yields 51 hits.  Clearly, no-one can hold 51 different models in their head at one time, so ‘sustainability’ has become a kind of shorthand for multitudinous ideas, theories and beliefs.

I’m proposing using instead ’legacy’ and ‘dynasty’ i.e.: the concept that what we do today has an impact on the future.  Legacy covers this definition, but leaves the future open to both optimistic and pessimistic outcomes.  Dynasty is a stronger concept, based on the idea of making sure that the generation you hand over to is better off than you are.

This is only one of the myriad of types of definition that ‘sustainability’ has become shorthand for.  I’ll touch on others in the future, but in the meantime, if you are talking about issues to do with what state we leave the world in for the next generation, try using legacy – not sustainability.

*I must give credit to Scott Berkun and his post banning the word innovation (which I also agree with) which galvanised some of my recent thoughts on sustainability

mel starrs Opinion dynasty, Google, James Evison, legacy, Scott Berkun, search result, Sustainability

I don’t know where* I found this definition but it came to mind when I found Scott Berkun (who wrote the excellent The Art of Project Management) had a new book out on innovation, The Myths of Innovation.

Innovation is the collection, assessment and implementation of ideas to transform an organization’s:

• Products: product attributes (what it consists of), product performance (how it works), or product platform (how it’s offered);
• Processes: internal or customer-facing processes, alliances, or technologies;
• Customer Experience: service, delivery channels, brand, or ‘wraparounds’ (the extras it offers customers, such as a connected and helpful community of passionate users); and
• Business Model: how it makes money (or at least covers its costs)

*If you recognise this, let me know and I’ll credit it properly…

mel starrs Uncategorized Management, Scott Berkun

Spotted on the CIBSE events pages:

The Association for Project Management (APM) is the UK Member body of the International Project Management Association (IPMA) and through them CIBSE is offering a Professional Project Management qualification that is recognised worldwide.

The IPMA set standards offering an international terminology for project managers in a wide variety of business fields, not least of which is construction. More and more engineers are recognising the benefits of a professional qualification in project management, which helps them communicate in the wider project management community.

The IPMA Level D qualification is becoming an important tool for engineers in project management. You can now study for the APMP (UK) and undertake a fast-track intensive course in Project Management leading to the IPMA Professional Qualification (Level D) in association with JC Consultancy. This fully accredited course offers a professional qualification in project management, with the exams on the final day.

Project management is a skill that can and ought to be taught and is much more than a nifty looking Gantt chart. Project management is often seen as a separate discipline, usually monopolised by companies who specialise in quantity surveying. I would argue that engineers and designers should know at least the principles of project management, even if they are not ‘project managing’ the job.

I have dug out the following list of resources, some of which are specifically for the construction industry and some more general. There is a huge body of knowledge on project management from the software industry, some of which can be related to our industry.

Engineering Project Management by N.J. Smith is a fairly old publication now (first published 1995). It’s aimed more at contractors on site than consultants in the office, but offers some useful overviews on project concepts such as:

• projects and project management
• project appraisal and risk management
• project management and quality
• project appraisal and environmental impact
• cost estimating in projects and contracts
• project finance
• project cash flow
• project organisation
• project managment and project managers

It concentrates on how to get a project built rather than how to manage a project design.

Project Management Handbook for Building Services is for “individual engineers who are responsible for managing their own activities and engineers in an overall management role or who have responsibility for managing the activities of others. Describes both established project management techniques and techniques tailored to the specific situations confronted by building services engineer with the aim of providing practical guidance on the 1) planning and management of building services design, 2) planning and management of building services installation and 3) the integration of building services design and installation within an overall construction project management framework. Section headings are – plan of work, Design team appointment, Inception to outline proposals, Outline proposals to detailed design, Tender process, Construction, Commissioning, Handover. Supplies in addition a toolbox of techniques and appendices supplying additional information.”

I use this book often and although it is slightly out of date it has some great tools and resources, including ‘starter’ Gantt charts for the design process for a typical building services project. It is part of the BSRIA application guides series and was published in 1998.

The Art of Project Management by Scott Berkun is a more general, philospohical look at project management. Scott has a relaxed writing style and comes from a software engineering background. He blogs here and is currently researching his next book on innovation. Typical thoughts from Scott’s book:

“feelings about feelings: before you skip past this section, assuming it’s touchy-feely stuff that doesn’t concern you, let me ask you one question. Have you ever wondered why people behave differently under stress? If you don’t care, or don’t see the relevance to project management, feel free to move on. But I pity anyone who works for you.”

Masses of sarcasm and wit in this book, so it won’t be for everyone, but it’s not often a ‘management’ book entertains. Highly recommended.

admin Book Review Association for Project Management, CIBSE, International Project Management Association, Management, Productivity, project management, Resources, Scott Berkun

Just as I posted this, I found this post by Scott Berkun. Scott is a blogger and also author of The Art of Project Management. Although the book is primarily aimed at software engineers, there are obvious crossovers into construction engineering and more general management.

His post argues that the PMP qualification is likely just a money spinner for the PMI. His attitude towards the qualification is summed up by the following:

“Since the PMP focuses on an exam, it has the limitations of standardized tests: people study to the exam, not to the world. What do they know besides the minimum required to get a passing grade? Who knows.

an exam-centric certificate tells me only that they passed a test. Unless the job I’m hiring for matches the problems on that test, I’m not going to be impressed by the fact that they passed.”

This pinpoints the vague uneasiness I have with the LCC qualification. Whilst I selfishly embrace the opportunity to pimp my expertise with a shiny badge of approval from CIBSE, I’m sure there will be many consultants who don’t want to invest the time, effort and expense of qualifying if it’s nothing more than a way of generating cash to support the tier 2 documentation required for Part L. I’ll still do it, but I suspect the cynicism that comes with old age is starting to kick in…

mel starrs Uncategorized Part L, Scott Berkun, software engineers, Sustainability