Civil Engineering Firms Stretched Thin

December 12, 2012 at 10:29 am 12 comments


As I was perusing the different headlines  at CNN.com the other today a headline grabbed my attention:

“We Are Working Too Hard.”

And as I leaned back in my chair for a moment reading this piece, I began to wonder, “is it time for civil engineering firms to adjust the notches on their belt and loosen up a little?”

Take a look at what the commentary’s author, Paul La Monica noted:

doing more with less“Bob Baur, chief global economist for Principal Global Investors in Des Moines, Iowa, noted that U.S. workers may be reaching the point where they are stretched too thin…at some point, U.S. corporations need to recognize that they can’t keep trying to do more with less…”

The idea of “doing more with less” is nothing new, but if I had a dime for each time I heard this phrase as a result of the recession I could retire…today!   The concept is not a bad idea, but at some point you have to draw the line. Seriously.  Remember the days when your Land Development or Highway group was made up of a Vice President who was mainly responsible for business development; a Department Head who assisted with business development but also managed the Project Managers and kept their finger on the pulse of all the projects and clients; Project Managers managing projects making sure they got out the door within schedule and within budget; a Project Engineer;  a designer and a cad tech?    As civil engineering consulting firms have been fighting to stay afloat many of them have slimmed down their business structures where a department now  may be made up of a “Seller-Doer” and Project Engineer where the “Seller-Doer” is a Vice President/Department Manager/Project Manager all rolled up into one, and the Project Engineer is the Project Engineer/Designer/Cad Tech all rolled up into one.  So now you have two professionals scrambling to handle the responsibilities of what was previously in the laps of six.  They are doing more with less.  But it may be time to loosen up the purse strings a little and invest in some new help.

We recently completed a search for a client of ours, a local consulting engineering firm, who was looking for a Project Manager for their Land Development group.  The local market was improving and development was beginning to pick up.  overworkedThe President was still struggling with some of the uncertainty in the air and quite frankly, found it difficult to be optimistic after being in the dumps for so long.  But he listened to his employees.  They were becoming overwhelmed with hours, they were stretched thin, and stress was beginning to set in.  The “doing more with less” mentality was beginning to take its toll, but he recognized that and made the decision to bring on another Project Manager…a decision that was welcomed by his staff, in turn easing the burden on them, resulting in a happier group of campers.

So you adjusted to the economy and have implemented the “do-more-with-less” philosophy, but as the economy begins to improve, is that same philosophy beginning to take its toll?  Is it now time to re-adjust your philosophy?

If you are a business owner or executive and can relate, or an employee who has been in the trenches with this philosophy in place, please let us know and share your experience with our audience on this topic.


Matt Barcus
President, Precision Executive Search, Inc
Managing Partner, CivilEngineeringCentral.com
View Matt’s profile & connect with him on LinkedIn

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Entry filed under: Career Development, Civil Engineering, civil engineering blog, Civil Engineering Companies, Civil Engineering Issues, Civil Engineering Jobs, Civil Engineering Shortage, Employee Retention, Human Resources, The U.S. Economy & Civil Engineering, The Workplace, Uncategorized.

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12 Comments Add your own

  • 1. Glenn Chouinard  |  January 29, 2013 at 4:43 pm

    Matt,
    I echo the comments received. It truly is a white elephant as organizations such as ASCE and ACEC continue to ignore it. Collectively the comments are all dead on. The civil engineering (A&E) profession has lost its identity and needs to recognize that it is now a commodity, thanks to the business savvy individuals who claimed to be managers, and managed to keep the short term profits rather than reward the professionals . The true winners will be the design-build contractors who are hiring staff engineers for design.

    Keep watching for another mega-aquisition that further proves that the trend will continue. Outstanding stock values held by “staff” are minimized when a professional is “let-go” and the remaining “new” pie size increases but with a lessor number of pieces in it. Who benefits when that happens?…Of course it is the overpaid execs at the top who sell the firm after cleaning house of the people who got them to the sale. I seems like the banking industry went through the same thing…Citicorp, Chase etc.

    Reply
    • 2. aepcentral  |  January 29, 2013 at 4:51 pm

      Hi Glenn, thanks for sharing your thoughts. My hope is that the managers and business owners of this day and age learn something from what they have seen over the past six or seven years and can adjust their business plans and philosophy accordingly.

      Reply
  • 3. Amelia Price  |  December 20, 2012 at 2:33 pm

    Matt, this topic has been “the-elephant-in-the-room” for a while and it’s great that you have written about it. Also, I have to echo the sentiments of Sherri van der Wege and Janet McSwain, as I have watched these trends develop over the past ten or so years: increased utilization with less resources and increased executive staff salaries with little support to the rank and file–especially in publicly held companies. As a result, burnout among engineers is up and executive management salaries are out of whack. Alternately, I have seen a trend emerging where engineers who were with large firms are starting their own businesses and those who have been successful are those who provide great client service, treat their employees well, and moderate their firm’s growth to ensure that client service and employee welfare remain balanced. Neither higher utilization nor exorbitant executive salaries are sustainable. Perhaps, “moderation” is a more doable model.

    Reply
    • 4. aepcentral  |  December 20, 2012 at 2:54 pm

      Hi Amelia,

      Thanks for reading our blog! So the question then is, how does this change? Or will it eventually flush itself out?

      Happy Holidays!

      Matt

      Reply
  • 5. Doug  |  December 18, 2012 at 11:41 am

    It’s amazing how common this scenario is throughout the industry. I have seen our market bounce along the bottom for so long that it has become the norm to stress in both directions of the cycle. “Are things improving for good and I’ll keep my job or is it just temporary and I risk losing my job again?” Regardless, nothing will change until the uncertainty with government taxes, regulations, and debt are dealt with responsibly. Profit is good. Profit allows us to attract new investment, expand, develop new research, and ultimately bring on new hires. Your personal profit is your salary minus your costs. Are we not always looking to increase our salary and reduce our costs?

    Reply
    • 6. Sherri van der Wege  |  December 18, 2012 at 2:01 pm

      Profit is only good up to a point. When the profit margin allows my CEO to have a $9M annual bonus, but almost none of the engineers doing the work get bonuses or even cost of living adjustments (or training, or other benefits listed in our employee handbook), then why should the people doing the work really care about profit, other than to simply hold on to their jobs? People are loyal when they are treated well. People will perform when they are respected instead of feel like they are being used. People will even put in unpaid time up to a point, without quarrel – until they see the fruits of their labors all going into someone else’s basket. I really don’t believe that my CEO worked that much harder than any of the engineers I know. Not all of us just want to be a mercenary, going to the highest bidder.

      Reply
      • 7. Janet McSwain, P.E.  |  December 18, 2012 at 4:25 pm

        The problem I saw was that engineers salaries, benefits, training, hours for PE renewal, were not looked upon as investments but as “costs” to the company, which of course they are, eating into the profits, from a stockholder point of view. So yes, there seems to be a trend to increase the salaries or compensation at the top, via stock options, to the turn of 100 to 150 times that of the engineers with the billable hours, while reducing the costs – ie the salaries and benefits of those same engineers, cad operators, and support staff down stream. It got to the point where the engineers were having to take vacation and pay their own way to attend local trade conferences, both to socialize with their clients and would-be clients, and to earn continuing ed. hours for PE renewal. This just struck me as not very supportive of your workers. Training to increase the skills of your employees also seems to be dying out – why should I pay to train you when I can hire so and so over here with the skill I need for this job and then lay him/her off when the job is finished? What is lost in this equation are the relationships – both employer to employee, and engineer to client. There is no stablilty within the firms. From a pure economic standpoint, the principle is sound – profit and cost. But from a human equation, well, the equation just isn’t balanced. As Sherri said, she does not want to auctioned to the highest bidder.

        Most engineering companies I know of do very little in the way of actual research – some still do, but the days of the research actually coming from engineering consulting firms rather than equipment manufacturers seems to have ceased to exist. So that extra capital isn’t used to do much more than (maybe) expand markets, but primarily to pay stockholders. Again, manufacturers are a different story and I think their profits are put back in the business in terms of investment and research – new product development.

  • 8. Janet McSwain, P.E.  |  December 17, 2012 at 6:36 pm

    I would like to second what Sherri said. I was the Water Engineering dept. Manager for a branch office of am engineering firm in a midsized town. We too had difficulty scoping work and predicting the unbilled hours that were worked, based on previous projects. Also, we were pressed to maintain a high profit level – for investors – all of which meant that the workers themselves were squeezed to produce more. Many of the small clients that we worked for were determined to be “unviable”, as the profit margins and size of projects were not large enough. Eventually the department was closed and I was laid off. Frankly, it was one of the best things that ever happened to me as I was able to step off the non-stop treadmill I had been on for almost 30 years and decide if this was the business model I believed in.

    But this also goes to a deeper issue – what are we in business for? Is it strictly to make profits? Or, as when I got into the profession many years ago, was it to serve society – you know, CIVIL engineers. Frankly, if we look at the compensation of the CEOs of the major multinationals, those who have “merged” with the former mid sized, privately held firms, then you might get a clue as to where the loyalties lie. Many CEOs and upper management make several million dollars in total compensation – but often 90% of this may be in stock options (unearned income, taxed at a lower rate). Therefore, the stock performance is more important than anything else.

    Engineers used to make a good living. We were well off, though not particularly wealthy, but it was a honest living. Moreover, we were THE most trusted of the professions. We lived and worked in the communities we served. That is no longer the case as more and more it is driven, or appears to be driven purely on a profit motive. The “best” projects are overseas, and I can’t help but believe the local accountability is no longer there. In the cases of some communities, even in this country, engineers actions have lead to the bankruptcy of communities and have been guilty of fraud, and we can only hope this is exceedingly rare.

    More with less is about one thing and one thing only – profits for stocks. It is not about serving the communities – and our profession is the lesser sfor it..

    Reply
    • 9. aepcentral  |  December 17, 2012 at 6:45 pm

      Hi Janet,

      Thanks for reading and sharing your thoughts and story. Congratulations on your business venture as it is my hope that you are now happy now that you are off that non-stop treadmill! Again, thanks for reading, and may you and yours have a joyous and safe holiday season and blessed New Year!

      Matt

      Reply
      • 10. Janet McSwain, P.E.  |  December 18, 2012 at 4:33 pm

        Matt, I am working as hard as ever, and my boss (me) can be hard task master.

        As Sherri intimated some engineers are doing, I do hope that folk do ask the question though, where is my labor contributing to the good of society (what we civil engineers were all about) or am I just making someone else rich by driving up costs for the common citizens. When we feel we, as a nation, city, town, can’t afford to repair our failing infrastructure, it is time to look at what is driving costs. I am all for a reasonable profit, and for good work from excellent engineers, and for being fairly compensated for that good work. But we need to look at our business model and what is driving the markets.

  • 11. Sherri van der Wege  |  December 12, 2012 at 4:48 pm

    I have absolutely seen this phenomenon first hand. A couple more things to think about: For many companies, particularly those that are publicly-traded and therefore reliant on short-term financial results to maintain shareholder value, the “do more with less” idea is the business model. Profits become dependent on it. New work scope and fees are underestimated (intentionally or not), requiring salaried employees to work excessive unpaid overtime to stay within budget. One of the results is that clients become unhappy when the quality of work goes down because the engineers are overworked, creating more stress on companies and individuals (and ultimately a loss in new work). Another result is that we *can’t* scope new work effectively if all the data from previous projects is incomplete, since it doesn’t include all those unbilled hours; we no longer know what it takes to do a particular scope of work, except for those directly involved with the project. Employees must maintain a high utilization rate at all times to keep their jobs; the ebb and flow of the market is the enemy of stability of employment, and we all feel the stress. What I saw in western Canada in the past two years, where the job market for engineers is hot, is that the overworked engineers are leaving civil engineering companies that do more with less for jobs with fewer hours, jobs with more money for the same hours, jobs with smaller companies where they have a say in how business is done, or jobs in different professions entirely. The companies that make all decisions from the top and use the do more with less business model will ultimately suffer, I believe. The question is, will they wake up before they suffer, or after.

    Reply
    • 12. aepcentral  |  December 12, 2012 at 4:59 pm

      Hi Sherri –

      Thanks for reading and commenting. One point you made was indeed very interesting, and that revolves around how companies are not able to effectively scope new work because everything is so off kilter as a result of this “do more with less” philosophy in place. Again, thanks for sharing!

      Matt

      Reply

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