The 3 biggest challenges engineering firms face and how to overcome them
We live in strange times, in a world we must adapt to quicker than ever before. Ground breaking technology is evolving at a breath-taking rate. The planet is asking for better care and attention. The global economy and geopolitical landscape are unsettling (to say the least). Meanwhile younger adults are viewing their lives through a different lens to their parents at the same age. Working with what we know, is quickly becoming working with what we knew.
For consulting engineers this means facing a plethora of challenges, all while running a business day to day that demands excellence and precision. These challenges can be broadly split into three categories: staffing, financial, and evolutionary. Let’s take a look at each of them.
1. Staffing challenges facing engineering firms
Ask any consultant what keeps them awake at night and you will most likely hear “staffing”. Whether it is because they don’t have enough, can’t keep them or need them to be upskilled, staff issues seem to be the number one complaint in a field where ironically people are the product.
Recruiting talent
There is currently an international labour shortage. University numbers are down for engineering and AI and data analytics are up (more on that to follow). And that is just at entry level. Finding qualified people with technical expertise who can also win new business is very challenging too, especially when you need a steady flow of billable work to justify their existence.
Attracting good talent in the face of fierce competition results in bidding wars. Sought after people are lured by generous employment packages, the costs for which have to come from somewhere, so budgets are squeezed to ensure projects are successfully completed. Recruiting from overseas is also an option but relocation expenses run high and lead times require meticulous forward planning.
To fill this talent gap professional engineering firms need to draw more from their own resources and those around them. Implementing measurable EDI objectives and investing in upskilling existing staff, although time consuming at first, will have positive long-term impact.
Staff training
It is true that for many professional services firms, CPD is the recipient of some of the biggest eye rolls. As non-billable time it can be seen as a low priority, not to mention an irritating overhead. Executives also worry that after investing in an individual they’ll leave anyway, taking that investment with them. If professional engineering firms could standardise training, then for every trained employee lost, a new one would be gained from elsewhere.
Talent shortages, constantly evolving technology and environmental demands also render training an absolute necessity. Time and money need to be put aside to ensure that new and existing staff can step up to immediate challenges by embracing change through disciplinary integration and collaboration.
Workplace behaviour training to ensure that staff are aligned with your cultures and values, and those of your clients, are a modern-day necessity. EDI consultancies have myriad modules in areas such as inclusive leadership, harassment prevention, mental health and wellbeing, risk and accountability and people skills generally. Although it may seem costly at first, reaching out to an EDI firm will save you time and limit the risk of expensive legal fees downstream.
Staff retention
You are only as good as your team, and the expertise of the people within your team is what you sell. Clients want consistency in your delivery and often request specific individuals to work on their projects, so it is important to try and keep them. With good talent being a precious commodity, regular offers are likely to be made to your staff. Competitive remuneration, a nice office, cutting edge tech and other non-monetary perks all help, but none of these are useful without a great company culture that includes a healthy work-life balance.
So how does one achieve such an employment utopia when budgets are frequently squeezed and timelines are tight? Professional Services Automation software (PSA) can transform the day-to-day running of your business, cutting out endless hours of admin and double handling of tasks.
Projectworks is a great example of PSA software that will help increase your margins so you can reinvest these gains in your people. With insights into real-time project performance and powerful bottom-line projections Projectworks is easy to use, connects with your ecosystem and gives you time back to focus on the real work that drives your success.
2. Financial challenges for engineering firms
It costs a lot to run a business and with people as your product, it can be difficult to quantify profitability until a project is completed. Optimal staff utilisation is an inexact science with project goalposts often moving, but client expectations remaining the same. The changing face of tech, intermittent availability of resources and a strained global economy force consultancies to act reactively to retain clients.
Balancing revenue and talent
Your biggest cost, but most precious asset, is the people that work for you. Ensuring project profitability requires your staff are utilised at a minimum 80% billable hours. Striking the optimal balance of the right headcount to successfully deliver a project without anyone “bench sitting” nor anyone over-extending themselves is very challenging. In most services firms more people will be thrown at a project to avoid complications downstream, the net result being a bottom line that is cut short.
The number of smaller scale operations is also increasing. With fewer overheads, costings can be very competitive, leading to price wars and even more squeezing of profit margins. This in turn raises client expectations. Customers believe that they will always get a quality outcome despite project complexity, capricious briefs and tight deadlines.
It can be difficult to manage client expectations proactively when you yourself struggle to quantify budget impact in real time. This is where PSA software really helps. Time tracking, resourcing and forecasting are integrated features in Projectworks that can be immediately drawn on to support those difficult conversations with concrete, quantifiable evidence.
Efficient admin
It is an age old issue in services firms that there is never enough time for “boring” admin when every working hour is spent on the actual project. Timekeeping, invoicing, implementing new systems and generally managing overheads slip by the wayside when everyone is chasing their tails to keep up with billable work.
Projects struggle to be profitable when time and costs cannot be traced. Projectworks PSA software gives you the project management tools to keep your margins healthy with its all-in-one invoicing, timekeeping, and expense-tracking features. Being able to manage and audit your projects rigorously will ensure profitability every time.
Economic and geopolitical challenges
Economic uncertainty around inflation and geopolitical tensions are discouraging development in some territories. This puts added pressure on firms to win business, and cost competitively to do so. Layer the unpredictable price and availability of equipment and materials on top and forecasting lead times and budgets can feel almost impossible.
Clients are also financially stretched. There is a much higher risk of bills not being paid on time, making regular and quick invoicing extremely important. Projectworks offers straightforward and accurate time tracking, along with prepopulated invoices that sync effortlessly with your accounting software. This makes billing a breeze and helps you get paid faster.
3. Evolutionary challenges that engineering firms face
In the last few years the world has presented us with overwhelming change. It is happening so fast that many firms can’t keep up, preferring to stick with what they know. This is understandable given that it seems to be coming from all four corners: advancing technology, local and global regulations, environmental demands and workplace culture are shifting sands that engineering consultancies find tricky to navigate. That said, survival is born from evolution so embracing the change and turning knowledge into opportunity is key.
Technological advancement
Digitalisation is rapidly increasing in our daily lives. For engineering firms this is brought to life through BIM, digital twinning, drones and other AI powered software. Purchasing expensive tech and investing in the latest hardware and software (and their associated training) can sometimes feel relentless.
In a 2020 article for Engineers Canada (quoting James Plummer’s address at the 2017 IEEE Summit) engineers in traditional engineering fields will need to become more interdisciplinary and flexible to adapt to constantly emerging technologies. With job losses to automation estimated at 30-40% by 2030 “educational systems will have to focus on producing tech professionals who do what computers can’t… collaboratively leverag[ing] the strengths of human thinking and computational power”. If a more societal approach to innovation adaption is coupled with a streamlining of corporate internal processes, time and money will be freed to invest in this inevitable future.
Regulatory impact
Regulations and standards on a local and global level are ever-changing. Keeping up with different and stricter rules is creating a trend of specialisation in certain fields. Experts become siloed when they only have the bandwidth to focus on one of these many changes. This can create a rigidity to their knowledge, just as flexibility and integration (as discussed above) has never been more important. Consultancies also feel an increased pressure for responsibility and accountability, the mitigation of which carries significant financial burden. A centralised and impartial knowledge-sharing platform could reduce pigeon-holing with a dedicated project team member checking plans against the regulatory landscape.
Sustainability
Careful management of our planet’s finite natural resources and global demand to reduce carbon emissions have made sustainable development an action point engineering firms cannot ignore. But how do you turn something everyone is talking about, into something everyone is doing? Helen Davidson, CE of ACE NZ, summarised the view on sustainability at the 2023 FIDIC Global Infrastructure Conference in Singapore, “that existing commitments are not enough, and the largest sector where investment will need to be targeted is the electrification of the global energy supply, with the remaining investment directed towards decarbonising heavy industry such as steel, the transportation system and retrofitting buildings to make them more energy efficient.” The FIDIC GLF in Geneva in April also focussed on carbon management and a framework for best practice for consulting engineers is set to be available later this year. In the meantime, Davidson highlights that supply and demand can be transformed by “putting sustainability and whole-of-life cost at the front end of our contracts, and by adopting different procurement models that put emissions reduction front and centre of design procurement and contracting.”
Workplace culture
Since 2020 the workplace, particularly in the corporate world, has been irrevocably transformed. Remote working and flexible hours, at first a pandemic necessity, have opened our eyes to a new world where “one size fits all” best practice is not the best for everyone. Four-day week trials, working from home and hybrid models can cause headaches for those responsible for resource management and tech support.
Fewer face-to-face encounters have also shone a torch on inequality and toxic workplace culture. Those previously too afraid to speak out, now have some protection to do so in an online world (where remote working can reduce the fear of intimidation), so EDI is an acronym we have become familiar with. Although this sets the tone for a positive future, it also creates an objective for consultancies that comes with an associated cost. Training, strategy and dispute resolution are all overheads that affect a business’ profitability.
Overcome your challenges with Projectworks PSA software
Whether your challenges are staffing, financial or evolutionary related, the issues they cause for you can be boiled down into one key word – time. And time costs money. Training your people in an inclusive environment with a healthy work-life balance, while also ensuring you aren’t over-resourcing, takes time. Day-to-day administration including timekeeping and invoicing takes time. Purchasing and learning relevant tech takes time. Staying abreast of changing rules and regulations takes time. Committing to global sustainability objectives takes time. And all of this time is time not spent on billable hours – the bread and butter of your business.
With Projectworks you can get back your time and increasing your billable hours. Projectworks is an integrated solution to project planning, time tracking, expenses, resourcing and invoicing. With real-time forecasting, budget tracking and built-in reports and insights to help your business grow, double-handling and inefficiencies with admin will be a thing of the past.
