Business of the Practice Plan your Business

Transcription

1 Design YOUR Practice for Success Brian Watkinson OAA, FRAIC, Int l Assoc. AIA Business of the Practice Plan your Business You wouldn t start building without a plan Focus your ideas, dreams maintain focus = consistency consistent application of resources consistent messages Markets Services Character Brains <> Grey Hair <> Procedure Competition 1

2 Planning YOUR Business (cont d) Value Growth HR recruitment/retention Transition and succession Financial success sustained profitability Financing Personal and professional fulfillment Brand Planning YOUR Business (cont d) Inputs External inputs Trends Internal inputs goals and interests of the leadership of the practice, e.g. Personal and professional goals Definition of success Remuneration and standard of living What you LOVE to do! goals and interests of the team 2

3 What is a Strategic Plan? Three central questions What do we do? 2. For whom do we do it? 3. How do we excel at doing it? Five years... regular, formal review... Vision What are the components? Mission Values (Operating Philosophy) Strategic Objectives/Goals Metrics Tactics (Initiatives, Actions) 3

4 Vision Graphic depiction of the future state of the organization. Defines the culture, reflects beliefs and values The Network is the Computer - Sun "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." Mission Description of the purpose of the organization. To change the world through technology SONY We excel at moving people GO Transit 4

5 Values e.g. Leadership Responsibility Accountability Transparency Integrity Trusted Professionalism Commitment t Passion Education/Professional Growth Communications Strategic Objectives/Goals defines the specific directions needed to be taken to successfully execute Mission i and achieve Vision 5

6 What Goals? those features of the organization which if done properly yield success short list of things that must be done right if not, won t be successful in executing Mission and achieving Vision short list > greatest ROI typically 5 to 7 Metrics! Strategic Goal We will develop and implement a comprehensive, high quality in-house education program that will: - support our team in building new and relevant skillsets which will help them grow their careers and their sense of self-worth; increase their ability to deliver greater value to the practice; and, also be transportable - support recruitment and retention of staff - differentiate t us from our competition - enable us to provide a wider range of leading edge services to our clients - enable us to access new markets 6

7 Metrics Superior Professional Development and Full Suite of Educational Choices - increased spcific skills on our team - recognized as able to deliver wider range of valued services to current clients AND a bigger marketplace - regularly beat the competition - regularly able to recruit and retain talent in a highly competitive marketplace Tactics/Initiatives/Activities Engage consultant Develop and articulate the vision and strategy for the education program Identify and make policy decisions that will shape the program Communicate to team, clients, public Develop quality assurance framework Identify content broad/specific Identify developers/deliverers 7

8 Recap: What is a Strategic Plan? Three central questions What do we do? 2. For whom do we do it? 3. How do we excel at doing it? Five years... regular, formal review... Recap: What are the components? Vision Mission Values (Operating Philosophy) Strategic Objectives/Goals Metrics Tactics (Initiatives, Actions) 8

9 A Few Words on PROFIT Profit is not a dirty word ROI a cushion - cycles AND bad debts Invest in technology Invest in HR recruit, train and retain R and D Marketing and Business Development Change management Continuous Improvement - ConEd Sustainability Growth and expansion retirement 9

10 Elements of a Business Plan Executive Summary 1. Business Overview 2. Industry Overview 3. Market Overview 4. Business Development Strategy 5. Operating Plan 6. Action Plan 7. Financial plan 8. Risks and Conclusions Business Overview Business History Ownership and Attributes Vision, Mission, Strategic Objectives Services Pricing Strategy Regulatory Environment Growth and Development Plans 10

11 Industry Overview Info Sources Size of Industry Relevant Service Segments Trends in the industry Outlook Competition Numbers and description Competitors SW Pricing Market Overview Info Sources Market Segment(s) Your target and its outlook Trends in the Market Specific Services Pii Pricing in the marketplace kt Market Risk Factors response 11

12 Business Development Strategy Marketing and Promo Target clients (customers) Potential partners/subs Value Proposition USP Pricing Strategy Competitive Position Promotion Strategy Marketing Strategy Operating Plan Location Business Structure Management HR Physical facilities FFE Communications IT R and D Service Delivery Oper g Policies Financial Policies Regulatory Risk 12

13 Action Plan (Implementation) Specific, key activities - priorities Reasonably detailed description for each Completion dates Responsibility/accountability Resources Metrics Financial Plan Projected revenues Pro Forma Income Statement Pro Forma Balance Sheet Pro Forma Statement of Cash Flows 13

14 Risks and Conclusions If you don t High level summary of KEY risks/response Economic Market Business development Operational Financial Top Trends Affecting the Design and Construction Sector 14

15 DESIGN! We assume that products of our competitors have basically the same technology, price, performance and features. Design is the only thing that differentiates one product from another in the marketplace. Norio Ohga, Sony No Economy is an Island The Great Recession of 2008? 2009? Emerging economies G7, G8, G20 >>>>> G2? BRIC Harper s tour Free trade Tax structure Infrastructure investment GDP? Unemployment? 15

16 Some Key Industry Trends??? 16

17 Stimulus Spending 2? The Economy Global Canada Design and Construction Sector Sector in YOUR region YOUR markets Cycles Monitor and keep your data current Be prepared to course correct. 17

18 Focus on YOUR Market Know your market Know how it is performing demand demand for businesses in that market Know what the future holds for it Climate change and economy linked? 18

19 Sustainable Design 70 s CSR Climate Change, Recycling, Gridlock Smart Growth, Places to Grow LEED Leadership in Energy and Environmental Design Politics Gov t Policy Cap and Trade? Sustainability Smarter Sustainability Practices Needed d for Canadian Growth: Conference Board October 3, 2006 Economic growth and concern for the physical environment need to be integrated into a single concept of sustainability. 19

20 2009 Hubbert Curve What s It Mean? Climate change Carbon fuel depletion Drill baby drill! Pollution Impact on health and well-being, quality of life Future generations Economic impacts 20

21 LEED Recladding 50% now zero by Leading to...? Buildings ~ 40% energy/carbon on the path to zero Macro or micro grid? Operating (96) v. Embodied (4) Leadership???? 21

22 ? Opportunities? Threats? capital cost increment less than believed innovation and risk new tech construction process new complexities? specialists? Design, construction, ops? LEED AP need for robust systems 22

23 Risk Transfer Historically, AEC has always involved risk Business risks Construction risks Designers risks Owners risks Is Risk Increasing? risk allocation, risk sharing All too often Risk transfer What additional risks? So, TRANSFER what risks??? Schedule Subsoils Bd Budget Environmental Finance Operational Performance Energy Performance Users and Energy Costs Changes in law Innovation Fitness for purpose 23

24 Risk Management/Mitigation Transfer it Quality Management Insure Price it and charge for it Extra resources Sell extra services Take longer... Aggressive Procurement Strategies For builders, Supplementary Conditions from hell For designers, RFP s from hell reverse auctions construction AND design Lowest, LOWEST, LOWEST PRICE One-sided d contracts Risk managers, lawyers, insurers, procurement advisors, fairness commissioners 24

25 Traditional DBB Owner Designer Contractor Traditional DBB Owner RFP s and Contracts From Hell increasingly adversarial Contractor Designer Induced Adversarial Relationship 25

26 Government Policy Affordable Housing Carbon Tax vs. Cap and Trade Climate change and sustainability Globalization Immigration policy Green Belt/Planning l/ l Legislation red tape world Infrastructure investment Government Policy Accessibility Standards in Ontario Building Codes Bank of Canada AIT Regulatory Municipal bylaws Design review by municipalities Procurement... ORC 26

27 Demographics General Population Demographics use boomers as e.g. also cultural diversification, women in the workplace, post-secondary education trends The aging of Canada s massive baby-boom will be the underlying demographic force affecting labour supply AND demand for goods and services. Conf Board of Canada 2006 Boomers, e.g. Demographics (cont d) the big wave is moving along - aging but, also living longer 60 is the new 40 differing interests needs expectations ti from previous generations affects Demand Supply 27

28 Supply Demographics (cont d) talent ae crunch c attracting and retaining qualified people design as a career? impact from changes in attitudes Millenials Internet, instant messaging, fearless, ipod generation work/life balance end of life long careers loyalty?? impatience for a better lot retirement? Demand Demographics (cont d) new facilities service recreation live/work new/different kinds of facilities new population centres what about under-used schools, etc.? 28

29 Infrastructure Deficit Infrastructure of all kinds including public buildings of all kinds deferred (neglected!) maintenance failure to replace aging infrastructure failure to keep up with demand for new infrastructure estimates of deficit vary widely $123 B municipal (then add ) Ontario $120 B Committed to $60B/ 10 yrs Infrastructure Deficit $248 B and climbing 2B a year By % infrastructure at end of life More $ than projects, more projects than people to build them Taxes and fees up, services cut If Infra inventory; strategies eye opening order of magnitude for leaders 29

30 Integrated Project Delivery At the core of integrated practice are fully collaborative, highly integrated, and productive teams composed of all project life-cycle stakeholders. Leveraging early the contributions of individual expertise, these teams will be guided by principles of true collaboration, open information sharing, team success tied to project success, shared risk and reward, value-based decision making, and utilization of full technological capabilities and support. The outcome will be the opportunity to design, build, and operate as efficiently as possible. American Institute of Architects Integrated Process Is a sustainable design ESSENTIAL 4-5% add l capital investment can yield 40%+ energy savings BUT ONLY IF INTEGRATED DESIGN PROCESS IS USED Life Cycle Costing - connect the silos Shared objectives, decisions & accountability AND R and R More clients seeking, promoting it GSA and other U.S. Clients Ontario MOHLTC; Waterfront Toronto 30

31 vision objectives risk and reward SHARED 31

32 Design Construction ti Commissioning The 2 Silos Facilities Management Maintenance Energy Performance Operations Finance Service and Ops 95% Design/Construction + Asset Management Operations 5% 32

33 A Guide to Determining Appropriate Fees for the Services of an Architect Royal Architectural Institute of Canada Integrated Project Delivery Owner Project Facilitator Energy Model Design Project Users FM Project = Shared Goal Share Risk and Reward Builder 33

34 Project Alliance 3 Gain $ Profit 2 Pain 1 Corp OH Proj OH Direct Proj Cost Project Cost and OH guaranteed Profit and Corp OH at risk (pain) Potential Gain if improve on targets Project Alliance D/C Reward Gain Owner Savings Under Target Over Target D/C Risk Pain Owner Risk 34

35 Performance Contracting Maximum Incentive Beat the target Target Base Fee Des sign Fee Maximum Penalty Miss the target Metric (e.g. Annual Cost of Energy) IPD - Less Re-work and Potential for Information Disconnects Construction >>> Bid CD SD DD Project Lifecycle 35

36 IPD Input Early Impact of decisions Cost of changes Project life cycle Greater Investment in Design Impact of decisions Potential Cost of changes Usual Project life cycle to commissioning 36

37 Integrated Project Delivery Raises lots of new questions Who leads? What are the rules of the game? Risk? Liability? Insurance? How to implement in adversarial environment that Canada s AEC has become? Where are the standard docs? New Delivery Models Disenchantment with DBB both Private & Public Introducing more risk transfer in DBB D/B CM P3 (aka AFP) 37

38 What Does P3 Look Like in UK? The Trust Consultants SPV DB FM Equip/IT Finance Consultants Energy P3s Near-total risk transfer Pursuit government response varies widely Design What about Users making changes? Budget Schedule unknowns (unforseeables?) Finance Performance Operations and Maintenance 38

39 P3s serious capacity concerns will it spread? it always has elsewhere threshold dropping as low as $25m? or, bundling Feds, provinces, municipalities, agencies, boards Track Record in Canada health, corrections, justice, education, office not just a big firm issue strategy what? implications? risks? BIM 39

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43 Fabrication Stick roof framing Habitat Paul Rudolph s New Haven residences

44 Fabrication Loblolly House Kieran Timberlake Fabrication Home Delivery Home Delivery MOMA

45 R and D Fees, Fees, Fees 45

46 PSF? Or not? 46

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48 Our Website is Under Development Opening Soon Led by architect and former Executive Director of the Ontario Association of Architects Brian Watkinson, Strategies 4 Impact! Inc. provides strategic support, advice and consulting li services to businesses in the design and construction sector, their associations and their clients. Contact brian@strategies4impact.com