An outlook on the year and what to do about it

January 2007 » Columns » BEYOND WORDS
After four years of strong growth for most firms, we’re likely to enjoy continued demand for our capabilities.
John Doehring

When asked to comment on the future, Im reminded that noted economist John Kenneth Gailbreath once remarked that "economics was a useful tool…as a form of employment for economists." Painting an accurate picture of our business and industry in the future—even in the next year or two—is a difficult proposition. There are many uncontrollable variables and estimates are less dependable than engineers are used to. But with the caveat that economic forecasting is little more than educated guessing, heres my take on the future outlook on the business of civil engineering: more of the same, but with some storm clouds brewing in the distance.

After four years of strong growth for most firms, were likely to enjoy continued demand for our capabilities. However, I expect increased competition, growing client sophistication, and a continued struggle in sourcing, hiring, and retaining staff.

On the plus side of the forecast, our economy remains strong with continued low interest and unemployment rates. The stock market is at a record high, and weve survived a mid-term election without much disruption in momentum. Demand for engineering services is strong, particularly since the countrys infrastructure needs continue to outpace our efforts to address them. Available technical talent—at all levels of the organization—is very tight and is expected to remain so. Demographic shifts to the West and South will continue, defining building and infrastructure opportunities in these areas for years to come.

On the down side, pressure on client budgets is real and pervasive. Some material costs are substantially higher than in the past, and although cyclic, are impacted in part by longer-term structural changes in the global economy. Globalization is likely to bring even more pressure to clients, markets, and the supply of labor. And, of course, some economic sectors, such as domestic automotive and residential housing, have recently cooled substantially.

The AEC industrys strength is cyclic and expecting everything to forever remain on a waves crest is unrealistic. Down the road a year or two, well likely have a slow down of some magnitude, yet underlying trends suggest a strong outlook long term. Noting that our last two recessions were the shortest of the last century and that the intervening growth periods were the longest, there is an argument for a growing robustness and sustainability in our long-term economic prospects, specifically in the engineering sector.

Given this uncertain forecast, enlightened civil engineering firm leaders must focus on what they can control: themselves, their teams, and their companies. Here are six suggested focus areas, as you strive for meaningful progress in the new year:

Strategic plan—If you dont have one, develop a five-year strategic business plan. Alternately, if you have one thats not working optimally, breathe some new life into it. Painting a future vision with a roadmap and action agenda to achieve it is your most powerful success tool.

Annual business plan—Again, youve got to have one, and it should be something more robust than simply stating that you plan to increase revenues and staff by 10 percent.

Strategic marketing plan—Addressing everything from strategic issues, such as targeted markets and points of differentiation, to tactical activities in communications, business development, and training, your firm needs a focused and sustainable marketing plan.

Communication system—When was the last time you took stock of what your firm does (or doesnt do) to communicate effectively with staff, clients, suppliers, and partners? This is a real and growing opportunity for true competitive differentiation.

Management education—If you cant afford to develop staff now (when things are good), then when will you? Invest in staff by providing project management and business development education. You will reap rewards sooner rather than later.

Leadership development—Effective leadership development and transition planning (including identifying and developing current and up-and-coming leaders) are critical to meeting the challenges and opportunities ahead.

An old bumper sticker said, "Please send us another boom; we promise not to mess it up!" Were not really there; I expect that 2007 will be another strong year for engineering firms. Still, the thought is an important one: While things are going well (and were so busy we cant think straight), it is the time to plan for the future, improve our operations, and prepare our companies for a more uncertain future.

John Doehring is a principal and managing director of ZweigWhites business planning and marketing consulting group. He can be reached at jdoehring@zweigwhite.com.


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