2020 has been a peach, hasn’t it? A global pandemic. Raging wild fires. Riots and looting. Facemask battles. Ongoing trade wars. Election-year shenanigans. Recession fears. Increasingly divisive politics. Everything canceled. (Lest we forget zombie deer and murder hornets.)
In a year of jobsite shutdowns, project delays, funding pitfalls, and project postponements—and with no guarantee of a more prosperous 2021—it is understandable for AEC firm leaders to take a guarded, hunker-down stance when planning for next year and beyond. It is natural for firms to focus first on “right sizing” the business by slashing investments, overhead, and operational costs.
But these positions of passivity and cost-cutting run counter to the key lessons from AEC leaders who successfully navigated their firms through past market downturns and economic events, says Scott Winstead, President of FMI Management Consulting, who’s firm last year studied takeaways and strategic lessons from the Great Recession (BDCnetwork.com/DownturnLessons).
A common mistake AEC firms make during down cycles, says Winstead, is running the firm as a collection of projects, versus a business. “It’s a subtle but very distinctive difference that speaks to the long view versus the short view, and to the notion that you can’t save your way to prosperity,” says Winstead.
The firms that came out of the Great Recession in growth mode, according to the FMI research report, focused on investing in their clients, people, and business; they diversified their services and found unique ways to outperform the competition; they streamlined their operations and put their “A” players in a position to succeed and grow the business; and they created a company culture that is nimble, collaborative, and transparent.
Winstead says 2020-21 should be no different. “If I think back to 2008 and the beginning innings of the Great Recession, I heard then what we heard early on in this scenario, which is mistaking backlog as a proxy for health,” he says. “Backlog is a reflection of work that has already been sold and booked, and is in the process of being burned off. Past performance is no guarantee of future results.”
The key finding of the FMI research, which gathered insights from more than 150 engineering and construction executives, was that AEC leaders who increased their financial investment in strategy reported higher effectiveness in operations, strategy, and overall company performance, compared to respondents who either didn’t do anything or decreased spending in that area. “Strategic thinking and planning are among the top leadership skills needed to be an effective leader during a recession,” wrote the authors of the report.
Download the FMI report, “Leading Through Business Cycles: Lessons Learned From E&C Executives,” at: BDCnetwork.com/DownturnLessons.
Related Stories
Giants 400 | Dec 3, 2020
2020 Hotel Sector Giants: Top architecture, engineering, and construction firms in the U.S. hospitality sector
Gensler, Jacobs, and Suffolk Construction top BD+C's rankings of the nation's largest hotel sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 3, 2020
2020 Healthcare Sector Giants: Top architecture, engineering, and construction firms in the U.S. healthcare facilities sector
HDR, Jacobs, and Turner top BD+C's rankings of the nation's largest healthcare facilities sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 3, 2020
2020 Government Sector Giants: Top architecture, engineering, and construction firms in the U.S. government buildings sector
HNTB, Jacobs, and Turner top BD+C's rankings of the nation's largest government sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 3, 2020
2020 Cultural Facilities Giants: Top architecture, engineering, and construction firms in the U.S. cultural facilities sector
AECOM, Arup, and Populous head BD+C's rankings of the nation's largest cultural facilities sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 2, 2020
2020 Retail Giants: Top architecture, engineering, and construction firms in the U.S. retail building sector
Gensler, Jacobs, and PCL Construction top BD+C's rankings of the nation's largest retail sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 2, 2020
2020 University Giants: Top architecture, engineering, and construction firms in the higher education sector
Gensler, AECOM, and Turner Construction top BD+C's rankings of the nation's largest university sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 2, 2020
2020 Multifamily Sector Giants: Top architecture, engineering, and construction firms in the U.S. multifamily building sector
Clark Group, Humphreys & Partners Architects, and Kimley-Horn head BD+C's rankings of the nation's largest multifamily building sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 2, 2020
2020 Airport Sector Giants: Top architecture, engineering, and construction firms in the U.S. airport facilities sector
AECOM, Hensel Phelps, and PGAL top BD+C's rankings of the nation's largest airport sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Nov 29, 2020
Top 40 Engineering Architecture Firms for 2020
Jacobs, AECOM, and Kimley-Horn top the rankings of the nation's largest engineering architecture (EA) firms for nonresidential buildings and multifamily buildings work, as reported in Building Design+Construction's 2020 Giants 400 Report.
Giants 400 | Nov 29, 2020
Top 155 Architecture Firms for 2020
Gensler, Perkins and Will, and HKS Architects top the rankings of the nation's largest architecture firms for nonresidential and multifamily buildings work, as reported in Building Design+Construction's 2020 Giants 400 Report.