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
| Jan 2, 2015
Illustrations of classic architecture bring in the new year with style
New York-based designer Xinran Ma has illustrated a New Year's greeting card that assembles pieces of various brutalist and modernist architecture.
| Jan 2, 2015
Construction put in place enjoyed healthy gains in 2014
Construction consultant FMI foresees—with some caveats—continuing growth in the office, lodging, and manufacturing sectors. But funding uncertainties raise red flags in education and healthcare.
| Dec 30, 2014
A simplified arena concept for NBA’s Warriors creates interest
The Golden State Warriors, currently the team with the best record in the National Basketball Association, looks like it could finally get a new arena.
| Dec 30, 2014
The future of healthcare facilities: new products, changing delivery models, and strategic relationships
Healthcare continues to shift toward Madison Avenue and Silicon Valley as it revamps business practices to focus on consumerism and efficiency, writes CBRE Healthcare's Patrick Duke.
| Dec 29, 2014
High-strength aluminum footbridge designed to withstand deep-ocean movement, high wind speeds [BD+C's 2014 Great Solutions Report]
The metal’s flexibility makes the difference in an oil rig footbridge connecting platforms in the West Philippine Sea. The design solution was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
HDR and Hill International to turn three floors of a jail into a modern, secure healthcare center [BD+C's 2014 Great Solutions Report]
By bringing healthcare services in house, Dallas County Jail will greatly minimize the security risk and added cost of transferring ill or injured prisoners to a nearby hospital. The project was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
New mobile unit takes the worry out of equipment sterilization during healthcare construction [BD+C's 2014 Great Solutions Report]
Infection control, a constant worry for hospital administrators and clinical staffs, is heightened when the hospital is undergoing a major construction project. Mobile Sterilization Solutions, a mobile sterile-processing department, is designed to simplify the task. The technology was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Startup Solarbox London turns phone booths into quick-charge stations [BD+C's 2014 Great Solutions Report]
About 8,000 of London’s famous red telephone boxes sit unused in warehouses, orphans of the digital age. Two entrepreneurs plan to convert them into charging stations for mobile devices. Their invention was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Spherical reflectors help spread daylight throughout a college library in Portland, Ore. [BD+C's 2014 Great Solutions Report]
The 40,000-sf library is equipped with four “cones of light,” spherical reflectors made from extruded aluminum that distribute daylight from the library’s third floor to illuminate the second. The innovation was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Hard hat equipped with smartglass technology could enhance job site management [BD+C's 2014 Great Solutions Report]
Smart Helmet is equipped with an array of cameras that provides 360-degree vision through its glass visor, even in low light. It was named a 2014 Great Solution by the editors of Building Design+Construction.
