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
Sustainability | Feb 8, 2023
A wind energy system—without the blades—can be placed on commercial building rooftops
Aeromine Technologies’ bladeless system captures and amplifies a building’s airflow like airfoils on a race car.
Codes and Standards | Feb 8, 2023
GSA releases draft of federal low embodied carbon material standards
The General Services Administration recently released a document that outlines standards for low embodied carbon materials and products to be used on federal construction projects.
University Buildings | Feb 7, 2023
Kansas City University's Center for Medical Education Innovation can adapt to changes in medical curriculum
The Center for Medical Education Innovation (CMEI) at Kansas City University was designed to adapt to changes in medical curriculum and pedagogy. The project program supported the mission of training leaders in osteopathic medicine with a state-of-the-art facility that leverages active-learning and simulation-based training.
Multifamily Housing | Feb 7, 2023
Multifamily housing rents flat in January, developers remain optimistic
Multifamily rents were flat in January 2023 as a strong jobs report indicated that fears of a significant economic recession may be overblown. U.S. asking rents averaged $1,701, unchanged from the prior month, according to the latest Yardi Matrix National Multifamily Report.
Giants 400 | Feb 6, 2023
2022 Reconstruction Sector Giants: Top architecture, engineering, and construction firms in the U.S. building reconstruction and renovation sector
Gensler, Stantec, IPS, Alfa Tech, STO Building Group, and Turner Construction top BD+C's rankings of the nation's largest reconstruction sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.
Giants 400 | Feb 6, 2023
2022 Transit Facility Giants: Top architecture, engineering, and construction firms in the U.S. transit facility sector
Walsh Group, Skanska USA, HDR, Perkins and Will, and AECOM top BD+C's rankings of the nation's largest transit facility sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.
Giants 400 | Feb 6, 2023
2022 Telecommunications Facility Sector Giants: Top architecture, engineering, and construction firms in the U.S. telecommunications facility sector
AECOM, Alfa Tech, Kraus-Anderson, and Stantec head BD+C's rankings of the nation's largest telecommunications facility sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.
Giants 400 | Feb 6, 2023
2022 Religious Sector Giants: Top architecture, engineering, and construction firms in the U.S. religious facility construction sector
HOK, Parkhill, KPFF, Shawmut Design and Construction, and Wiss, Janney, Elstner head BD+C's rankings of the nation's largest religious facility sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.
Giants 400 | Feb 6, 2023
2022 Justice Facility Sector Giants: Top architecture, engineering, and construction firms in the U.S. justice facility/public safety sector
Stantec, DLR Group, Turner Construction, STO Building Group, AECOM, and Dewberry top BD+C's rankings of the nation's largest architecture, engineering, and construction firms for justice facility/public safety buildings work, including correctional facilities, fire stations, jails, police stations, and prisons, as reported in the 2022 Giants 400 Report.
Giants 400 | Feb 6, 2023
2022 Parking Structure Giants: Top architecture, engineering, and construction firms in the U.S. parking structure sector
Choate Parking Consultants, Walker Consultants, Kimley-Horn, PCL, and Balfour Beatty top BD+C's rankings of the nation's largest parking structure sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.