FEBRUARY 2005 ISSUE
BACKGROUNDER
Is Consulting a Profession, a Business - or a Process?
Engineering has always been both a profession and a business. Now widening the input, it is seen to be moving into a series of activities — as a process fulfilling the larger project mission, rather than as simply a discrete profession.
Challenges exist worldwide in one form or another, representatives from 59 countries agreed during the annual FIDIC Conference in Copenhagen, Sept. 12 to 15. They described conditions in the various local jurisdictions, and their comments and presentations inform this article.
FIDIC is the International Federation of Consulting Engineers — the initials come from the French version of the name. FIDIC represents some 560,000 professionals from 64 member associations.
The consultant who understands the factors at play as well as their inter-relationships will on occasion lead the project process. This role will require leadership and diplomacy, for which professionals, universities and consulting firms will have to emphasize additional training and skills development.
Along with this overall role we also observe a shift in the needs and interests of client groups. The engineer thus responds with more emphasis on risk management, contracts, business management and project management.
Technical competency is taken as a given. It is taught in engineering schools and has always been the focus of practicing engineers and professional associations.
The recent trend to buy technical services on price rather than competency, unwise as it may be — and many users find that out belatedly — has given engineers in the consulting industry further impetus to concentrate on business issues, client relationships and proper paperwork.
Clients continue to attempt to pass risk and performance factors on to the consultant, which is not financially structured to seriously take on such responsibilities. While consultants want to satisfy and properly serve their client, a workable compromise needs to be worked out.
These central themes can be summarized:
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Engineers have learned that often profits are made or lost in the way they manage their projects rather than through the technical solution they propose.
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Clients have become more and more focused on extensive, onerous contracts for engineering services, requiring consultants to engage legal counsel to protect their business interests.
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Engineering schools generally do not prepare students for the business side of a consulting practice.
This leads to an examination of the engineering firm, its relationship with clients, and its internal management and project practices.
The Firm
Conference workshops and presentations traced the issues facing small and large practices. They are not the same.
Interesting watershed decisions must often be made as single proprietorships evolve into larger and larger consultancies. Often, it was said, they must make irreversible decisions reflecting needs emanating from this growth. These appear to emerge at definite stages in most firms, first at 50 persons, then again at 200, and again as they approach the high hundreds and on into the thousands.
Each step requires a higher emphasis on business systems, and separate non-engineering related internal groups such as financial management, human resources services, risk management, legal counsel and possibly investor relations. Each step requires the owners to also make major, often lifestyle-altering decisions.
Each size category also has its proponents and opponents among staff. They often see themselves preferring a certain size and working environment, and some will leave a firm as it progresses along the growth cycle to where it no longer corresponds to their comfort level.
The Client
Often relationships with clients will also change with the size of the firm, as well as through the various client types and developments over time. When firms are small, relationships tend to be informal, and unless clients themselves have structures requiring extensive documentation, work is often performed over a handshake.
Eventually one or the other of the parties realizes that this is insufficient, unfortunately often driven by unpleasant project developments. With tighter financial control in most client organizations, one observes not only more attention to written negotiated project documentation, but also a tendency to reduce risk (for the client), and to pass risk on to the next in line — usually the consultant.
The consultant's financial structure and strength is unable to effectively take this on, resulting in a tug of war between client, consultant and the consultant's insurer.
These are business issues requiring skill and time, both of which may be in short supply in the emerging consulting organization. Both also require funding and cannot simply be paid for from existing project margins. Engineering consulting fees must begin to make allowances for these additional client services.
The Engineer
Internal management and project practices also have to evolve to respond to these realities. They should respond along two streams.
As a firm grows and the original founder or partners are no longer involved in detail in all projects, they begin to depend on staff. And as the business environment gets somewhat more challenging, old ad hoc practices and informalities must give way to well thought-out and consistent protocols and systems.
There are thus two drivers — the growing firm, and the more demanding and complex client groups.
It is evident that there is a need for training for consulting staff (and often founding partners) in the realities of the business world, including marketing, sales, contracts, project management and people skills. Few courses, if any, along these lines are available to the engineering student.
These therefore become “musts” for a continuing education program,
either within a firm or through selected courses in colleges or in seminar format.
Ben
Novak, P.Eng., M.C.P., Dip. B.A., writes regularly for The PEGG. His last contribution
was A Peer Review Primer for Consulting Engineers, published in October 2004.
Author Credits
BY BEN NOVAK, P.ENG.
PEGG Contributor