Wednesday, August 19, 2009

The agony of the fee

Recently, Bosley asked me how things were going on FCH, and he mentioned that we should try to get things wrapped up sooner rather than later because we were starting to run out of fee on that project. His comment made me realize that I didn't actually know how much fee I had left on each of my projects, and maybe I should find out. Turns out that access to that information isn't restricted, just kinda hidden in our project files. Because no one says, "here it is, here's how it works" unless you ask, then no one knows where it is and how it works.

But I did ask Howie on Friday what was the deal with fee. Where do we keep track of it and how do we know how much we have left? Howie showed me two ways of keeping track. One was kept for every project on the same office-wide software that our timesheets are done on, and the other is a record in an Excel spreadsheet that Howie does on all his projects. He showed me how each person bills against the project, how many hours they worked per week, and how much is still left. He puts the overall budget, broken up by phase, into the spreadsheet, and as Howie puts in how many hours each team member works on it, the spreadsheet shows him how much is left for that phase. It was eye-opening to see that we had already spent our fee for the planning phase on TCMC, for example. Howie pointed that out to me, and then he mentioned that we could look for ways to save fee as the project goes along. For example, we might roll SD into DD, since the floor plan is pretty much worked out at this point.

The concern I return to again and again is fee versus product and service. If we're running low on fee for a project (that is, we've nearly spent up and billed for all the cash we asked the client for in the first place), how do we assure that we still give the contractor (and thereby the owner) the good product that was paid for? What happens when you've spent the money wisely--no one was wasting time on the project and everyone who billed to it was really and truly doing something useful on it--and you're still not done? How do you schedule your time? My initial thought is to remove myself as much as possible from the project and step in as needed. We bill TCMC and FCH only $60/hr for Intern Timmy and Intern Kimmy, respectively, but we bill those clients $100/hr for me, $160/hr for Howie, and $185/hr for Bosley. The partner I used to do a lot of work for, Alex, rarely got involved on his own projects and therefore rarely billed to them. Bosely, however, works on his projects and bills to them, which on the plus side means that a client gets high-level attention but on the minus side he eats the fee. This is kind of annoying to me as a worker bee because Bosley, as a partner, will get a bigger chunk of the profits when the project is over than I will, and because he's salary he doesn't actually have to bill the time at all. I'm hourly so I do have to bill each hour I work (or travel to a meeting or work session) or I don't get paid. Furthermore, this hoses all the interns, and you know how I love my interns. Do not hose the little people who actually do the work, I always say. It's a little something I learned from Fight Club. That and do not talk about Fight Club.

So, I'm learning about a new part of my job responsibilities as a job captain and grownup-in-training. I have to watch out for getting the building built, keeping everyone organized and busy, and making sure we still have the cash left to finish the project. I almost feel cool.


Jdr said...

As managing partner in my engineering firm I've learned through my previous experience as a worker bee what it takes to be profitable. Research the pertinent building codes. Plan on the front end what you think it will take in hours to complete the project including surveys and programming, specs, inspectionsetc. involve your engineers on the front end with your concept. Anticipate for changes, however, never let a Client make changes after they have approved something previuosly without asking for additional services. Compare your hourly rates to historical data for similar projects. Planning is the key. One hour spent in clarifying a design is worth three hours answering rfis. While you may be disgruntled regarding pay scales and bonuses, let me assure you that running the business funtions of an office is much less enjoyable than drawing. I can assure you as a pricipal in my firm that I love to engineer, but rarely do I get the chance to complete the design fully. Collecting fees, running the company and managing people is the part of the business that makes it mondaine and tedious as basically, it takes three things to make it successful. Get the work, produce the work, get paid fr the work. Number two is easy. That's what you're trained for. The first is occassionally difficult until you're reputation is established. The last us a friggin pain in the ass no matter what. Without casflow no-one gets paid. Ever have to fire someone or worse lay them off. No fun all.

Mile High Pixie said...

JDR, I totally agree. I think the mistake that architects make is that we rarely "freeze plan" and ask for add services, which would make a difference in our bottom line and, dare I say, make the client recognize the work that we do. I completely understand that running a business is less fun than doing the actual work, and I don't envy the tasks that my bosses do one bit. My point regarding cost-to-the-client-per-hour and bonuses in this post is that I'm not sure my bosses are making the best use of their time. You put it quite well about how lots of front-end planning makes all the difference in the world in the profitability in a project.

I've just recently been learning about managing people, which in many ways is even harder than managing the business. Though I've generally had no trouble telling people what I want and how I want it, I still find myself slightly hesitant to criticize others' work at times. I'm sure I'll get over it--it's just one of those weird things. And I know getting paid is VERY tough sometimes. When I walk past our accounting department, I can hear them talking with our managers about how we've sent someone invoices for three months and keep getting no response. That sounds epic painful.