President of Long Engineering, Inc. (Hot Firm # 24 for 2017), a 90-person land surveying and civil engineering firm based in Atlanta, Georgia.
By Liisa Andreassen Correspondent
“Begin to identify internally if you have potential owners you can mentor, and enable them to be financially capable to invest in the transition,” Long says. “In our opinion, it takes eight to 10 years to fully transition leadership and ownership. If you don’t have any options, you may have to consider an acquisition route.”
A CONVERSATION WITH ELLEN LONG.
The Zweig Letter: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
Ellen Long: Don’t hire the wrong people in critical roles and if you do, fix the situation quickly.
TZL: There are A/E leaders who say profit centers create corrosive internal competition for firm resources. What’s your opinion on profit centers?
EL: We’ve found that it works well for us. We use it to measure performance and profitability and where we would like to grow or focus our available resources. Typically, firm resources are not intermingled between divisions. Decisions are made on the performance of a profit center and its ability to support growth and expansion, which requires accurate and separate financial tracking.
TZL: What’s your policy on sharing the firm’s financials with your staff? Weekly, monthly, quarterly, annually? And how far down into the org chart is financial information shared?
EL: All employees have access to project-related financial information at any time through our Deltek Vision project and financial management software, which gives real-time data on all projects, job-to-date cost amount invoiced, and individuals who bill to the project. The company’s monthly and annual financial statements (i.e. profit and loss statements) are open to division managers and above.
TZL: The design-build delivery model appears to be trending upward. What are the keys to a successful design-build project? What are the risks?
EL: The key is to position your firm with the right/winning team. You need to evaluate who the most successful contractor would be to team with and align yourself with them beforehand. This requires a good established relationship with a wide variety of contractor/teams and pursing projects where the selection is based on qualifications more so than the lowest price.
The risk is the upfront design costs and invested resources that are lost if not awarded the project. Additionally, the design team is on the critical path and can impact the schedules which would result in damages to the contractor, creating additional liabilities. We have also found many contractors treat design consultants no different than their framing subcontractor, so we carefully examine contracts prior to joining a design-build team.
TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms?
EL: We strive to get employees fairly and well compensated, sharing in the profitability with an emphasis of trying to meet their professional development goals. We also offer additional benefits (company cars, phone allowances, remote access, etc.) for upper management. We strongly prefer to promote internally in order to maintain our culture and to advance those in the company’s desired career path.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
EL: Senior project managers, entry design engineers (five years’ experience), and survey party crew chiefs to accommodate our growth. We also hire to create redundancy in all key positions critical to our firm.
TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
EL: You need to determine an ownership transition timeline first to judge how long you have to invest in new talent. Begin to identify internally if you have potential owners you can mentor and enable them to be financially capable to invest in the transition. In our opinion, it takes eight to 10 years to fully transition leadership and ownership. If you don’t have any options, you may have to consider an acquisition route.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
EL: We don’t have exclusive business development personnel. All of our business development efforts use personnel that have technical backgrounds. This typically occurs at the project manager level and above. It is a part of the many hats that they wear.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
EL: We have added new services such as construction engineering and inspection and subsurface utility engineering. We also recently expanded our transportation division with the addition of a Birmingham, Alabama, office. As we have grown, we have also been successful winning larger, longer-term projects that provide a healthier backlog.
TZL: The list of responsibilities for project managers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?
EL: Being strategic in the selection of the incoming workflow and preferred clients. We have been more selective with the clients and project size that we pursue to prevent burning out PMs on low profit projects or clients that are unappreciative of our work. We are also continually ramping up the employee workforce in an attempt to match workload and staff resources. If they crash, we try to be considerate of their situation, redistribute work or have senior management temporarily fill in to get through workload bubbles.
TZL: What is the role of entrepreneurship in your firm?
EL: Our company was founded through an entrepreneurial process and the founding owner is still in place so she understands new ideas and creative approaches to building a business. We encourage innovative thinking and ways to expand our business and services. We try to incorporate numerous levels of skills and background experience in our decision making processes. We are also willing to incorporate changes to our procedures to obtain and evaluate a fresh approach from younger staff.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
EL: Heat up:
- Transportation
- Surveying
- Healthcare
- Affordable housing
- Senior housing
Cool down:
- Stand-alone retail
- Franchises
TZL: Measuring the effectiveness of marketing is difficult to do using hard metrics for ROI. How do you evaluate the success/failure of your firm’s marketing efforts when results could take months, or even years, to materialize? Do you track any metrics to guide your marketing plan?
EL: We analyze items as a team/company effort and don’t see a need to track it individually because of the reasons cited above. Multiple people play a part with their involvement in the successful pursuit and the lines are rarely clear. We measure marketing effectiveness by the growth and profitability of our firm, both of which are very high.
TZL: The last few years have been good for the A/E industry. Is there a downturn in the forecast, and if so, when and to what severity?
EL: Approximately 70 percent of our work is in the public sector and the majority of our private work is for institutional clients. Because of this, we weathered the Great Recession pretty well and are always aware that a recession of some magnitude could happen at any time. It would not be surprising to have a slowdown in the next three to five years.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
EL: We have always been an organic growth company and we have been stronger for that. We are pretty risk averse and to acquire or merge with a company could bring substantial risks that we tend to avoid. We feel that organic growth promotes a strong team mentality and a culture where employees feel secure and can grow with the company.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
EL: It depends on the client and the services offered. It is easier to utilize for surveying and transportation. It is more difficult on the land development/private sector side due to a number of unknowns and regulatory influence. It is more common to assess the client, scope of work, and feel for the maximum fee that will be acceptable.
TZL: What’s your prediction for 2018?
EL: We feel that it is going to be a strong year for LONG. As certain large projects wind down, we are ramping up on other projects. Our pipeline is strong with large scale, long term projects and public clients so we are quite optimistic about 2018.
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