Maleon is a successful 30-strong firm of consulting engineers specialising in innovative design and management solutions for modern building services, predominantly for FTSE & NASDAQ-listed clients.
Steve Revell, B.Eng (Hons) C.Eng MCIBSE F.Cons.E, is the Managing Director of Maleon.
Here he explores the link between quality and profitability and shares his 7 Golden Rules of Profitability.
"You need lean business processes and a solid job-based management system that gives the engineers and management team all the real-time visibility and tools they need. Only a serious system can pull all that together."
The theory. Ever since The Service Profit Chain became a bestselling business book 20 years ago, management gurus have proclaimed that if you improve customer service you can achieve better profitability too.
But does that theory still work? More relevantly, would it apply in the cut and thrust of the notoriously cyclical building services sector of today’s UK consulting engineering world? We asked Steve Revell for his views...
Is there a service / profitability link? "Yes. It certainly works for us. We find a strong link between the two. Let me explain...
"Clients want value. There’s lots of pressure on construction costs today. For example at the moment materials costs are escalating, and this is put ting the squeeze on.
"But the bigger picture is that clients need to get their jobs delivered properly, and on time. They depend on service providers to deliver on their commitments. Getting a cheap quote is no help to them if the job goes wrong. They know that.
"Clients are willing to pay for expertise, trust, reliability and advice. If the service they get is excellent, it’s worth a lot to them, reducing their risk. We invest in giving that service. The margins ensure we’ll remain there for them. So that’s the link between exceptional service and profitability. It works, but only if you follow 7 golden rules...
1. HAVE TIGHT MARGIN CONTROL. Giving exceptional client service is expensive. So to make it feasible you have to have real-time margin visibility, job by job, to track it constantly.
2. BUILD FOR ENDURANCE. We’re in a sector that is famously prone to cyclicality. We’ve been through two recessions, and emerged strongly each time. You can only do that by focusing on KPIs and delivering on long-term relationships.
3. DRIVE UTILISATION LEVELS. Good engineers are expensive, so you need to use their skills fully, not have them waste time on unproductive, administrative or unbillable work.
1. "Synergist helps our engineers focus on what they do best. We now achieve very high utilisation rates – over 90%. The admin is removed from their day. We give them great support: they work hard, they’re well qualified, we want to keep them. The system helps them concentrate on the essentials, which is what they want."
2. "We monitor gross profit monthly, by job. The system helps us constantly drive the margins.
3. "We use Synergist’s two-tier estimating, and phases and stages. For example we produce workload forecasts each month, by phase.
11. "The best thing? It ’s live data that drives the decisions that we make every day. Everything is at your fingertips. A client phones you and – two clicks – you have it all in front of you.
12. "We create very comprehensive fee proposals, down to the number of meetings. For example if the number of meetings starts to go off-track, we alert the client and decide together what needs to be done.
13. "Our engineers get better and better educated about the big picture and how everything fits together, plus the financial implications of their decisions. It’s raised their game.
14. "We also learn from past jobs, updating our intelligence on profitability, analysis by types of job, by sector, by size of client, by type of client, and so on.
15. We couldn’t run the company without it.
16. "Synergist is constantly being enhanced, and it keeps looking better and better.
17. "The Synergist software paid for itself within the first year."
Maleon initially worked with Louise Neale from Magnifeye, part of The Agency Works team. Magnifeye implemented the system, trained the Maleon personnel, and gave consultation.