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The 3 biggest challenges engineering firms face and how to overcome them
June 24, 2024 in Engineering
By Nicola Stewart, Content Manager
We live in strange times, in a world we must adapt to quicker than ever before. Ground breaking technology is evolving at a breath-taking rate. The planet is asking for better care and attention. The global economy and geopolitical landscape are unsettling (to say the least). Meanwhile younger adults are viewing their lives through a different lens to their parents at the same age. Working with what we know, is quickly becoming working with what we knew.
For consulting engineers this means facing a plethora of challenges, all while running a business day to day that demands excellence and precision. These challenges can be broadly split into three categories: staffing, financial, and evolutionary. Let’s take a look at each of them.
1. Staffing challenges facing engineering firms
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Ask any consultant what keeps them awake at night and you will most likely hear “staffing”. Whether it is because they don’t have enough, can’t keep them or need them to be upskilled, staff issues seem to be the number one complaint in a field where ironically people are the product.
Recruiting talent
There is currently an international labour shortage. University numbers are down for engineering and AI and data analytics are up (more on that to follow). And that is just at entry level. Finding qualified people with technical expertise who can also win new business is very challenging too, especially when you need a steady flow of billable work to justify their existence.
Attracting good talent in the face of fierce competition results in bidding wars. Sought after people are lured by generous employment packages, the costs for which have to come from somewhere, so budgets are squeezed to ensure projects are successfully completed. Recruiting from overseas is also an option but relocation expenses run high and lead times require meticulous forward planning.
To fill this talent gap professional engineering firms need to draw more from their own resources and those around them. Implementing measurable EDI objectives and investing in upskilling existing staff, although time consuming at first, will have positive long-term impact.
Staff retention
You are only as good as your team, and the expertise of the people within your team is what you sell. Clients want consistency in your delivery and often request specific individuals to work on their projects, so it is important to try and keep them. With good talent being a precious commodity, regular offers are likely to be made to your staff. Competitive remuneration, a nice office, cutting edge tech and other non-monetary perks all help, but none of these are useful without a great company culture that includes a healthy work-life balance.
So how does one achieve such an employment utopia when budgets are frequently squeezed and timelines are tight? Professional Services Automation software (PSA) can transform the day-to-day running of your business, cutting out endless hours of admin and double handling of tasks.
Projectworks is a great example of PSA software that will help increase your margins so you can reinvest these gains in your people. With insights into real-time project performance and powerful bottom-line projections Projectworks is easy to use, connects with your ecosystem and gives you time back to focus on the real work that drives your success.
2. Financial Challenges for Engineering Firms
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It costs a lot to run a business and with people as your product, it can be difficult to quantify profitability until a project is completed. Optimal staff utilisation is an inexact science with project goalposts often moving, but client expectations remaining the same. The changing face of tech, intermittent availability of resources and a strained global economy force consultancies to act reactively to retain clients.
Balancing revenue and talent
Your biggest cost, but most precious asset, is the people that work for you. Ensuring project profitability requires your staff are utilised at a minimum 80% billable hours. Striking the optimal balance of the right headcount to successfully deliver a project without anyone “bench sitting” nor anyone over-extending themselves is very challenging. In most services firms more people will be thrown at a project to avoid complications downstream, the net result being a bottom line that is cut short.
The number of smaller scale operations is also increasing. With fewer overheads, costings can be very competitive, leading to price wars and even more squeezing of profit margins. This in turn raises client expectations. Customers believe that they will always get a quality outcome despite project complexity, capricious briefs and tight deadlines.
