Our recent Business Conditions Survey responses highlight the fact that many firms don’t have a true understanding of what productivity means or of the most effective ways of achieving it. Getting to grips with how you define and measure productivity in your business can present real opportunities for productivity growth.

What is Productivity?

39% of architecture and engineering firms surveyed are not measuring productivity. These businesses are either unable to accurately define what productivity is, or think that productivity is derived from sales and growth. Cost reduction (indicated by 6% of respondents) rarely increases productivity, and we think cost reduction in and of itself is not a clear way of defining productivity as cost reduction may actually be an indication of staff attrition or a number of other significant factors that have potentially contributed to a decrease of productivity within the business.

How Do You Measure Productivity?

Respondents who identified more capability (19%), as a measurement for productivity, were getting closer, but they were still missing the key relationship. The 39% of respondents who measured productivity as a way of doing more with less (or the same) resources are ahead of the curve. These businesses recognise that productivity and—as a direct result—profitability, are best measured by analysing the relationship between outputs and inputs. These firms incorporate productivity into their business analytics, where data can have a real impact on strategic plans and growth strategies.

Measuring Productivity

Firms who are failing to accurately measure productivity are missing out on huge business insights and growth opportunities. If taken advantage of, these insights present an opportunity for architecture and engineering firms to take a closer look at how productivity is measured, how it should be measured, and how to maximise the potential for productivity gains and financial growth.

PSMJ define productivity “as the ratio of output volume to input volume”. Firms should be measuring billable and non-billable hours alongside actual client billings. Productivity growth is best achieved when more hours are billed for less staff time, e.g. fees/hours worked. Many firms don’t measure non-billable hours. We believe this is an oversight. All hours spent on client work should be logged. This includes rework and out-of scope tasks that often don’t end up being charged to the client. Measuring all areas of input is the first step to ensuring that your analytics are truly meaningful. Once this is captured, you can measure it against output and compare this ratio over time to get an accurate picture of productivity gains and losses in your organisation.

Improving Productivity

Our annual Business Conditions Survey asks business leaders to inform us know how they plan to improve productivity in the year ahead. Looking at the most popular responses can help your firm gain insights into what competitors are doing to enhance productivity and what options you should consider to keep up and remain competitive in the market.

The main strategies for improving productivity identified in our latest survey include:

■ More accountability for performance
■ Implement improved management systems
■ Improve utilisation of resources
■ Identify and reduce inefficient work practices

If business leaders implement these four strategies (or at least one!) over the next 12 months, productivity will increase and useful insights will be gained into how to maintain and improve productivity in your architecture and engineering firm into the future.

Do you want a competitive edge? Management for Design is offering a complimentary 60-minute business productivity coaching session for architecture, engineering, or design firms under 20 people.

To book your complimentary coaching session simply email Robert Peake rpeake@m4d.com.au.