Aec 2
Aec 2
Aec 2
That said, to complete projects on-time and within budget its important that you fully understand the costs of
people, materials, expenses, and subcontractors that will be needed to complete projects and can plan and
schedule accordingly. The positive impacts resource planning can have on your firm profitability should make it
an easy choice to adopt, for it will ensure:
Happier clients
However, resource planning can be difficult for some companies to implement for a few reasons. When left to
their own devices, most project managers are prone to tapping the resources they know and trust. The
alternative is centralizing the process. However, this often requires a firm -wide cultural and strategic change
that many companies shy away from.
But that is a big mistake.
There is a lot to be gained from moving to a centralized resource planning solution. A central resource planning
system puts all resource management information in one place and will consolidate all account and project
information. It provides everyone at your firm with a single and accurate version of the truth. Youll have
consolidated information based on actual data, in one place rather than across multiple s preadsheets from local
managers. That way youll get more real-time visibility into account and project progress across the
organization. That real-time visibility available to everyone from project manager to senior management will
help you increase utilization across your entire organization.
The good news is that this has been done before and there is a clear path to follow based on firms that have
successfully made the jump from massive spreadsheets to automated processes. Deltek Project-based ERP with
resource planning tools will help you do this, and will give you a n ERP system that includes a project
scheduling tool with resource attributes that gives you the ability to search for the right resource, with the right
skills, at the right costs, and when you need them.
So what should you look for in a Project-based ERP with Resource Planning solution? When looking for an ERP
system ensure that it has resource planning / resource scheduling that:
Provides a simple, flexible user experience, because resource and project planning varies by company.
Allows for people at different levels and competencies to plan optimally. You want a solution that facilitates
higherlevel, more resilient, flexible planning.
Provides options for drilling down, but can keep users from getting lost in too many details.
Provides one view that combines visibility into projects and resources.
Can be complemented by experienced consulting services as you need them, including pre and postimplementation
review and support.
The average number of business emails sent and received per user per day totals 122 emails per day.[1]
This figure does not include the large number of spam emails corporations must filter on a daily basis.
People on average spend 2-3 hours a day on email related activities, consuming 20-30 percent of their business
day.[2]
If a central place for teams to store project related emails is not provided, each recipient and ccd user has no
option but to file the email, and separately the attachments, in personal folders or on network drives. This
results in storage duplication and makes retrieval at a later date more difficult. The risk of l osing key pieces of
information increases further when employees leave the company.
BOOK VALUE
It is very common for small A/E firms to use book value as their method of determining the value for share
transactions. However, an A/E firm is usually worth much more than its book value! Even if your accounting is
properly performed on an accrual basis, book value only in cludes tangible assets and represents nothing more
than liquidation value if you collected your receivables, paid your payables and sold off other assets. Surely
your firm is worth more than just its liquidation value!
CAPITALIZATION OF EARNINGS
A/E firms can also be valued by assigning a valuation multiple to capitalize the historical or projected future
earnings of the firm. Depending on the type of earnings that is utilized in this calculation, an appropriate
valuation multiple might be in the range of three to seven times. This type of valuation will only be effective if
a firms earnings are normalized to addback discretionary expenses and adjust for other nonrecurring income
or expense.
THE A/E APPROACH
While book value is not by itself sufficient to determine value, consideration must be given to the value of the
assets retained in the firm. Under the A/E Approach, the adjusted book value represents the floor value or
starting point in determining value. To this base value, an earnings or goodwill factor is added to determine the
overall value of an A/E firm. The earnings factor is most often determined by capitalizing the weighted average
earnings of the firm for the most recent five-year period. This hybrid approach was developed years ago by
Dannible/McKee and Associates and is commonly known as the A/E Approach. It has been successfully
utilized to value hundreds of A/E firms across the U.S.!
Conclusion
I hope this article has helped to show the importance of knowing the value of your A/E firm and provides at
least a starting point to understanding how that value might be determined. Please visit our website
at www.dmconsulting.com/business-valuation for more information about A/E firm valuation. If you would like
to discuss the valuation of your A/E firm, feel free to reach out to me anytime!