Monday, November 14, 2011

Strategic Selling in AEC Part 2: Challenges for AEC Sales in Today’s Economy

This is the second of a four part series of posts on the sales culture of the Architecture Engineering and Construction industry (referred to below as AEC): how it needs to evolve to meet the demands of a rapidly changing industry, and what you can do in your company to integrate sales and customer service more fully into your entire organization.

The harrowing global economic crisis has brought a host of pestilence and plagues upon our heads in most industries, but in AEC we face unique challenges. To head up a dauntingly long list, the current state of the RFP (request for Proposal) process alone is one of the biggest challenges. All the AEC sales professionals I know have commented on the dramatic decline in quality in RFPs in recent years- and they weren’t that good to begin with. There are many deeply imbedded reasons for this, but many RFPs are put together by people whose business is not building projects- most clients manage only a few building projects in their entire lives (the exception being municipalities, government agencies, or educational institutions that have professional project managers on staff to handle long term capital improvements- but these kinds of clients have their own set of shortcomings when it comes to RFPs.) Behind the poor quality of RFPs is the obvious buyers’ market situation: construction and capital spending has slowed down dramatically, competition is even fiercer than before, and owners are exploiting this situation relentlessly. There’s no incentive to do better RFPs, or even treat AEC firms with respect, as there will always a firm who will come along and rewrite the RFP for free, hoping for a competitive advantage in selection. (While this happens in a good economy too, the situation is exacerbated by a down economy).

The next plague visited upon us is disruption caused by global competition. In the U.S. in recent decades, we have steadily allowed our manufacturing and agricultural bases to erode, and now we’re allowing our professional services base to erode as well. Sure, we can now compete in global markets, but many AEC firms in Asia are no longer content to provide production while we provide the innovative designs for projects, and high unemployment at home is draining many professionals off to other countries. It’s now clear that it’s a huge mistake to adhere to the cultural notion that the U.S. has cornered the market on innovation. As global economies mature, their ability to innovate will grow exponentially- many, like countries, like China, have highly trained and educated technical workforces and are already building a capacity to innovate competitively. On the other hand, rapidly improving communications and design and prototyping technology and evolving delivery methods are opening up regional, national, and even global markets for even smaller AEC firms. Globalization is driving the need to sell differently, and to sell new solutions, not just design or construction services, but operational, management, and other consultative services.

To continue elaborating on the plagues of disruption, the emerging forms of integrated design practices and new, often hybrid, project delivery methods are encouraging and necessary developments, but they’re also key disrupters. Roles are changing and blurring, and better (not necessarily more) communication is at a premium. Design/build and all its different flavors and permutations are not ideal for all projects, and it’s causing some backlash in certain sectors. There’s a lot of focus on rapid prototyping and up-front conceptual design, and a dramatic increase in continual cost modeling. BIM is really the elephant in the room, and is realigning roles, responsibilities, deliverables, incentives, and the entire design process, often for the benefit of owners and contractors, but not necessarily for traditional design firms.

Other factors impact sales on AEC today. Industry consolidation is taking away some opportunities for smaller firms, and creating others. Much of this consolidation means that larger firms are able to offer more highly integrated services, but there is also an emerging range of new highly specialized services that only smaller firms can provide. Flexibility in design is at a premium as dynamic changes in many sectors, such as science and technology, make it more difficult to predict the future uses of critical facilities and other building types. Increasing globalization is presenting more cultural and communications challenges: learning to work within the context of different regional building practices and regulatory environments has a considerable learning curve. As AEC professionals become more sophisticated about building globally, they’re gradually learning that importing building types from different climate zones isn’t always a good idea- glass box skyscrapers in Malaysia are a totally different proposition than in Manhattan. Global exposure means that designers and builders must adapt to new regional building practices, and this also presents many opportunities to learn from traditional practices that are more inherently green and sustainable.

Perhaps the biggest sales challenge in AEC today is the need to deliver truly sustainable design and high performance buildings at no premium cost: clients and owners are demanding higher performing buildings in order to attract, motivate, retain, and get higher productivity from employees. But the value proposition for deep green building is very often not fully understood or communicated correctly. Continuous cost modeling, rapid prototyping, and high technology can aid in designing and creating deep green buildings, but ultimately it’s a sales challenge- their whole-system benefits and ROI must be compellingly conveyed to investors, owners, partners, governments, and other stakeholders if green projects are to be approved and building practices revolutionized.

Next: Part 3: Why Have a Sales & Service Focus?

No comments:

Post a Comment