Case Study: Ferguson and Bardell, Inc. The Company Corporate Vision “Ferguson and Bardell, Inc. is dedicated to increasing shareholder equity by increasing corporate profits while at the same time maintaining the high quality standards for which the company is famous. Our goal is to be the recognized market leader in our stated target markets.” from the company’s 1998 Annual Report Corporate Profile Ferguson and Bardell, Inc. is a Chicago-based engineering, architecture, and project management firm. Founded in 1948, it has grown to more than 800 employees with revenues in 1998 approaching $230 million. Corporate headquarters occupy seven floors of a prominent office high-rise in downtown Chicago, with satellite offices in Detroit, Milwaukee, Cincinnati, Indianapolis, and Louisville. The following charts present 1998 revenue by line of business and location: Table 1.1 Revenue by line of business Line of business 1998 revenue (in $000s) Architectural design 88,744 Project management 50,120 Electrical engineering 37,002 Mechanical engineering 26,881 Civil engineering 20,375 Landscape engineering 4,935 108 Case Study: Ferguson and Bardell, Inc. Current Status Today, Ferguson and Bardell, Inc. can be characterized as follows: ! Number 1 architectural firm in the Midwest. ! Accelerated growth in past two years as satellite offices added. ! Consultant team: • 620 consultants (billable resources) with varying expertise. • Average billable time for all consultants: 92%. • Average tenure of consulting personnel: 7.5 years. ! Marketing team has 25 people in central office and 2-3 in each satellite. ! Sales team tends to focus on highly visible architecture projects. Sales team meets with potential clients and draws up proposals. When a proposal is agreed to in principle, a contract is drawn up. The legal department reviews and approves all contracts. ! Human Resources department is responsible for maintaining all state certifications for engineers and notifying all internal support members when employee statuses change. ! Landscape Engineering team has garnered a number of awards in the industry. ! Drafting group is a separate profit center that is usable by any line of business. ! Majority of clients pay promptly and in full for services. ! Average tenure of nonbillable new hires: 7 months. ! Consultants are issued a company vehicle for travel to customer's sites. Future Business Directions and Plans In an effort to increase revenues and profitability, Ferguson and Bardell, Inc. is considering forays into the following areas: ! Construction ! Property leasing ! Real estate ! Legal services Other goals include: ! Current lines of business • Focus on higher-margin complete design contracts, such as architecture, landscaping, and engineering. • Increase repeat business percentage. • Launch national advertising campaign to increase name recognition in architectural, engineering, and project management fields. • Placement on government preferred agent lists in every state where there is a satellite office. Case Study: Ferguson and Bardell, Inc. 109 ! Offices • Open four new offices, for a total of ten, over next 18 months. Eventually, open satellite offices in 40 major metropolitan areas. • Open offices in Europe. Staff • Add 250 people, for a total of 1050 (more than a 30% increase), over next 18 months. Long-term goal is 2000+ people. • Set up systems so that all salespeople can work from home and the road (no offices). • Streamline support staff needed in each satellite office. • Train more internal support people to move into consulting. • Create a family-friendly workplace. • Lease vehicles for senior employees. Corporate Challenge The intense commitment to customer service that prevails at every level of Ferguson and Bardell, Inc. creates a number of challenges as the company grows in different areas. Information has become increasingly harder to disseminate to the consultants at the central office, let alone those at the satellite offices. The Information Technology (IT) department has needed to learn a number of new technologies to continue to support existing customers, as well as compete in the increasingly diffused world of the Internet. Technology Recent Staffing Changes In 1998, the board of directors and senior management came to the conclusion that the firm’s IT efforts were inadequate. One board member, who was familiar with studies of effective business uses of technology, contacted a consulting firm that had been involved in several business and technology studies. After examining Ferguson and Bardell, Inc.’s IT practices and accomplishments for two months, the consultants brought a set of recommendations to the board. The most controversial recommendation was to remove the position of IT Director, which at that time required that the IT Director report directly to the Chief Financial Officer (CFO).In the place of the IT Director, consultants recommended that the company create a Chief Information Officer (CIO) position within senior management. Several board members, including the CFO, wanted to keep the organization chart as it was, but the consultants were insistent, and the board agreed to the change. The new CIO, who came aboard in October 1998, was highly recommended by his former employer, a regional law firm where he had risen in five years from Network Manager to CIO. 110 Case Study: Ferguson and Bardell, Inc. Current Technologies The former IT Director, who had decided to leave rather than take on the redesigned position, had spent the previous year putting a new network infrastructure in place and enabling Internet connectivity across the enterprise. The following table describes the computing technology currently in use at Ferguson and Bardell, Inc. Technology Description Desktop Minimum configuration is a Pentium 233 with 32 MB RAM and a 2 GB hard drive. Most systems run Microsoft ® Windows ® 98; approximately 25% run Microsoft Windows NT ® 4.0 Workstation. Laptop Minimum configuration is a Pentium 200 with 32 MB RAM and a 1.2 GB hard drive. Most systems run Microsoft Windows 95; approximately 15% run Windows 98; and approximately 5% run Windows NT 4.0 Workstation. Network 100 Mb ethernet, primarily switched. T3 between most offices. TCP/IP protocol. Usage peaks at 10 AM and 1:30 PM with load of about 55% at those times. Servers Minimum configuration is a Pentium 233 with 128 MB of RAM and a 2 GB hard drive, except for certain machines used for testing. All systems run Microsoft Windows NT 4.0 Server. Internet/intranet All fixed users have Internet access through the network, going through both Microsoft and IBM firewalls. Company intranet, which has been in place only since Summer 1998, is hosted by Microsoft Internet Information Server. Electronic messaging Exchange Server. Corporate database Corporate standard is SQL Server ™ 6.5. Other notes Extranet was brought up and fully functional on February 12th, 1999. 40 CAD workstations run several different versions of AutoDesk AutoCAD for Windows. Most communication is via e-mail between administrative and management staff and consultants. Many consultants use company-provided personal digital assistant (PDA) with built-in synchronization using Microsoft Outlook ® to track hours. Accounting system in use for 3.5 years; runs on SQL Server 6.5. Sales team uses networked sales tracking and contact management software. Case Study: Ferguson and Bardell, Inc. 111 Future Technology Directions Ferguson and Bardell, Inc. wants to implement the following technology improvements in the near future: ! Build training and skills tracking system. ! Narrow approved technologies list. ! Deploy Windows 2000 in the fourth quarter of 2000 at the earliest. More likely deadline will be mid-2001. ! Move more administrative tasks to intranet/extranet-based applications. ! Provide interfaces, in all offices, between company phone system and desktop computers. ! Standardize fleet of notebooks and PDAs. ! Migrate all company documentation to intranet/extranet. ! Reduce cost of maintaining fleet of notebook computers. ! Add computer-imaging technologies to sales information. ! Provide more timely and accurate financial information to middle management at satellite offices. ! Utilize more advanced features of Microsoft Office to streamline consultant’s communications. Time and Billing Resource Scheduling Billable resources are scheduled using a Master Scheduling Sheet. This large Excel spreadsheet has dates across the top and names down the left side. Each person who manages resources, such as engineers, designers, and administrative assistants, maintains a smaller scheduling sheet that lists all of the resources for which he or she is responsible. They are listed alphabetically, by last name then first name. When a project needs resources, the manager checks the scheduling sheet to see who is available during the project’s time frame. If someone with the skills required to do the work is free, the manager blocks out that person’s time by filling in the appropriate dates with the name of the project. If nobody is available, the manager has to either juggle resources or negotiate project date adjustments with the salesperson that sold the job. Difficulties arise in the resource scheduling process because the spreadsheet does not include a column that indicates the abilities of each resource. Even if such a column were added, the information about a resource that could be listed in the spreadsheet would be limited. For example, if a resource’s primary qualification is as a civil engineer, but he or she also has electrical engineering experience, it is difficult to list both in such a way that either skill or a combination of the skills can be searched for or sorted on. 112 Case Study: Ferguson and Bardell, Inc. A further problem is that the scheduling sheet is not integrated with the calendar system. Ferguson and Bardell, Inc. uses the calendar features of Outlook and Exchange, but very few people keep their Outlook calendars up to date. As a result, managers cannot judge the availability of resources by checking people’s calendars. When managers plug resources into a schedule, they either send an e-mail to the people affected, telling them what they are doing and when, or try to page or call them. Because there is no link between people’s calendars and the scheduling sheets, the sheets don’t reflect vacations, meetings, and so forth. If a manager schedules a resource who has another commitment, the manager has to go back to the spreadsheet and start over. The system worked when each manager was responsible for fewer than 30 people. Now, with Ferguson and Bardell, Inc.’s drive to create a flattened organization, some managers are scheduling as many as 100 resources and cannot possibly keep track of everyone’s skill set, much less everyone’s calendar. Time sheet System The time sheet system is basically a manual process. Consultants use a Word table set up as a template to create a new time sheet each week. At the top are places for the employee’s Name, ID Number, Department, Title, Status, and Supervisor. Below is a table with columns for Date, Job Number, Category, Phase, Total Hours, Billable Hours, Mileage, Meals, Lodging, and Description. Consultants fill in, line by line, how they spent their work time during the week. Each task is supposed to have an associated Job Number, which is assigned by the Accounting office to each job or project. Consultants are supposed to be told the Job Number when they are assigned the work. However, sometimes they are given the wrong Job Number, and sometimes the project is so new that a Job Number has not yet been assigned to it. The Category and Phase columns are primarily for larger projects. Category is the generic type of activity, and Phase refers to the part of the project being worked on. Sometimes these columns are left blank. For smaller projects that have no discrete parts, there is nothing to put in the Phase column. For some projects, consultants may think it is obvious what the activity is and leave the Category column blank, assuming that an administrative assistant will fill it in. Consultants also sometimes leave the Total Hours and Billable Hours columns blank. Not all of the work done by everyone in the company is billable. For example, billable resources may sometimes go to training sessions. Occasionally, someone may decide that a task took longer than it should have, and they list the time but do not list it as billable. Consultants use the Mileage, Meals, and Lodging columns to record expense items. They have to turn in receipts for all meals and lodging. The last column, Description, is important because it goes onto the customer’s invoice. Case Study: Ferguson and Bardell, Inc. 113 If consultants are logging an expense that doesn’t have a column on the time sheet (for a book they purchased, for example), how they list the expense depends on its purpose. If the expense is billable to a client as part of a project, consultants list it under one of the three expense columns and then explain what the expense really is in the Description column. If the expense is not billable to a client but is an internal expense, it is not logged on the time sheet at all. Instead, it is handled through an internal purchase-order system. After consultants finish filling in their time sheets, they include them in e-mails , that are sent either through Outlook or via the Internet, to the central office using a Time sheet alias that has been set up in Exchange. One of the biggest problems with the current system is the possibility of error. When consultants enter their own time in the Word table, the program cannot check the data as it is entered, and consultants often mistype or miscalculate their hours, especially when the table runs to two or three pages. Consultants frequently enter wrong Job Numbers or no Job Numbers at all. If the Job Number is wrong, the time gets billed to the wrong project. Sometimes errors are caught before the invoice goes to the customer, but occasionally they are not, and the customer receives an incorrect invoice. The time sheet is static data. In other words, nothing on the screen changes as people enter data to give them feedback about what they have entered. They can total the numbers manually, but often they are hurrying to finish the time sheet and send it through e-mail before a deadline, and they do not take the time to check it thoroughly. As a result, they might leave out an entire day, or they might enter hours twice. If a total on the table were updated every time consultants completed a line, they would be more likely to correctly fill in their time sheets the first time. Consultants’ time sheets are not linked to their Outlook calendars. Some people use these calendars, and others use other calendar programs or hand-held devices. Whatever time-tracking method they use, they have to open it up, read its data, and then re-enter the data into their time sheets. There is no quick-and- easy method for importing calendar data into the time sheets, even as a starting point that can then be edited. The current system often leads to duplication of data. Consultants store data in various devices and documents. Then, they re-enter the same data into their time sheets. Later, an administrative assistant will enter the data again somewhere else. Because of problems with the time sheets, employees often complete their time sheets at the last minute. The time sheets are often late, which makes the rest of the process late. Time sheet Data Entry The administrative assistant’s role in the process begins when the time sheets are received in the Time sheet alias in Exchange. Because of the volume of time sheets, eight administrative assistants have access to the alias. The process is time-consuming, so they rotate the task among them. No matter who is doing the work, the process is the same. The administrative assistant opens the e-mail and saves the attached time sheet in a directory named for the employee. The administrative assistant then renames the file to the date the e-mail was opened. Finally, the administrative assistant opens and prints the file. 114 Case Study: Ferguson and Bardell, Inc. When the administrative assistant has a paper copy of the time sheet, he or she enters the data into the time and billing add-on software for Ferguson and Bardell, Inc.’s accounting package. Each week, the administrative assistant prints a summary of each project team’s time for the week and faxes or hand- delivers the report to the appropriate manager for approval. The manager reviews each consultant’s time totals and either approves or disapproves the time for that consultant. The manager then faxes or hand-delivers the signed summary back to the administrative assistant, along with any notations of approval or disapproval. Time sheets are disapproved about 5 percent of the time, usually because consultants have not entered all their time, or they have miscalculated it in some way. If a time sheet is disapproved, the administrative assistant sends it back via e- mail to the consultant with a note explaining the manager’s reasons and asking the consultant to correct the time sheet and resubmit it. The original time sheet is deleted so that two time sheets do not exist for the same time period. Then all of the approved time sheets are posted into the time and billing system. Some weeks, the administrative assistants enter more than 10,000 line items into the time and billing system. Although they are skilled typists, they make mistakes. Most of the errors are caught in the review process, but some get through to the customer. Three problems occur with the current time sheet system. First, the number of errors in data entry is high. Second, the amount of time needed to process the time sheets each week takes too much of the administrative assistants’ time. Third, the time sheet data is stored in at least three locations: the employee’s computer where the time sheet is created, the central directory where the sheet is stored, and the time and billing system where it is re-entered. As a result, data integrity is difficult to guarantee. After the time sheets are posted to the time and billing system, the administrative assistant creates trial invoices and prints them. He or she sends the trial invoices to the appropriate managers and salespeople for review. After they all sign off on the invoice, the trial invoices are posted to the main accounting system, which runs the actual invoices. Some of the firm’s work is billed on a project basis, and some is billed on an hourly basis. Ferguson and Bardell, Inc. bill the time for all projects the same way, no matter how much time consultants spend on them. When the time allotted for a project is exceeded, the company loses money. Because of the way time is tracked, often no one knows the project is over its budget until the administrative assistant does the invoice. There is no way to track time by project and compare the amount of time actually spent to date with the amount of time originally budgeted for in the bid or contract. Case Study: Ferguson and Bardell, Inc. 115 Business Issues Related to Time and Billing (from an interview with the CFO) “Four basic business issues relate to the current time and billing system.” “The first issue is the inefficient use of resources. Each resource has a certain skill set, but there is no adequate record of that skill set. For example, one person may be marginally competent at a given task, and another may be exceptionally competent at that same task. A manager might assign the marginal person to a project because he or she does not know that the exceptional person is free at that time.” “Ultimately, an inefficient use of resources leads to loss of revenue. Customers want a resource adequate to the job at hand, but only adequate. The goal is to send the appropriate resource to the customer. If a manager sends a $200 resource to do a $50 task, either the company bills the customer $50, in which case the company loses money, or the company bills the customer $200 and risks losing the customer.” “We recently lost a job because a manager thought he did not have a resource with the required skills available. In fact, someone was available, but the manager just did not know it. This sort of situation sends salespeople and management absolutely over the edge. One salesperson quit over that particular incident. She had spent six months trying to get work from that firm, and when she finally negotiated a contract, our internal systems were not coordinated sufficiently to deliver a qualified resource to the customer, even though one was available.” “There are two additional issues with the current system. The first is the cost of the time associated with filling out, entering, and reviewing time sheets, and then generating, reviewing, and mailing invoices. Although spending a certain amount of time is inevitable, there must be a way to reduce it. Cutting just 15 minutes a week from the time spent filling out time sheets adds up to more than ten hours of time saved a year. Multiply that by 800 resources, and the savings is more than 8000 employee-hours a year.” “The area most in need of improvement is data entry. If the process were even partially automated, we could cut one or even two administrative assistants. Considering the loaded cost of even one of those positions, that alone could be enough to justify the cost of writing a new piece of software.” “Another option is to assign the administrative assistants who are no longer needed for data entry to other, more productive work. As we grow, those two people, who already know Ferguson and Bardell, Inc. and who already understand the work, would be available for new assignments and could be productive from the beginning.” “Another more esoteric business implication that can, in some cases, have a major impact on the bottom line, is the cost of money. A contributing factor is the current invoice cycle. We send out invoices twice a month, with terms of net 30 days for almost all clients. Most clients actually pay in around 45 days. If we are having a fiscally tight month because we are waiting for large invoices to be paid, we sometimes have to move money out of our line of credit and into the payroll account to cover payroll. We pay interest on this money. The rate is not high, but over time the interest can add up.” 116 Case Study: Ferguson and Bardell, Inc. “We currently process invoices twice a month because the entire time and billing cycle takes two weeks. If a week could be shaved off the time required to process an invoice, the money for that invoice would come in one week sooner, and we would pay less interest. Over the course of a year, the savings could really add up. The current estimate of those savings is approximately $500,000 a year.” “Another factor is that we are constantly losing money on projects that go over their time allotment. We lose thousands of dollars on some of these projects because they are fixed-bid projects. Most of the project managers complain that they cannot obtain good data on how much time has been spent and how much is left. Before they even realize it, they are over the allotted hours on part of the project, or even on the entire project.” [...].. .Case Study: Ferguson and Bardell, Inc 117 Additional Interviews Chief Information Officer Ferguson and Bardell, Inc.’s dedication to becoming the premier architectural and project management company in the Midwest has put it in a number of interesting positions from a technology perspective.” “The company has always stressed communication throughout the organization as a way to stay focused and. .. Ferguson and Bardell, Inc.’s employees have access to the company’s intranet and e-mail system If they work from home or in the field, they are provided with notebook computers and are expected to maintain at least daily contact with the company This level of contact within the company, and the flow of information throughout, is evident in our level of repeat business with clients.” Ferguson and Bardell, ... over-bill by accident, and it makes my job more difficult Usually, I don’t care about billing, I just want to do my job.” 118 Case Study: Ferguson and Bardell, Inc “Right now, all of the information ends up in a SQL Server 6.5 relational table with information on projects and project categories, but for some reason only a certain number of categories There is information about each consultant and who they have... experience working with ASP files and components We will need to pick up additional training to be able to add functionality using these technologies.” “The only other area of concern I have is the fact that Ferguson and Bardell, Inc is expanding at an enormous rate We have plans for foreign offices, and I do not want any new applications to become a staple of the company and then have to be taken down... onsite and working I want to know that the hours they are working and the hours they are billing I have to figure out when to hire people, and the only way I can do that is to have the consultants send me their time sheets when they submit reports through Outlook, and then key the information into Excel.” Administrative Assistant “My typical day’s work with invoicing is a nightmare Customers and consultants... software Workflow and collaboration tools have improved our communication both between satellite offices and internally.” Consultant “With these time sheets, the dates are not there, job numbers and project categories are not there, I have to total hours for the day to know what to bill, and then I have to add a description The length of the description depends on how much time I have, and then sometimes... more The Category and Phase fields should just go away because I work on the same things all the time And giving me a list of descriptions to choose from would make filling in time sheets easier.” “Clients have complained about our process, and sometimes they receive the wrong bill I do not know how billing works, but sometimes you look at the description on the customer’s invoice and it is wrong, or... Administrative Assistant “My typical day’s work with invoicing is a nightmare Customers and consultants call and complain about wrong bills I send e-mails and call 60 consultants a week to remind them to turn in their time sheets I am always on the phone I receive a time sheet and print it We have 600 consultants, and we use a lot of paper on Monday afternoons Sometimes it takes until Tuesday to finish everything... accounting system Sometimes consultants do not put in categories or descriptions, and I have to fill in those columns Sometimes I even make things up, just so that there are no blanks Then I print out pro forma invoices I put them in the managers’ boxes, and they sit there until I call all 50 managers to come and look at them and approve them Managers sometimes scribble on the invoices so that I cannot... manager tells me I have missed one of the consultants, and then I have to re-key all of the changes, print out the new invoice, and give it back to the manager They seldom really make changes, or at least not until a customer calls and yells.” Support “My biggest concern with where the company is headed is Web server stabilization Our Web server and e-mail systems are integral to the business environment . engineering 20,375 Landscape engineering 4,935 108 Case Study: Ferguson and Bardell, Inc. Current Status Today, Ferguson and Bardell, Inc. can. sales tracking and contact management software. Case Study: Ferguson and Bardell, Inc. 111 Future Technology Directions Ferguson and Bardell, Inc.