If they were to return to observe our routine procedures for a day, our predecessors of 30 years ago would not likely recognize any of the methods by which we now complete our tasks. We do not debate automation anymore; it is here to stay, and it affects nearly every aspect of our operations. Oddly enough, the billing philosophy is usually the last trait of the firm to reflect the benefits of automation. Inattention to the potential effects of automation on revenue can have a disastrous impact on cash flow, and ultimately on the health, of any company.
Having said that, let me reiterate that I am a firm believer in progress. Who wouldn’t be? Try to get someone who has been exposed to digital terrain modeling software to be content in "pulling" contours by hand. Once exposed to indoor plumbing, no one wants to return to outhouses.
Treadmill of Software Upgrades
But unmanaged, automation can have a damaging effect upon a firm’s revenue. First, as anyone familiar with computers knows, conversion to automated systems sets in motion a treadmill of hardware and software upgrades. Firms that are heavily dependent upon computers (and most now are), know that the pressure to upgrade is continual. Yet, for some reason, the new version always lacks a little something that probably will be fixed in the next release. This puts firms in a similar position to Sisyphus, who, having transgressed against Zeus, was sentenced to eternally push a great rock up a hill, only to have it roll down again just as he got it near the top. Of course, the true cost is not limited to the upgrade price. The real costs involve installation and training—"soft" costs, not easily quantified, but very real, and generally non-billable. Successful firms insist that vendors provide the installation and training—which is much less expensive over time.
Value Costing
Second, for service firms, automation has an insidious side effect—it destroys time-and-material fee structures by shrinking the time necessary to complete a task. Most surveyors, being prudent business people, have recognized the automation/revenue paradox and, if successful, have modified their billing philosophy accordingly. Their focus is on the value of the product, not on the time necessary to create it. Clients primarily concern themselves with the dollars and calendar time necessary to finish the job, not on the number of payroll hours. Therefore, if it does not result in a cost increase, revising the billing method to account for the automation would be appropriate. In other words, if it cost $5,000 to complete the project using the old methods, the service is probably worth $5,000, no matter how fast it was generated.
However, the problem really presents itself when large consumers of surveying services, such as public agencies, insist on procuring such services on a time-and-materials basis. For many types of surveying work, this chills the incentive to do it "faster and cheaper." Ultimately it is the taxpayers in these situations who are the losers, for they end up paying more than private clients would for the same service. I know from experience that firms with a large percentage of government time-and-material work intentionally eschew dramatic timesaving methods. One could hardly blame them. Think of it—a firm invests large sums of money to purchase training and equipment for the luxury of slashing its billable time to a third of what it had been. Gee, where do I sign up?
So, with all due respect, I offer the following suggestion to those surveyors in public practice: consider re-evaluating how you procure surveying services from the consulting surveying community, especially for tasks like control, topography and stakeout. Changing your procurement policies to encourage lump-sum contracts probably will make your budget dollars go farther, while simultaneously encouraging your consultants to make the most of the equipment at their disposal.
Not For Investigations
We must be careful here. Some surveying tasks are properly the stuff of time-and-material budgets. For instance, the time necessary to determine the location of property boundaries is impossible to predict completely, and thus is at its most honest when unhampered by a lump-sum price. In fact, any task that includes investigation as a component cannot be reliably predicted. One simply cannot tell where the investigation will lead.
I know that nearly all surveyors (including me) quote lump-sum prices on boundary surveys. We do this because the market demands it. If we were to insist on a time-and-material billing basis, we probably would go hungry, because clients (for some odd reason) usually have an aversion to unquantified expense budgets. So, we quote lump-sums and hope that, over time, we gain a profit from more jobs than we lose money on. However, we would be foolish to believe that project budgets are completely disregarded when they clash with ethical or qualitative issues. While occasional sips of red ink generally are not fatal, frequent drinks at that fountain will result in a tightness-in-the-chest when it is time to pay bills (not to mention payroll). The pressure on mid-level managers is even greater than on top management. When top management is removed from the technical side of the practice, as it is in many larger firms, the focus of performance evaluation for the manager will almost certainly center upon profitability. It will not take too many negative evaluations for the mid-level manager to be forced into rethinking whether another trip out to the site to look for that monument is warranted (if the manager is still employed).
Lump Sum Contracts Part of the Answer
So, lump-sum contracts are not the answer for every project. But for the many facets of surveying practice heavily dependent upon automated systems, lump-sum contracts can mean the difference between being competitive and being a statistic. We would be foolish not to take advantage of them.
Copyright © 1997 By Joel M. Leininger, LS