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Case Study:Fergusonand 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 CaseStudy:Fergusonand Bardell, Inc.
Current Status
Today, Fergusonand 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, Fergusonand 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.
CaseStudy:Fergusonand 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 Fergusonand 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 CaseStudy:Fergusonand 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.
CaseStudy:Fergusonand 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 CaseStudy:Fergusonand Bardell, Inc.
A further problem is that the scheduling sheet is not integrated with the
calendar system. Fergusonand 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 Fergusonand 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.
CaseStudy:Fergusonand 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 CaseStudy:Fergusonand 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 Fergusonand
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. Fergusonand 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.
CaseStudy:Fergusonand 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 Fergusonand 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 CaseStudy:Fergusonand 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: Fergusonand Bardell, Inc 117 Additional Interviews Chief Information Officer Fergusonand 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. .. Fergusonand 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.” Fergusonand 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: Fergusonand 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 Fergusonand 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.