Getting your costs in line is more important now than ever in this competitive recessionary environment.  It's no longer feasible to achieve largepermanent cost reductions by slashing head count.  Besides, it's danger­ous.  Indiscriminate firings and cost cutting can hurt design firms in the long run.  If you're not careful, your knife may (and probably will) nick bone and muscle, diminishing your organization's capacity to perform.

     Mandates to "cut costs 10 percent" for example, leave important programs in trouble, key slots unfilled, and investments that could bring hefty returns de­ferred.  In all cases, it's better to analyze before acting.

    Here are some cost cutting tips.

     What's your business? Figure out where your core business lies and outsource the rest.  Ask, about every activity, "Why are we doing this?" The best way to re­duce costs is to eliminate non-essential activities.

     Work closely with subconsultants.  Screen them care­fully, audit their work, and train them in quality im­provement and cost-reduction techniques.

     Engage all members of the workforce.  Employees trained in reducing costs feel a sense of pride and ownership.  Plus, they can come up with great ideas.

     Find the true costs.  Traditional accounting prac­tices - like adding a standard percentage for overhead to your costs - obscure opportunities to cut the fat.  Activity-based costing and other methods uncover them.  By identifying discrete costs, you can leverage certain activities - or eliminate them. All costs are investments subject to analysis.

     Measure.  Use ratios to measure profitability, to maximize the productive use of assets, and to monitor dangerous levels of debt.  And techniques like Pareto analysis can help you improve continuously.