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Probably no other aspect of professional practice for design and construction firms is as important to their future growth and prosperity as getting paid what they’re worth. Yet, fee bidding and price competition continue to escalate as major selection factors in both the public and private sectors. Sometimes in the form of alternative project deliveiy options such as design/build, and sometimes simply as the low fee gets the job. Because design and construction firms in general have not been very successful in differentiating themselves, clients continue to view professionals as being “equally qualified.” Since all appear “equally qualified,” many clients are using fee to differentiate and support their selection decision.This is not likely to stop in a buyers market until design and construction professionals learn to effectively differentiate themselves from the rest of the pack. It seems to know no limits. It’s happening in the public sector, sometimes subtly and sometimes openly as in the state of Ohio where the low fee gets the project for state work. Even areas in the private sector that once recognized value and were willing to put fee issues in perspective, are becoming more fee conscious in their selection process. Although some clients will always push for the lowest fee, most clients who use fee as a major factor in the selection process, do so because they often see no difference between the short-listed firms under consideration. All firms appear “equally qualified.” As professionals, you know that all firms are not “equally qualified” any more than all employees in the same job in the same firm are equally qualified. There are important differences in experience, education, technical ability, creativity, project management skills, their ability to satisfy client needs and a whole host of other attributes that one could name. We know that all design firms are not equally qualified but many clients believe they are. What we have here is a classic communications problem between the professional and the client. Much of this communication problem is the fault of the design firms themselves. They are not effectively differentiating themselves in the eyes of their clients. They only think they are. When clients see no difference between firms, then these clients will differentiate with the only supportable basis they have —fee. What’s even more interesting, we have found, is that when many architects, consulting engineers and other design and construction professionals are asked if they make efforts to differentiate themselves in their proposals and presentations the answer is usually a resounding yes! Some typical explanations describing how they differentiate include answers like.... “We always analyze the project in great detail and present a unique, tailored approach to their problem.” “We have an unmatched record of performance for quality projects, delivered on-time and in budget.” “Over 80 % of our work comes from repeat clients.” “Our firm is the leading hospital design firm in the U.S.” There is nothing wrong with any of these statements except that most of the competitors are saying the same things and making the same kinds of claims. To differentiate your firm from the rest of your competitors requires that you are able to draw some meaningful comparisons directly or indirectly with their abilities. To do that, you must know something about how your competition works with clients, their marketing approach contractual structures, policies, pricing, project management process, staff skills, special competencies, strengths and weaknesses to name a few. You need to have an up-to-date, accurate and supportable profile of your major competitors if you are to draw meaningful comparisons and differentiate effectively in the client’s eyes. It is likely that fee bidding will continue to escalate until design firms are able to provide prospective clients with real choices or alternatives to fee as the basis for selection. Qualification-based selection as it is now practiced, is often little more than the presentation of a litany of credentials, resumes, past projects, and often uninspiring, detailed approaches to projects with schedules, milestones, manpower loading, and budget projections all designed to “out-qualify” the competition. This type of qualification-based focus simply reinforces the “equally qualified” syndrome.In reality, the best and most qualified team is not guaranteed the job. It is more often the team that shows the client how the client will benefit by selecting their team. It is the team that shows convincingly, how the client will benefit in specific and measurable ways that wins in the end. RECOMMENDATIONS: There are two essential ingredients necessary to set the stage for an effective program to differentiate your firm from your competitors. 1. Develop a competitive information system. Formalize it, keep it current and learn all you possibly can about the strengths, weaknesses, strategies and tactics of your major competitors. Use what you learn as input in your own strategic marketing planning efforts and as a basis for differentiating on a client by client, project by project basis. Differentiating requires comparisons by the client between you and your competitors. When you know little about your competition, it is hard to focus on the differences that make you unique in the eyes of that client. It weakens your case. 2. Specialize in a handful of industry or market segments. Don’t try to be all things to all people. When you specialize you will know more about how you can impact your client’s bottom line in the specifics of productivity, profitability or costs. When you know this, you are in a position to quantify these contributions to profits or cost reductions as a basis for differentiating your firm and overcoming the “equally qualified” syndrome.
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