Conference call: Edward Fitzemeyer
President of Fitzemeyer & Tocci (#2 Best Firm Multidiscipline), a 50-person engineering consulting firm based in Wolburn, Massachusetts.
By Liisa Andreassen
“The expectation is growth through 2018 followed by a mild recession in 2019,” Fitzemeyer says.
A conversation with Edward Fitzemeyer.
The Zweig Letter. What’s your philosophy on fee/billing and accounts receivable? How do you collect fees from a difficult client?
Edward Fitzemeyer: Our preferred contract type is fixed fee which allows us to manage the project to meet the client’s expectations. We are a sub-consultant on about 50 percent of our work and on many of those projects we are assigned by the owner. We have a proactive collections procedure that monitors AR in advance of the next major milestone. We provide enough advanced warning, so we don’t typically get much pushback if we must withhold service or deliverables.
TZL: What’s the recipe for creating an effective board?
EF: We’re in the process of revamping our board to improve our corporate governance. We have an internal board made up of only shareholders which doesn’t help with our vision of the outside world. We are looking to include one to two outside board members or advisors. The outside members would be elected every two years based on the current strategic needs.
TZL: Is there a secret to effective ownership transition?
EF: I acquired our firm as a sole proprietor from my dad. He had chosen a principal who worked with him for many years and was set to take the reins. That person died at a very young age before he was able to take over the firm’s management. This drastically changed the firm’s direction and I was thrust into leading/buying the firm. I learned quite a bit about what can go wrong during ownership transition. Now we have three shareholders with a robust leadership pipeline that is intended to increase the number of shareholders to diversify and solidify our ownership position.
TZL: How do you go about winning work?
EF: Our reputation and word-of-mouth from our long-term clients. We recently changed our structure and have a far stronger business development system. This is continually evolving and we are in the process of rolling out our “Thought Leadership” program to boost these efforts. Everyone from project engineer to principal will contribute in some way.
TZL: What’s the greatest problem to overcome in the proposal process?
EF: We use an ERP system to generate our proposals. We had the ERP customized to help streamline and standardize proposal generation. It’s good in theory, but the software is very clunky. However, the standardization aspect alone is well worth the effort.
TZL: Once you’ve won a contract, what are the “marching orders” for your PMs?
EF: We require a signed contract or letter of intent prior to issuing a project number and charging time to the project. Once the project number is assigned, the project manager has a project team kick-off meeting to get everyone on the same page to execute the project. On small projects or reports, we use a short form for project kickoff.
TZL: How does marketing contribute to your success rate? Are you content with your marketing efforts, or do you think you should increase/decrease marketing?
EF: Marketing has traditionally taken a back seat at our firm. We did monthly email newsletters, local client organization presentations, and the occasional article in a trade publication. We are ramping up our systems to include blogs, white papers, guides, and increase publications and industry presence.
TZL: What has your firm done recently to upgrade its IT system?
EF: We rely heavily on technology and consider this to be one of our top investments. Each person has a two-year or newer laptop. PMs have Microsoft Surface tablets. We have a robust server with remote backup and redundancies. We have the latest versions of our Deltek ERP system, Office 365, our Newforma PIMS system, and Autodesk design products. We are investigating virtual desktop infrastructure for our next upgrade to improve working remotely. In our experience, VPN is not ideal for working remotely with Autodesk products.
TZL: What’s the best way to recruit and retain top talent in a tight labor market?
EF: Since 2012 we have had a full-time recruiter/HR manager. This has been a great addition to our team. They are continually sourcing candidates to help fill positions quickly with the right talents. They keep us focused on employee brand and attend the right career fairs, etc. We now spend much less on outsourced recruiting fees. Prior to this position our processes were not good and hiring was a challenge. As a testament to our commitment to our employees and our brand, for the past two years, we won a Zweig Group Best Firm to Work For award.
TZL: What’s the key benefit you give to your employees? Flex schedule, incentive compensation, 401(k), etc.?
EF: We don’t want employees to worry about healthcare. We ensure our benefits package works as well for our staff as our staff works for our clients. We evaluate our health plans every year to ensure we offer the best possible plan with the most comprehensive coverage and pay 95 percent of the benefit. We offer four options that are all covered at the same contribution rate because we recognize that not everyone’s needs are the same, but we want to be sure everyone is taken care of regardless of family dynamic. We are continuously working on building a flexible, results driven environment with working remote options for every employee and software that works from anywhere. It’s important that our employees feel comfortable taking care of their personal lives while also having a successful career.
TZL: How do you raise capital?
EF: We have a line of credit that is equivalent to 20 percent of our revenue. We have had this financing in place for the past 13 years and are satisfied with our banking terms and relationship.
TZL: What’s your preferred strategy for growth, M&A or organic? Give us a synopsis of how your firm effected growth in the recent past.
EF: We are a steady growth firm and have grown organically. Boosting our business development and structure has helped us grow from 30 employees in 2014 to roughly 50 employees by the end of 2017. We continue to add services that our existing clients need. Our commissioning and energy and infrastructure services have helped us grow beyond traditional building design services.
TZL: What’s the greatest challenge presented by growth?
EF: Our organizational structure was our biggest barrier to growth. In 2014, we revamped our structure which has allowed us to expand quicker and seamlessly. Prior to 2014, we had a small project team structure. We outgrew those benefits. Our new structure allows us to be nimbler and to quickly react to all size projects.
TZL: What’s your prediction for 2017 and for the next five years?
EF: The expectation is growth through 2018 followed by a mild recession in 2019. Our market of health sciences continues to grow and we are fortunate to be in one of the largest areas in the world for healthcare, health research, and health studies.