Small engineering firm in competition with big name firms 1

[Dado75]

We are a small structural firm with 3 structural engineers including 2 PEs that tried to go prime and submitted responses to RFPs for public projects but have not been successful. We have not even gone past the shortlist phase because of our size even though due to the slow economy our competition and quite possibly some of the big name firms have no bigger staff than us. The goal is to add more staff if needed once the contract is won. How does a small firm compete under these factors? In terms of experience, I believe we are competitive because we used to work for these big name and large firms.

 

[IRstuff]

As with an individual trying to get a job, who you know and what your track record is will play into such situations.

> You need to possibly start smaller, with jobs that are too small for the big boys to get interested in.

> You need to get some feedback from these customers to find out what they perceived to be the issue with your proposals, was it experience, was it price, etc?

> Did the customer perceive the lack of existing personnel as a serious weakness? Perhaps a track record of successfully using contract engineers might be a necessity.

> You need to review the general thrust of your proposals. How well did you make your case? How well did you ghost your competition? Did you off the customer a better deal than anyone else. How good is your relevant experience section? Were there flaws in your technical analysis of the problem?

> You perhaps need to have some sort of independent review of the quality of your proposals. Is your proposal writing top-notch? Did you appear to clearly understand the requirements and the scope? Were your costs and schedule realistic? Did you have a realistic hiring and loading plan?

> There are supposedly SBA-type organizations that can provide you with relatively free consulting, possibly.

TTFN

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[Dado75]

Thanks IRstuff for your input.

Our proposals have mostly been technical proposals and no fees. The proposals typically require standard forms such as Forms 254/255 and SF330s. You are usually limited in total package size but allowed to include project examples. We have enough projects to showcase that we have worked on in previous employments and the current company and this I believe is done by most firms. I have had the chance to see other lead engineers standard forms that included experiences strung from different firms that they worked for. The economy is so tight that the big names are going after every project, no such thing as small project.

The question is how do you make clients understand that size is not the most relevant factor. Technology has come so far that projects that took say 10 engineers to complete 25 years ago would quite possibly take only 3 engineers to do these days!

 

[Ron]

Breaking into Guv work is difficult for firms, large or small. Do the private work first...develop a reputation...ally with larger firms on a few projects...then try again.

I've submitted on a few (we are small also...4 engineers), but didn't expect to get them and didn't. I allied with a much larger firm a few years back for a significant pavement evaluation. I did the analysis, they did the grunt work. Worked out well.

 

[cry22]

The picture out there is that the government does not want to do anything, no management, no checking, no nothing- it started out in the Bill Clinton years - Remember, "the Era of Big Government is Over" statement?
Result is that all governement agencies have turned to the private sector to actually run the government for them.
Want to check a project? hire a thrid party peer review; want to procure a project? hire a procurement firm.

Now, we see government agencies packaging a multitude of small projects (say 15 to 12 - 10,000 SF buildings) in various locations, and put them out for bid as a single large project. A project they will call for a major PM firm with a minimum of 100 million dollars revenue and a gazillion dollars in insurance and BONDING.

This puts the small guy like yourself straight out of business.

We get the government we deserve, our rulers have opted for the private to take care of the people's business. That's for the people to find out the hard way - the people needs to take care of its own business and not rely on big business (but that's only my political opinion that is valid only for our industry, I wouln't apply it to defense sector for example).

If you want to play the government project game - Follow Ron's advice and go under the giants' wings if you want to survive, and always Kiss their A****. Any other way, you're dead meat.

Or (actually you must),

Be woman owned, Wounded veteran Owned, american Indian owned, African/American Owned, 8(a) status, hub-zone, etc.

If you are a small business white man, you're not likely to go far in government. I've seen woman owned companies going from zero to 50 people in 3 years.

 

[IRstuff]

" our rulers have opted for the private to take care of the people's business. "

Not our rulers, but our "voters" Time and again, voters have elected officials that demand cutting government to nothing and pay lower taxes. This is result. You cannot have organic government resources and expect to pay lower taxes. Nonetheless, the majority of "white man" engineers vote for precisely that scenario, so,

"We have met the enemy, and they are us."


TTFN

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[Dado75]

Ron, thanks for your input. We have and still teaming up with large firms as their sub whenever possible. We have been successful as subs on some projects especially large ones. As you probably know by now, prime firms are likely to have you on as a sub if they don’t have your particular discipline in-house or contractual obligations require them to include small firms such as DBEs, women owned business, minority-owned and other local business requirements. It is difficult to be a sub to a prime when they have people in-house to do the work especially design. I don’t fault the primes at all and I would probably do the same if I were in their shoes.

cry22, thanks for your input. In the interest of honest discussions, these are the disclosures. We are registered as DBE, that is, minority-owned business. We don’t go after Government (federal)projects, mostly State, County and City infrastructure projects. We applied for 8(a) but got turned down because a large part of our revenues in the past have been with one single private client and we were considered affiliated with them! Not that we were making a lot of money, far from that, and we are completely independently owned.

When a large firm with say 15 structural engineers wins a project, typically it would be a subset that would actually work on the project. It could range from 2 to 4 or 5 engineers on one particular project depending on size. If you isolate the projects that they only used 2 to 4 engineers on, is it inconceivable then to assume that a small business with 2-4 engineers with similar work experiences can operate and do the same work efficiently? I have worked for a large firm in the past and there were some pretty sizeable projects that only 2 structural engineers and one CAD person worked on successfully! Why can’t a small business operate like that?

The infrastructure projects that I mentioned in the beginning that we were not even shortlisted were actually a team approach. We were a group of small businesses owned by black (mine), 3 white owned companies including 2 white owned small businesses, and one Indian. We are multi-disciplinary engineering (structural, civil, survey, geotech) because most state infrastructure projects require those disciplines. We have worked together as employees of the same companies or subs to primes in the past. We decided to go as a team because of lack of subconsulting opportunities and to compete with the large primes for these State and County projects but unfortunately have not been successful so far!

Do small engineering businesses like ours out there have similar experiences?

One thing cry22 mentioned is the bundling of projects...that makes it practically impossible for small businesses to compete! It is a giveaway to large firms! We are experiencing the same bundling issues.

 

[hokie66]

"government does not want to do anything"? "cutting government to nothing"? Seems to me the government just gets larger, and what it wants to do is to make things as difficult as possible for the rest of us.

 

[cry22]

No hokie, government is actually getting smaller.
example, when all the flooding and hurricanes happen in the midwest, who do you thing is running the show? FEMA?.
Oh no, it the mega firms that are running the entire thing with megabucks in fees. from procurement to planning, to engineering, to assessment, reports, etc.
Not that it is a bad thing for the governemt to rely on the private sector for help (large firms included). It is a bad thing to have ONLY the large firms compete for projects. All small firms are asking for is an opportunity to compete, and that's the only issue at hand in this gigantism business.

Don't get me wrong, I am not a socialist.

 

[hokie66]

I don't know about government getting smaller. Maybe in some areas, including the areas affecting engineers and construction. But in other areas, there must be increases, at least in number of personnel. The attached table shows that, except for the military, the numbers are tending upward lately.

http://www.opm.gov/feddata/HistoricalTables/TotalGovernmentSince1962.asp

 

[KENAT]

Well, maybe but the lowest number appears to be 4,127 in 2007.

2010 shows 4,443 which would have included a number of temporary census jobs for 2010 (and maybe a little year before & after) which are now (Q3 2011) gone as I understand it.

So a 7.6% increase from the all time low, and although I haven't actually calculated, 4,443 would appear to be below the average.

Plus of course, and perhaps most significantly, those are federal jobs.

A lot of govt jobs related to engineering & construction are at the state & local level where many cuts have been made.

So I strongly suspect, that total government including state & local has probably shrunk quite a bit the last year or so.

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[JedClampett]

I think you're going at it wrong if your business plan is to go the Federal Register and fill out RFP's. The Federal procurement system is frustrating. And if you get the work, there's more frustration coming.
Our company is large (600 employees) and while we do predominately city and other government entity work, we stay away from Federal work. Unreasonable scope creep, incompetence, etc. Hard to get change orders, even when justified.
Try other govenrment work, closer to your location. At least the managers will be close to home.
A long time ago, while I was in a different career, I filled out some government procurement applications that our company was marginally qualified to do, for Sandia Lab. I heard nothing, so I called up the contact. When asked about the RFP, the guy stuttered and thought for a split second. "Oh, that was cancelled!" click. The whole thing smelled like the fix was in. They didn't want any random applications, just their prepicked favorite,

 

[hokie66]

KENAT,
Your numbers include the military. The other federal jobs show an increase of 140,000 from 2007 to 2011, about a 5.3% increase. I don't know the distribution, but if federal jobs have dropped off in the construction area, they have increased somewhere.

 

[cry22]

Back to the original Post:
Some pro's and con's.

Big business is needed in many projects requiring immediate staffing, large type, multiple locations cross-country, etc. (I recall going to work and was told to go home pack a suitcase and fly cross-country to be a military base the next morning)
While a small firm can do quality work, it does not have the resources to staff any project at any time.
The other thing is that the small business can litteraly go out of business if one of its key players (owners) is in an accident or dies. Government wants a firm that will deliver even if the entire team dies in a plane crash.
And, one must admit, large firms have much more elaborate technical databases and training programs in place than small firms (especially software training).

There are issues with competition from big business on small projects though:

Big business (including construction firms) keep pushing for technology in the construction industry, BIM, Revit, etc. this requirement makes busines very expensive for the small guy (imagine the training and software cost of all these tech gabgets). Government keeps requiring so much high tech and eliminate the small guy in the pre-qualification, this should not be required for small projects.

Government requires extensive QA/QC documentation in RFP's - A large firm can issue an ISO 9001 certification backing its QA/QC proposal in a heartbeat that the small guy cannot even dream of (by the way, ISO 9001 is a not a label of quality- you can have lousy engineers as long as you have an documented QC system in place).

No one is against big firms, but Government needs to understand that making business expensive for the small guys will result is less and higher bids, wasting tax payers' money.

 

[moltenmetal]

Fortunately I don't do public tender work any more. When I tried, years ago for another employer, we came up against masters of the "bait and switch": large firms who would pad their technical packages with the resumes of people who would never even look at the project. They would then bid the hourly rates of people who didn't even work there yet, but who would actually do the work if they won it. When the work involved subs, it got worse still. Some of the firms under-bid the quoted prices of "captive" subs (environmental labs in this case) who were then told what their real price would be for the work.

"Quality based selection" sounds like a nice way to ensure that public engineering work isn't granted solely on the basis of the lowest hourly rates, but the devil's in the details for sure. Improperly implemented, it's a means for the big firms to ensure that they don't have to worry about young upstarts taking away any of their core business.

 

[KENAT]

Mea Culpa. Though 5.3% doesn't seem that much when you consider a lot of them in 2010 would be temp census folks. Also, my point about local/state govt I believe stands.

However, way off target apologies to the OP as well as hokie for only looking at the bottom of his link.

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[Dado75]

Thanks to all of you for your inputs. I'm taking in all the points and ideas.

 

[csd72]

This is not just an American problem. At my previous employer we had problems getting Network Rail to give us the decent size jobs and had to settle for the smaller and support jobs (surveys, temporary works, e.t.c.).

They seemed to have this vision that the big companies had bums on seats just waiting for their next job but the reality was the complete opposite. Most big companies treat engineers as an interchangeable commodity and will insert whoever is available into the project whether or not they are experienced.

Whereas if you have a small company where most of their work is this type of thing then you are more likely to benefit from their specialist experience.

 

[beej67]

Government employment goes up, not down.

http://www.kentwillard.com/photos/graphs/employment-growth-by-sector.html

I don't bid public work. When I do, there's 40 companies all trying to bid it too. To win it you either have to bid so low that you won't make money, or you have to have an amazing glossy marketing package made by your marketing department. That means, effectively, that all the public work right now goes to starving lowballers and 10,000 employee megafirms.

The few public jobs I have bid, it's because I have a friend in that municipality that put me on his short list.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

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[Electic]

I've had a good time consulting as a very small office competing against large firms. Not getting rich, but that isn't the point. I previously worked for one of the largest engineering firms and the fact is, they generally assigned one lead engineer per discipline; I now serve that same function as an independent consultant. It is a matter of understanding what the customer wants, and that can only be accomplished by knowing the customer well. It takes time and effort and endurance. The work I've done is for private corporations and government.

Don't let firm size or government policy become your excuse......