The guidelines within this sample plan will provide you with a good overview of starting an engineering consulting business. Use this example to compile your own.
StructureAll Ltd. will be formed as a consulting firm specialising in structural engineering services. A home office in Yellowknife, NT will be established the first year of operations to reduce start up costs. The founder of the firm is a professional engineer with eighteen years of progressive and responsible experience.
The founder, Philip Nolan, provided an initial investment towards start-up costs. Of this, more than half is required for start-up expenses while the balance is to to be placed in the company accounts as working capital.
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The firm will specialise in providing three dimensional modeling and visualisation to our clients. State-of-the-art analysis and design tools will be an integral part of the business plan. Implementation of a quality control and assurance programme will provide a focus for production work.
- Modest revenues the first year, with slow by steady growth over the next two years.
- Achieve 20% of market value at the end of the third year of operation.
- Increase gross margin significantly by the third year of operations.
Our mission is to provide clients across Canada’s North with structural engineering services for all types of buildings, from concept planning through to completion, with a highly skilled professional team working together, using common sense and practical experience.
1.3 Keys to Success
- Provide professional quality services on time and on budget.
- Develop a follow-up strategy to gauge performance with all clients.
- Implement and maintain a quality control and assurance policy.
StructureAll Ltd. is a new company which provides professional engineering design services for clients which manage, maintain, and plan for residential, commercial, and industrial type buildings. Our focus will be the public sector market in remote communities across Canada’s North.
2.1 Company Ownership
StructureAll Ltd. will be created as a limited liability company. The company will be privately owned by Philip D. Nolan. Leslie C. Goit will also be listed as a Director.
2.2 Start-up Summary
Our start-up expenses allow for initial legal expenses, licenses, permits, stationary, specialty software, office equipment, and furniture. In addition to these start-up costs, an initial balance will be placed in the company accounts. The software purchases include an allowance of $5,000 for AutoCADD® 2000, $1,800 for National Master Specifications, and $200 for QuickBooks® (accounting package).
Philip Nolan will contribute towards the overall start-up costs.
2.3 Company Locations and Facilities
We will establish a home office in Yellowknife, NT in order to reduce start-up costs. The office space is estimated to be 150 square feet. We will be installing a dedicated fax line as well as a high-speed Internet connection. An interactive website will also be developed which will serve as a marketing tool. The domain name of “structureall.com” has already been reserved.
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StructureAll Ltd. offers complete structural engineering services. We will focus on buildings with the following ‘Use and Occupancies’:
The company is ‘project’ oriented where each project involves:
- New construction.
We offer innovative and economical design services, maintaining state-of-the-art design technology. We meet client needs on projects of all sizes and smaller, special design projects.
3.1 Competitive Comparison
StructureAll Ltd. offers their clients superior service accompanied with state-of-the-art analysis and design capabilities. We will offer three-dimensional visualisation services to reduce the possibility of spatial conflicts with architectural elements and other engineering disciplines. In comparison, our competitors rely mostly on two-dimensional models.
We will implement a quality assurance and control program for all projects undertaken. This document will serve to focus on the standards which will be achieved and a means of measuring performance.
A systematic manner of sorting and retrieving a library of structural elements and assemblies will be implemented. Slide libraries will be available from a tool bar within AutoCADD for quick access. We will adopt the layering standards of the American Institute of Architects (AIA). In comparison, our competitors do not have an integrated database. StructureAll Ltd. will adopt the filing systems developed by the AIA. All project information will be tracked using an integrated database management system. All of our business tools will be year 2000 compliant.
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3.2 Sales Literature
A brochure system, which covers a broad spectrum of the target market segment will be developed during the initial year of operations. This system will be modular in nature and include many ‘boiler plate’ sections which may be edited to suit specific needs. Brochure inserts will be maintained as individual sheets to facilitate their assembly in any custom situation.
Our website will be developed the first year of operations and include a description of our services, the areas which we plan to serve, contact information, a list of representative projects, and a brief biography of Philip D. Nolan. An Internet domain name has already been reserved for this purpose … http://www.structureall.com A series of templates will be developed for project proposals. The format for all proposals will include:
- Cover letter.
- Scope of services for each project.
- Fee (if requested).
- Firm’s qualifications to provide services (overview).
- Project Team (describes each person’s tasks and qualifications).
- Philosophy of design approach.
- Relevant experience.
- Schedule to provide services.
3.3 Service Description
- Project Consulting: Proposed and billed on a per-project and per-milestone basis, project consulting offers a client company a way to harness our specific qualities and use our expertise to develop and/or implement plans, from conceptual planning to turnover. Proposal costs will be associated with each project.
- Forensic Investigations: Proposed and billed on a per-project and per-milestone basis, our investigations will serve the public and private sector markets. We will focus on troubleshooting buildings where damage and or failure has occurred. Our reports will outline the description of the problem, the nature of the mechanism which has caused damage or failure, and a list of options for remedial action including estimated budget costs for implementation.
- Project Management: Our project management services include defining client needs, preparing bid documents, tendering, bid analysis, construction review, payment certification, contract administration, and warranty inspections. Projects include new facilities, renovations, repairs, and remodeling.
- Dispute Resolution: We draw upon our broad range of construction and contract administration experience to provide dispute resolution services, including arbitration, mediation and expert reports for litigation. This work is supported by forensic engineering services to identify the cause of failures.
- Restoration Engineering: We provide condition survey, design, and construction review services for the repair of building structures.
- Home Inspections: We will provide prospective homeowners with an assessment of the various systems in a residential home, including foundations, framing, building envelope and efficiency, mechanical systems, electrical systems, and general safety issues. We provide a photographic record along with a thorough written report.
We will turn to qualified professionals to supplement computer aided design and drafting (CADD) services, specialty connection designs, and analysis support services which are areas that we can afford to contract out without risking the core values provided to the clients.
We have fostered several alliances with suppliers of structural elements, including glued laminated lumber, pre-engineered dimension lumber trusses, engineered lumber, and steel to facilitate this strategy.
In the second year of operations, we intend to secure a storefront presence in Yellowknife. At this stage, we will seek qualified northern engineering students to provide them with work experience in a structural engineering office environment.
StructureAll Ltd. will maintain complete and comprehensive Windows® based analysis tools for structural design. An integrated computer aided design and drafting tool permits several evaluations to be made on a structure at minimal cost. StructureAll Ltd. will maintain an Internet website complete with file transfer protocol (ftp) capabilities.
3.6 Future Services
Quality Control and Assurance: Serving the needs of the welding industry, we will ensure that certified firms and their employee welders are qualified to perform specific welds in accordance with the requirements of the Canadian Welding Bureau (CWB) as a certified Welding Inspector. We are currently in the process of completing a comprehensive home study program offered through the CWB for this purpose.
There are four firms presently in the NWT which require these services in order to maintain their certification with the CWB. On-site inspections are required four times per year.
Fabrication and Detailing Drawings: Serving the special needs of steel and concrete construction, StructureAll Ltd. will be working toward offering these services to contractors in the future.
Toll-Free Communications: We will provide our clients a toll-free number to access 24 hours a day in the second year of operations.
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4Market Analysis Summary
StructureAll Ltd. will focus on traditional Architect/Engineering (A/E) contracts. The owner will usually contract the A/E to perform planning and design services. These design services include preparation of plans, specifications, and estimates.
Construction services may be limited to occasional field visits and certain contract administration requirements. Typically, these types of projects distribute total design fees amongst the professionals involved in accordance with the following guideline:
- Architecture Design (65%).
- Structural Design (10%).
- Mechanical Design (15%).
- Electrical Design (10%).
Our most important clients will be established architectural/engineering firms who require structural engineering services.
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4.1 Market Segmentation
The market for engineering services may be summarised with the following groups:
- Established Architectural and Engineering firms: Typically, the structural portions of any building project involve a Prime Consultant who pre-selects their team members and promotes their strengths in a proposal call to prospective clients. Our strategy is to offer these established firms a viable resource from which to draw upon. We can undertake the entire structural engineering process or provide assistance to their own in-house staff.
- Territorial and Federal Governmental Departments: The Government of the Northwest Territories (GNWT) and the newly created Nunavut Territory retain consultants for a variety of purposes. We intend to position ourselves as a local firm offering expertise in consulting, project management, forensic, and restoration engineering. The Federal Government also retains consultants for similar purposes.
- Law Firms: We will market our services to the legal community to provide dispute resolution services, including arbitration, mediation and expert reports for litigation. This work is supported by forensic engineering services to identify the cause of failures.
- Contractors: We will offer design/build services to contractors for the multitude of potential projects which the Territorial Government and Nunavut Territory have recently undertaken. Contractors occasionally require structural engineers to submit sealed alternatives for equivalents to construction details.
- Municipal Governments: Remote Municipal Governments in the Territories can expect to have more autonomy with respect to infrastructure growth and development in the years to come. This initiative is part of the GNWT mandate. We will promote our services to the local municipal governments for this purpose. To attract this market potential, we will offer to train those students in each community who are interested in engineering as a career choice. On the local front, the City of Yellowknife often provides recommendations to builders and homeowners for structural engineering services related to renovations, additions, and new construction.
- Private Individuals: We will focus attention on homeowners in Yellowknife who are renovating or contemplating an addition to their residence. We will also promote home inspections to those parties contemplating the purchase of a home.
- Realtors: In conjunction with home inspections, we will make all the Realtors aware of this service.
4.2 Service Business Analysis
The following sections describe in more detail these aspects of the service business environment:
- Business Participants.
- Competition and Buying Patterns.
- Main Competitors.
4.2.1 Business Participants
The majority of consulting services cater to the needs of the Territorial Governments. The Territorial Governments operate on a budget of approximately $1,170 million per year, based on the 1998/1999 Main Estimates. Of this total, approximately $1,028 million is spent on Operating and Maintenance Expenditures while $142 million is allocated to Capital Expenditures.
Within the Capital Expenditures, Buildings and Works is a sub-category. This is the area of the annual operating budget from which all building design consultants must draw upon. Our analysis of the 1998/1999 Main Estimates indicates a total expenditure of $59,339,000. A typical A/E contract derives fee estimates from total budgets. For this analysis, we will apply 9% as a guideline for design fees. This yields a figure of about $5,340,000 in design fees available for distribution to the consulting industry.
The major clients within the Territorial Governments include:
- Department of Education.
- Department of Transportation.
- Department of Municipal and Community Affairs.
Our competition matrix indicates a total of 102 persons within the consulting field in the Territories. This total has been subdivided into the types of positions these people hold. Based on reasonable estimates of salary expectations including 30% burdens for administration yields a value of about $7,800,000. This figure represents an estimate of the revenues required to sustain engineering consultants in the Territories.
From this evaluation, the Territorial Governments account for close to 70% of design fees while other participants in the building marketplace account for the balance. The Territorial Governments retain consultants for the following types of buildings:
- Health Centres.
- Community Halls.
These types of buildings are constructed on a rotating basis across several communities in the NT. In addition to new construction, rehabilitation, renovations, and additions are also in demand. Typically, the Territorial Governments issue a proposal call to consultants to service these needs. StructureAll will position itself as a Structural Sub-Consultant or resource to the Prime Consultant. StructureAll Ltd. will also promote its services as structural specialists and project managers to the Territorial Governments.
4.2.2 Competition and Buying Patterns
Pricing of projects and billing rates are surprisingly variable. In consulting at this level, it is easier to be priced too low than too high. Clients and potential clients expect to pay substantial fees for the best quality professional advice. The nature of the billing, however, is sensitive. Clients are much more likely to be offended when a job starts at $20K and ends up at $30K because of overruns, than if the same job started at $30K or even $35K.
Clients rarely compare consultants directly, looking for two, or more, possible providers of a proposed project or job. Usually they follow word-of-mouth recommendations and either go for the job or not, rather than selecting from a menu of possible providers.
The most important element of general competition, by far, is what it takes to keep clients for repeat business. It is worth making huge concessions in any single project to maintain a client relationship that brings the client back for future projects.
4.2.3 Main Competitors
- Ferguson Simek Clark (FSC Group): This well established architectural and multi-discipline engineering firm would be our main competitor. This firm has branch offices in Iqaluit, NT and Whitehorse, YT besides a head office located in Yellowknife, NT. Their principal strength is undertaking a project from inception through to completion under one roof. Their weakness stems from an understaffed structural engineering group. At present, there is only one structural engineer who services the needs of all their in-house architects and outside clients. The drafting aspects of any project rely upon recollection and modification of past projects typically. There is no systematic manner in which standard block libraries are maintained or updated. They underutilise the programs at their disposal for structural analysis and design.
- A.D. Williams Engineering Ltd. (ADWEL): This multi-discipline engineering firm is well established in Yellowknife. Their head office is located in Edmonton, Alberta. They can draw on additional resources from the core group as required to meet the demands of project schedules. At present, there is no resident structural engineer on staff in Yellowknife.
- Girvan and Associates: This is a small one person architectural and engineering firm which specialises in providing services for residential construction projects. Ian Girvan services the private sector mostly. It is our hope that we can form a strategic alliance to carry out consulting work jointly as needs and occasions arise.