Pushing the Boundaries
If you answered “No” to any of these questions, you are probably limiting your surveying practice. And you might be contributing to the “commoditization” of the profession--reducing it to a service that is underused, undervalued and ultimately underpriced. To raise the bar, surveyors need to invest in and deploy advanced surveying tools in existing and new markets--even during tough economic times.
In the Blink of an Eye
Equipment advances over the past 15 years have changed how surveyors do business, and technology continues to evolve rapidly. Equipment manufacturers are replacing “last year’s model” at ever faster rates. Surveyors, therefore, should toss old budgeting models that assume a new equipment investment will last 10 years. Most investments now provide just three to four years of service at most, and no one should be surprised if a piece of equipment they bought this month is replaced with something else next month.
New technologies are also changing the surveyor’s role. Equipment such as 3D laser scanners and reflectorless total stations have allowed surveyors to adopt data acquisition procedures that often are less expensive, less invasive and safer. Software advances have encouraged surveyors to go beyond data acquisition to produce cost-effective, ready-to-use deliverables in a wide variety of client-specified formats. Traditionally, professional surveyors provided only points and plots to engineers, who performed calculations and built their own drawings. Now surveyors with 3D laser scan data can create line work from point cloud data automatically, provide digital terrain models more efficiently and calculate material volumes and cross sections precisely. Surveyors can use powerful software to produce visualizations or renderings that have more functionality. And they can create other end products quickly, such as 3D digital models in a variety of software formats, color CAD drawings and Web deliverables uploaded to an FTP site for immediate use.
New technologies have been a boon to surveying firms that have embraced them. In many cases, these tools have reduced the size of survey crews required in the field. Two surveyors on a job can now operate two different instruments and complete two separate tasks simultaneously, ultimately doubling productivity.
Opportunities and Challenges
Advanced technologies have inspired some of the industry’s most business-savvy firms to pursue new and exciting projects outside of the traditional engineering design and construction surveying markets. For example, some firms are using 3D laser scanners not only to complete topographic surveys for design but also to capture the architectural details of a building’s exterior, create 3D subsurface maps of underground mines, measure interior spaces at airports and industrial plants, perform volumetric calculations of soil or coal piles and survey deformations of dams and locks. Other firms are using reflectorless total stations to perform inspection surveys for highway bridges; survey remote highways while minimizing lane closures; and survey, map and monitor changing cliff faces to prevent catastrophic rock slides.
Surveyors who compete in these and many other arenas are buying the technologies needed to perform highly specialized, high-margin projects. Many of these firms are able to make these investments by using a strategy that involves careful planning and budgeting, smart purchasing and “charg- ing back” technology benefits to clients.
Plan for New Technology
Equipment purchases should be neither a surprise nor a burden. To stay on the technological edge, you must make routine capital investments in technology, whether your firm is large or small, and you must do so with a plan in mind.
Be sure to investigate the needs of your markets and potential clients so that you don’t merely invest for the sake of investing. First, consider market trends. Ask yourself:
- What’s happening in our marketplace or geographic area?
- Is an industry in our region expanding?
- Are municipalities and state governments spending more money on infrastructure?
- Could they benefit from new surveying technologies?
- Can I serve an existing client better by applying a new technology?
- What additional industries, markets and clients do I want to serve?
- What technology is needed to serve the needs of these industries, markets and clients best?
- How should this technology be applied?
- Are there multiple users and applications for survey data to be collected?
Finally, decide what to buy and when. Make a list of products and their costs so you can plan your purchases for the next several years (see the example below). Remember that equipment purchases go beyond the sticker price of the hardware or tool itself. You’ll need upgraded software in most cases, as well as training and in-house testing.
Budget for New Technology Annually
Decide what to charge clients today based on the profit you want to earn and the funds you need to allocate for future technology upgrades. Accurate budgeting is important because the most sophisticated surveying tools are usually the most expensive. For instance, the cost of a 3D laser scanner can be five or six times that of a new total station. Whether you replace what you have with a better model or buy a different device altogether, you must make technology investments part of your annual business plan.
You can make a line item for equipment in your annual budget based on either a percentage of revenue or a percentage of profit. For example, a firm with $900,000 in annual revenue might invest 6 percent of that revenue in new technology, thereby budgeting $54,000 for new equipment purchases at the beginning of the year. A firm anticipating a comfortable profit margin and projects with certain equipment requirements might allocate 30 or 40 percent of projected profits to new technology.
Purchase New Technology
Buy wisely. Take advantage of the knowledge and experience of your manufacturer’s rep or dealer before deciding what equipment to purchase. Sometimes the “latest and greatest” might not be the best option for your applications. Trusted dealers can help you determine which models are best suited to your daily tasks based on the accuracy you require and on what products you usually produce for your clients.
Don’t purchase anything without talking to other surveyors who are using the technology. Ask them about their experiences using the equipment for various applications. Also, make sure you are well connected to the markets you intend to serve with this new technology so that you can determine whether clients are already taking advantage of it or are willing to try it on their next project.
Hire the right people. Investing in technology helps surveying firms recruit and retain the brightest, most promising professionals in the industry. The most talented individuals--who are in great demand--are more likely to join your firm if they see your commitment to purchasing and applying the latest technology, along with opportunities to apply their technical expertise and grow technically and professionally. Don’t fall into the trap of hiring button pushers or “coordinate cowboys.” Your workforce must know how to perform a number of computations and adjust system parameters correctly to ensure the proper outcome of a survey and deliver high-quality products and services.
Prepare to upgrade. Stay abreast of technology trends so that you know when new and important features become available, and regularly assess whether you could benefit from these features. When a manufacturer discontinues support of a piece of equipment, often after five or six years, then it’s definitely time to upgrade.
Educate clients about the cost--and value--of advanced surveying technology. Your clients should understand that your equipment is high-end, state-of-the-art, the best solution for their project--and often expensive. In almost every case, you will be able to show clients how your equipment makes you more efficient with your time and labor costs on their projects.
Your equipment charges should be included in the cost of every project you undertake. Consider breaking out equipment charges as a line item--or a “charge back”--so that clients understand the benefits they are receiving. Alternatively, add the extra cost for equipment to your hourly rate, but keep these charges separate in your internal accounting system so you can track the equipment charges that are set aside over time.
Let’s say you want to buy a new system annually for $35,000 assuming 5-percent annual financing costs for three years ($5,250). That brings your total cost for the system to $40,250. How can you recoup this investment?
One way is to add a dollar amount per hour per surveyor to every project--i.e., every hour a surveyor works will put money into your “equipment pot.” For example, if your firm has three one-person crews each working 2,080 hours annually with a 90-percent utilization goal (5,616 total hours worked), you would add a $7.17 (or $7.20) equipment charge per hour to cover the $40,250 equipment cost. The per-hour labor rate you would charge to the client would be calculated as:
Surveyor’s hourly rate + overhead multiplier + equipment charge + profit = labor rate to client
Another way to charge back for new equipment is to add a dollar amount per hour per piece of equipment used. For example, if the crews in the above example each use a piece of equipment for seven hours of each eight-hour day, the equipment is used approximately 4,914 hours per year. The equipment charge per hour would be $8.19 (or $8.20). You can break out this per-hour equipment charge as a direct reimbursable expense, separate from your labor rates. The sidebar on page 22 summarizes both charge-back methods.
Charging back equipment investments to clients allows continuous reinvestments in advanced technologies. Your commitment to buy and use new technology--which helps you provide better, more robust solutions and more accurate, reliable and usable data sets--is a commitment to the success of every client’s project.
The pace of technology change has introduced a “go big or stay home” mentality, which in effect handcuffs every survey business owner into finding ways to implement what’s new. Surveyors need to quit fighting over low-margin services and expand into more big-ticket, high-margin work. New opportunities--and greater profitability--await firms that follow an annual investment plan that leverages new technology.
Sidebar 1: A Sample Technology Purchase PlanYear 1: Robotic total station $35,000
Year 2: GPS system $45,000
Year 3: Laser scanner $125,000
Year 4: Upgraded robot (assume trade-in) $25,000
Year 5: Processing/CAD software $14,500
Year 6: Upgraded GPS rover (assume trade-in) $20,000
Year 7: Upgraded laser scanner (assume trade-in) $85,000
Sidebar 2: Two Ways to Calculate Equipment Charge-BacksEquipment Cost: $40,250 (Examples assume a crew gets a new piece of equipment annually.)
1. Dollar amount per hour per surveyor.
Total equipment cost ï‚¸ annual surveyor hours x no. of crews = equipment charge per hour
In a firm with three one-person crews each working 2,080 hours annually with a 90-percent utilization goal (5,616 hours worked):
$40,250/5,616 = $7.17 (or $7.20) equipment charge per hour
2. Dollar amount per hour per piece of equipment used.
Total equipment cost ï‚¸ annual equipment-use hours = equipment charge per hour
In a firm with three one-person crews each working 2,080 hours annually, each using a piece of equipment for seven hours of every eight-hour day with a 90-percent utilization goal:
(3 surveyors)(2,080 hours)(0.90) = 4,368 potential hours
5,616 potential hours ï‚¸ï€ 8 hours per day = 702 hours equipment not used
5,616 - 702 hours equipment not used = 4,914 hours of equipment use
$40,250/4,914 = $8.19 (or $8.20) equipment charge per hour
Sidebar 3: Points to PonderDo you…
- Use advanced GPS equipment for topographic surveys, photogrammetric ground control, construction staking, boundary surveys and utility inventories? Do you use GPS instead of leveling equipment for long-range transfer of elevation between control points?
- Use 3D laser scanning and reflectorless total stations for applications outside of traditional surveying?
- Use cell phones/wireless communications with GPS for greater ranges and better coverage over longer distances, more efficient and productive setups, and real-time communication between the field and the office, which allows faster data transfer and minimizes crew mobilization time?
If you aren’t taking advantage of advanced surveying technologies, you could be limiting yourself--and your surveying practice.