Strategies for Success in 2009 and Beyond

December 22, 2008
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Success used to be measured in a months-long backlog of work and double-digit profits. These days, many firms are struggling simply to keep enough work in the pipeline to stay afloat. Cutbacks and layoffs have become the norm in virtually every sector as large and small companies alike batten down the hatches to try to weather the storm. Mick Morrissey of the business consulting firm Morrissey Goodale LLC makes the grim prediction that “few [engineering and environmental] firms will successfully navigate through these challenging times.”{1} Associated professions, such as surveying and mapping, undoubtedly will continue to feel the impact.

But not everyone is struggling. In fact, some businesses are taking advantage of difficult economic conditions to expand their outreach and services. For example, Merrick & Co., a midsized engineering, architecture and surveying firm based in Aurora, Colo., opened two new offices in the fourth quarter-one in Tennessee and the other in Texas-to serve clients in the government, energy, life sciences, infrastructure and mapping markets. Keystone Associates LLC, a smaller engineering, architecture and surveying firm based in Binghamton, N.Y., is opening a new office in Starlight, Pa., and expects to maintain a steady level of work in 2009. Numerous land surveying firms are also bucking the trend by keeping a backlog of projects despite tough economic conditions.

In these and other success stories, location certainly plays a role-it’s no secret that surveyors in Texas have generally been faring far better than those in Florida and California, for example. But other factors are also important in positioning a firm for survival and growth in 2009 and beyond. To identify these success strategies, POB spoke with a number of equipment dealers and surveyors about current economic conditions and future trends. Their advice is summarized in the six basic steps outlined below.

1. Cut Back-Wisely

As evidenced by the rising unemployment figures and other economic indicators, many businesses already have cut back on labor, travel and incidentals. But some firms might face still more reductions in expenses to maintain a positive balance sheet in the months ahead.

Cutting the fixed costs of doing business is crucial to surviving a recession, according to George Hedley, CSP, a professional business speaker specializing in construction-related fields. “Determine what your business really needs to survive,” he says. “Eliminate all unnecessary expenditures including extra travel, gifts, donations, office supplies, subscriptions and new personnel. Hold your overhead budget at its current level. No raises, hiring or equipment purchases (except technology). No new long-term commitments such as leases, cars, office equipment or renovations. Challenge everyone in your office to see who can cut the most out of the budget.”{2}

Matt Nawrocki, president of Vectors Inc. headquartered in Denver, Colo., points out that every dollar saved goes directly to a company’s bottom line. “Every business owner has to go through expenses line item by line item and find ways to cut back,” he says. However, he also cautions that such reductions must be made carefully. “You don’t want to cut the wrong thing,” he says. “Without valuable employees, you can’t generate profit. Without technology, you can’t remain competitive.”

Businesses also must keep in mind the perception of existing and prospective clients when evaluating budget cuts. Quality and value are paramount, according to Larry Phipps, PLS, owner and president of Land Surveyor’s Workshops (LSW), Jefferson, N.C. “Moving [your business] into your basement because you need to save money on rent sends a message, just like handing the client a very nice map and report printed on high quality letterhead sends a message,” he says. “You can’t go part-way with the quality theme. Either you go all the way or there is no point in even trying.” Phipps also advises against cutting prices in an effort to attract clients noting that even during tough times, good clients are looking for quality as much as or even more than price. “The most successful firms will be those that emphasize quality over cost,” he says, “but that emphasis has to begin at the initial contact with potential clients. Telling the client you do good work as you hand them the final invoice won’t work.”

2. Diversify

At the height of the residential construction boom a few years ago, land surveying firms didn’t have to look far to find work. In fact, work often came looking for them. Construction projects were plentiful, and there was little need to pursue other opportunities. However, forward-thinking firms knew better than to rely on one type of business to feed their revenue stream.

Merrick & Co. is just one example. The firm began in 1955 as a small civil engineering and surveying company focused on electrical transmission and distribution projects in the Rocky Mountain region, but it embraced diversification early on. By the late ’80s, the company was involved in a variety of different surveying, engineering and architectural projects throughout the United States, including numerous projects for the U.S. Department of Defense, and it also began offering GIS capabilities. Today, the firm employs 475 people, serves a worldwide market and has total annual revenues of about $75 million. While many architectural and engineering firms have been hit hard by the recession, Merrick & Co. is poised to continue expanding. “We are diversified, and that’s been an advantage,” says David Huelskamp, senior vice president for the firm. “When land-development work slows down, the federal projects are typically countercyclical. We also have an international footprint that’s growing.”

Smaller firms might argue that they don’t have the resources to offer varied services in multiple markets, but that challenge hasn’t stopped Rodney Carey, PLS, at Keystone Associates. When Carey joined Keystone in 2006 as member-survey manager and part owner, diversification was a significant part of his strategy for the company, which currently employs 50 people. “Our survey department had been focused almost exclusively on boundary surveys,” Carey says. “But I believed our best chance for growth was to diversify as much as possible.” The firm acquired state-of-the-art GPS and robotic total station equipment, which made its crews more efficient, and it began pursuing projects in construction stakeout, gas exploration and niche markets, such as surveying cemeteries and building interiors. The firm has also begun to implement GIS capabilities, and it is investigating laser scanning. Recently, Keystone has tapped into another new market opportunity-subcontracting out its field crews to other survey firms.

“Diversity is key for us,” Carey says. “I don’t see a lot of growth potential going into 2009, but I don’t think our revenues will decline, and that says a lot in this economy.”



3. Plan

Deciding to diversify a business is a step in the right direction, but even large firms recognize that they can’t be “all things to all people.” Small firms have to be even savvier about where to focus their efforts to gain the maximum return on investment. So how can a firm identify potential growth markets? George Hedley advises networking. “Get out in your community and see lots of different people,” he says. “Seek input from your existing customers, bankers, competitors, suppliers, subcontractors, architects and engineers. More importantly, make a commitment to seek leaders who are not in your industry. Ask them for ideas and suggestions how to change the way you do business.”{3}

Merrick & Co. has a five-year plan, which the firm frequently re-evaluates and adapts to changing market conditions. The company relies on 14 full-time business development managers, continuous feedback from clients, internal research and outside help from business consultants, like Mick Morrissey, to identify key trends. “We do a pretty good job of pulsing the market,” David Huelskamp says. “We can’t do everything, so we’ll typically bite off maybe three new initiatives a year and invest in each of those.”

Huelskamp notes that Merrick & Co. is currently pursuing the field of commercial nuclear power as well as other projects in both traditional and alternative energy, such as power transmission upgrades, wind farms and solar collection sites. Keystone and other firms are finding opportunities surveying for new natural-gas pipelines. Patrick J. Beehler, PLS, director of surveying for the Olympia office of the multidisciplinary firm WHPacific and 2008-09 president of the National Society of Professional Surveyors, believes that energy will continue to be a strong market in the future. “Wind energy and the potential for new nuclear power plants should see an increase in surveyors, along with the oil- and coal-rich upper Midwest and Canada,” he says.

With the slump in private spending, many businesses are also eyeing government-funded initiatives such as military housing and infrastructure. However, firms without experience in government projects might have a difficult time winning the bids for new work, according to Bruce Gandelman, president of California Surveying & Drafting Supply in Sacramento, Calif. “You can’t just say ‘I want to start doing this work,’” Gandelman says. “You may need to hire people who are familiar with writing government proposals, scopes of work, etc. A long process is involved, and the earlier you start that [process], the more successful you’ll be when those projects become available.”

Other opportunities exist in niche markets, according to Gandelman, such as forensic surveying for local police departments. “In many cases, I think they would be very willing to allow a survey firm to come in and do that work because it would prevent them from having to buy their own equipment and train their own people,” he says.

Ultimately, firms need to be creative in their approach. “We all have to think outside the box and find ways to stay profitable,” Matt Nawrocki says.

4. Invest

Thinking outside the box should include an evaluation of technology. Advanced tools such as GPS systems and robotic total stations can help firms pursue more projects more quickly and with fewer people compared to conventional technologies. Laser scanning, LiDAR and GIS capabilities can open new opportunities, and software advances can help firms add value to their deliverables.


According to Larry Phipps, “Government contracts for things like new (improved) flood maps and highway infrastructure seem a good bet for future opportunities, but these are the types of tasks that demand cutting-edge technology like LiDAR and laser scanning. How many surveyors will be willing to invest the large sums necessary to be considered for this work? Only time will tell.”

The increasing use of laser scanners and other technologies will help to drive down the price and make such investments easier, according to Dick MacDonald, chairman of Fort Lauderdale, Fla.-based FLT Geosystems. In the meantime, he points out that a slow economy provides a good opportunity for firms to assess the condition of their existing equipment. “This is the time to get existing equipment serviced so that it will be ready when things do begin to pick up again,” he says.



5. Learn

Staying on top of market trends and technology advances is a continuous learning process. While meeting specific continuing-education requirements is a prerequisite for license renewal in most states, numerous other opportunities for learning exist such as Webinars, magazine articles, seminars and workshops, and discussions with peers and clients.

“It is imperative to stay current with magazines, literature and trade shows to see the latest and greatest technologies,” says John Dudley, owner of Birmingham, Ala.-based Earl Dudley Inc. Dealer seminars and manufacturer-sponsored user conferences are also beneficial, according to Bruce Gandelman. “I think most surveyors think of these [types of events] as a sales pitch,” he says. “But they can provide valuable information about what’s coming down the road, and they can also allow surveyors to get their wheels turning as to how they might be able to implement those technologies.”

“Once you get behind, catching up is almost impossible,” comments Larry Phipps. “The only way we can stay current is to dedicate ourselves to learning. At the end of each day, many of us direct employees to clean the equipment, reload the truck with expendable supplies and ‘sharpen the bush ax.’ We should look at our professional skills in a similar manner. We can all use a little bush-ax sharpening from time to time. When business is slow, we should be investing in ourselves.”

6. Adapt


Everyone wants the recession to end quickly. Promises of federal funding for roads, bridges and other infrastructure projects have many in the surveying and mapping professions hopeful that 2009 will bring a renewed demand for their services. But, as Matt Nawrocki cautions, there is a danger in being too optimistic. “When you hope for the best, then you cling to what you’re doing now,” he says. “The mentality is, ‘If I can just wait another six months, then the same type of work I’ve done in the past will be back to normal again.’ A better approach is to ask, ‘What strategies am I putting in place right now so that it won’t matter if that particular industry comes back or not.’

“Who’s going to be successful in 2009, 2010, 2011, 2012? Companies that have adapted to new technology and found new opportunities because of that technology.”


References

1- Morrissey, Mick, “Viewpoint: Recession-Driven Changes Coming,” Engineering News-Record, Nov. 12, 2008, www.enr.com.

2 - Hedley, George, “Don’t Just Survive - Thrive!” www.hardhatpresentations.com.

3 - Hedley, George, “Flat Times Are Here To Stay!” www.hardhatpresentations.com.

 



Sidebar: INTERVIEW WITH JOHN DUDLEY, EARL-DUDLEY

What do you believe are the best strategies to deal with the current economic and business climate as we head into 2009?

It’s critical to make crews as productive as possible by using equipment that minimizes the number of people required. Such equipment typically pays for itself through reduced labor costs.

Firms need to make sure they’re diversified. Surveyors who were exclusively focused on the residential market have been absolutely decimated within the past year. Conversely, the companies that have been focused on commercial, industrial or government projects have been doing OK.

What are the biggest technology trends that will affect surveyors in the next several years, and how can they stay ahead of the curve?

Today’s technologies offer new capabilities for deliverables that can create improved demand for services. Reference networks are allowing single units with a subscription to offer the same services that used to require two or more devices, thereby making surveys more cost-effective. Laser scanning offers a dramatically different product with added value. However, all of these areas require some marketing skills to be able to identify and fill the needs of clients. It is important for firms to learn to market the services and capabilities they already have to be able to find new opportunities.

High-resolution imaging stations do a better job of zooming in with the camera to allow surveyors to pick out points more easily. Software will allow more georeferencing with pictures to tie coordinate values to pixels. Many survey crews are already taking digital photos and layering them with data in their deliverables, so these advanced technologies simply combine those capabilities to streamline surveyors’ time and efforts.

It is imperative to stay current with magazines, literature and trade shows to see the newest and latest-and-greatest technologies. Stay in touch with the dealers who know what’s new and stay on top of the latest developments. Dealers are eager to help firms remain productive and profitable in these challenging times.

Now is a good time to take part in seminars on new technology. You might learn something new that will help you add capabilities and find new business.

Do you see any opportunities for growth in specific markets?

I mentioned government projects earlier. Local governments in particular have been an area of strength as they have added GIS equipment. Some surveyors have even added crews to address infrastructure investments (roads and manufacturing). However, as retail sales drop, less tax revenue will be flowing to many local and state governments, which will affect local infrastructure spending. Federal infrastructure investment is needed going forward for the maximum long-term impact.

Some other possible areas of growth include utilities, commercial, industrial, highway projects, etc. Companies must have a balanced business. Try to expand into GIS or other areas needed by local governments. There might be opportunities for surveyors to take on work as a contractor rather than those offices having to hire employees, especially in areas such as forensics work.

Sidebar: INTERVIEW WITH MATT NAWROCKI, VECTORS

What do you believe are the best strategies to deal with the current economic and business climate as we head into 2009?

Business owners have to sit down, look at the numbers and say, “Where are the places I can increase business, and where can I cut back?” People are what make a business, so that’s not the first thing you want to cut. You don’t want to cut some of your good employees only to have them go out and start their own thing or move on so that they’re no longer able to come back when the situation improves. So it’s important to retain your very good employees.

Most business owners [don’t understand] that when you save yourself $1 at your company in expenses, that’s really $1 of profit you’ve increased for your company. If your sales go down by $2 million but costs decrease by $1 million, that’s very significant. When you save $1,400, it’s like making $1,400. So one thing you have to do as a business owner is go line item by line item through your expenses. However, you have to be careful what you do cut – you don’t want to cut the wrong thing. Without valuable employees, you can’t generate profit; without technology, you can’t remain competitive.

In tough economic times, there’s a lot of good that happens. A lot of “cleaning house” needs to be done, and a lot of mergers and acquisitions take place. There’s also a lot of creativity that says we have to think outside the box and find a way to stay profitable. Every successful company has to have diversity to stay successful in slow economic times.

Of course, everyone wants to hope for the best, but here’s the problem: When you hope for the best, then you cling to what you’re doing now. The mentality is, “If I can just wait another six months, then the same type of work I’ve done in the past will be back to normal again.” A better approach is to ask, “What am I putting in place right now so that it doesn’t matter if that particular industry comes back or not-I’ve no longer put all my eggs in that one basket.” We all have to diversify and figure out other ways to become profitable.

Who’s going to be successful in 2009, 2010, 2011, 2012? Companies that have adapted to new technology and new opportunities because of that new technology.

What are the biggest technology trends that will affect surveyors in the next several years, and how can they stay ahead of the curve?

Our company has been focused on scanning and showing companies how to use that technology and market those services. That technology presents a lot of opportunities. You might be able to do work for a historical society scanning a historical building - you’re now doing preservation and making income with something that you might not necessarily think of as a surveyor’s job. I know police officers, for example, often buy their own total stations for crime scene investigation or GPS, and these guys aren’t experts. They’re police officers purchasing survey-grade centimeter accuracy. Why not position yourself as an expert in forensic surveying?

Companies have to consider the cost analysis. When the housing market was booming, it wasn’t financially feasible to invest in expensive technologies. But now that surveyors no longer have jobs in the housing industry, they need to look at whether it’s feasible to get into scanning and start marketing that. Companies that invest in the technology now and start implementing it will be in a good position when the economy bounces back to say, “Hey, we’re the experts in scanning; we’ve been doing this for several years.” And they already have the knowledge and education. So diversification and investing in new technologies are both key strategies.

Rental equipment gives you a great chance to become familiar with new technology and become prepared to invest when the market rebounds. We allow you to rent a scanner, a full-blown scanner or a scanner with a VX total station system, and we also allow for the cost of one of our guys to rent out with that package so that you can learn how to use the equipment and get the proper training and direction and guidance.

3D and 4D data are becoming critical today. Companies can give deliverables to their clients that they couldn’t offer before. And this is something I’m seeing – when survey companies start giving deliverables in a 3D scan rather than just a piece of paper with coordinates, you’re starting to see even the customer think outside the box. By giving a client a new deliverable, you might encourage that client to think, “I’ve got six more projects I could use this deliverable on; I’m willing to spend another $30,000.” You’re giving clients deliverables that are more profitable for them to show their clients.

I don’t think surveyors are implementing Google Earth enough in their products, but it’s very easy to implement. For example, one of my guys had scanned a radio tower in Albuquerque, and he was showing us how he could bring that scan into Google Earth and say, “Do you want to see how this tower would look right outside your office in Denver?” He then geospatially moved the scan of the tower to outside my office and put it in my parking lot to generate a 3D view. With that technology, you can model what a building would look like in a certain location, environmental impact, and so forth. That’s thinking outside the box – giving someone an evaluation tool that wasn’t there before.

Do you see any opportunities for growth in specific markets?

Aside from what I’ve mentioned already, there are some other markets that are thriving. We have the natural gas industry out here [in Colorado], and there’s also the field of alternative energy. Some firms are getting contracts with wind farms or solar energy farms. There have been increasing efforts to tap oil shale reserves on public land. Louisiana is a unique area for surveys because of the aftermath of the hurricanes and also oil exploration.

It’s important to go where the money is. When the residential building market was strong, survey companies could attach themselves to one of the development companies and ride their coat tails. But when the developers stopped developing, the work dried up.

You have to look at who has money to spend right now. The federal government is a big one. Look at who is getting federal dollars, and then figure out how you can get part of that money. Surveyors have got to say “We’re the experts, not only in measurements but also interpreting properties and so on.” After the hurricanes down south, surveyors were relied on to re-establish boundaries and so forth. It might even entail some companies opening survey offices in some areas where the survey business is good. Unfortunately, not all companies are big enough to expand all over the country. But there might be one PLS in your company who is licensed in a number of different states.

There’s an old story about a buggy maker 150 years ago, when the buggy and whip were about to be replaced by the automobile. A worker in the buggy business said to the CEO, “Sir, we’re going to be out of a job soon because the buggy is going to be replaced by the automobile.” The CEO replied, “The No. 1 mistake you made is thinking we’re in the buggy industry. We’re in the transportation industry-therefore, we should be the leaders of the auto industry.” It’s a shift in thinking. By saying we’re in the transportation business, it’s like saying we might be in the buggy business today, but we’ll be in the automotive business tomorrow. We’re the conventional surveyors today, but we’re the scanning experts [of] tomorrow.

Sidebar: INTERVIEW WITH BRUCE GANDELMAN, CALIFORNIA SURVEYING & DRAFTING

What do you believe are the best strategies to deal with the current economic and business climate as we head into 2009?

The obvious one is to reduce your overhead. But along with that, just working smarter. If a surveyor hasn’t embraced robotic technology, that’s probably the first thing to look at. That reduces staff and makes you more productive.

Diversifying is also key. You need to look for some niche markets. We’re finding some interesting trends in the use of surveying services, such as surveying for solar companies. When companies are doing large rooftop installations, they need surveys of the roof. I also understand, and I haven’t seen it too much here, but there are some opportunities in surveying accident scenes. Instead of a police department acquiring their own equipment and training people, it may be a viable alternative to simply contact your local police station and say, “We can provide those services.” That’s on an on-call basis and things would have to be worked out, but it presents some new opportunities. We’re seeing it all over the news media and also in TV shows. That’s a whole new vertical market that has sprung up. I think in many cases surveyors are sitting back and letting police departments handle the work themselves, but that doesn’t have to be the case. In many cases, I think they would be very willing to allow a survey firm to come in and do that work because it would prevent them from having to buy their own equipment and train their own people.

What are the biggest technology trends that will affect surveyors in the next several years, and how can they stay ahead of the curve?

VRS networks is a big one. It saves surveyors money and allows them to work faster because they don’t need bases. We’ve done studies where we’ve shown we can save surveyors 50 percent just because they’re not setting up base stations and doing site calibrations. Some of the steps that you have to do to set up for every project can be eliminated if you’re using VRS. And it’s not available everywhere yet, but it’s been very successful where it has been rolled out. VRS and scanning are the two big things I see on the technology front.

Deliverables is another area. I don’t think we’re ever going to get away from the construction technologies that are being implemented now – the machine control, the GPS. I think that the surveyor has to go back out to the contractor and come up with new deliverables. This might be building models, doing the QC, taking on the liability that the contractor doesn’t really want. Surveyors need to take a good look at their deliverables and change them to fit the needs of their clients. We can now incorporate pictures because total stations might take pictures or there might be a scanner. So capabilities have changed, and letting clients know what your capabilities are will really help. You might also have to go to other people such as architects and developers, who are ultimately paying for the projects, so sometimes they’re more receptive to new technologies if it’s going to save them money.

If you’re not familiar with the technology, take advantage of the informational seminars offered by dealers. I think most surveyors think of these as a sales pitch, and they very well might be. But they can also provide valuable information about what’s coming down the road, and it also allows surveyors to get their wheels turning as to how they might be able to implement those technologies. And that goes back to the strategies – it can be helpful to view dealers as a partner in your business. User conferences are also a good place to get information.

The world is always changing. You can’t ignore change and expect something to happen. It’s happening all around us, and we either need to get involved with it or get left behind.

Do you see any opportunities for growth in specific markets?

In addition to what I mentioned earlier, infrastructure monitoring is also something that presents opportunities. We know about the bridge in Minnesota. In ’89 we had a section of the Bay Bridge collapse. So monitoring dams, bridges, is certainly something that surveyors – if they’re proactive and talk to people – can say “We offer this service.” And equipment manufacturers are coming out with good products to do monitoring very easily.

As far as other areas for growth, the government right now is where we see some opportunity. In California, a couple years ago we passed $40- or $44-billion worth of infrastructure bonds. We’re going to start seeing some of that money becoming available for these projects, so there is certainly some opportunity there. But surveyors can’t just say “I want to start doing this work.” They need to start that process early. You may have to hire people that are familiar with writing government proposals, scopes of work, etc. They tend to not just reward those projects to the lowest bidder; they want experience, all the background information. So it’s something that involves a long process to get into – building that, finding out what’s required. And the earlier you start that, the more successful you’ll be when those projects become available. We’ve heard about Obama’s plans to stimulate the economy through infrastructure projects, so we might see this on a national level. Governor Schwarzenegger within the last week announced that the California government would be freeing up some of the bond money that we have to get some of these projects done. He had to slash through some red tape to move them forward. It’s a trend I think we’ll continue to see in government.

Of course, all of this requires companies to be more active in marketing their services to potential clients. One of the things I think is key to the survival of the entire profession is to be more receptive to the customers’ expectations. Surveyors need to be more proactive, understand what their customer is looking for and provide that service.

Sidebar: INTERVIEW WITH DICK MACDONALD, FLT GEOSYSTEMS

What do you believe are the best strategies to deal with the current economic and business climate as we head into 2009?

We’re suggesting that people review their equipment situation. This is the time to get equipment serviced that needs servicing so that it will be ready when things do begin to pick up again. We’re also suggesting that surveyors look at other areas of revenue.

What are the biggest technology trends that will affect surveyors in the next several years, and how can they stay ahead of the curve?

I think the biggest thing that’s going on in the survey world is the development of scanners. I think this is an opportunity for surveying professionals to get more involved with that product. Up to this point, it’s been primarily an engineering product, but I think it’s a product the surveyor needs to become acquainted with and figure out how to best use it. I think the price of the technology is going to start coming down because use is increasing. A lot of surveyors are still reluctant to take the plunge, but I think they’re going to need to adopt it to stay current and competitive.

GPS continues to be a technology that is becoming more useful, but I think most surveying firms are up to speed with what’s going on there. Robotic total stations continue to be a practical way to reduce the number of people survey firms need to employ.

Do you see any opportunities for growth in specific markets?

The people who seem to have money are not the private developers but the government entities – the cities, counties, state and federal. These are the people that have projects on the board that are funded and work needs to be done. Getting involved in these projects is primarily a matter of going around and knocking on doors. Unfortunately, many surveying and engineering firms don’t really have the expertise or even the desire to go out and do that, but I think that’s where work is, so you kind of adapt yourself to the situation.  

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