On the Level
August 1, 2006
An old industry adage in the manufacturing arena says you can make money by producing the best product, or you can make money by producing the cheapest product--but you can't make money by producing the best and the cheapest product.
What is true in manufacturing is doubly true in a service business like surveying. In just about every community where there are more than two or three surveying companies, there will be one that is known as the cheapest and another that has the reputation as the best.
Of all the articles you read on the issue of business practices in publications like POB magazine, you will rarely find one that discusses how to be the cheapest surveying company in your community. The concentration is invariably--and rightly--on producing high quality services. On the other hand, surveying is a highly competitive business, and a proprietor must find ways to deliver services at as low a cost as possible. By reducing/controlling costs, the proprietor can accomplish two objectives: the company becomes more competitive in the marketplace, and/or the company diverts a greater share of income away from labor and overhead and into the profit column.
When we think of cost control we usually think first about lowering cost through the use of modern technology.* What we should really think about first is reducing the cost of our systems and procedures, which usually means reducing the time required to accomplish tasks. Cost control then becomes a matter of efficiency and proficiency; both qualities are required of the worker. (It is possible to have one quality and not the other, but both are necessary in the well-run organization.) To be proficient, the worker must be educated and trained. But in order to be efficient, the worker must also plan the time for every operation and must be conscious of working as quickly as possible without making mistakes that require redoing the work. As the good carpenter says, measure twice, cut once.
A major ingredient of efficient and proficient work is the concept of quality control and quality assurance (QC/QA). Quality control is what the staff is responsible for; quality assurance is what the organization promises and the customer should expect. If every worker in a system is QC/QA conscious, the whole system (or organization) benefits and the production, whether a product or service, can be accomplished at lower cost.
In many or most operations, labor time is the most costly component. When the pyramids and Parthenons and medieval cathedrals were built, labor was cheap and everything that was done was labor-intensive. Today labor is expensive and, in order to lower costs, the time of human labor must be minimized. But labor time should only be minimized while also achieving quality of production.
This is true in a service industry as well as in the manufacturing process; it is true in the private surveying office as well as in the public surveying agency. The difference between public and private organizations is that private business managers are ever conscious of the need to make a profit at the end of the quarter; the need for timesaving procedures is more apparent and compelling. Managers in a public agency are not as concerned about profit; public office managers are budget-conscious and may be quota-conscious, but it is possible to meet budget and quota goals without being profit-conscious. The not-for-profit government surveying agency does not work in the for-profit competitive atmosphere of the private surveyor.
So, the main issue of low-cost surveying is time. How to save time, how to finish an operation on time, but also how to anticipate the time required for the following operation. That is the best way to achieve low cost. And every worker must be time-conscious and can be if he/she works efficiently as well as proficiently.
QC/QA consultants study every operation in a system (company or agency), looking at the ways workers accomplish their tasks and looking for ways to reduce time required. If workers can accomplish their tasks in less time, costs go down and production goes up. Workers are apt to fear that by reducing the time required to accomplish tasks, they may work themselves out of their jobs. This is rarely the case. By working more efficiently they enable their organization to achieve higher standards and attract more work, and they themselves are able to demand higher pay. The private company increases its competitive edge, gets more work and makes more money. The public agency satisfies the needs of its "customers," achieves its goals and meets its budget. In short, it serves the public better.
Finally, there is nothing wrong with trying to lower the cost of surveying services, even--or especially--by the company with the reputation for the best services. But this discussion is about cost, not fee. When an organization finds ways to lower the cost of its services, management can decide to pass the savings on to customers in the form of lower fees, or management may enjoy a greater margin between costs and income in order to share the profit with staff and/or make more capital investment in the latest technology. It is one of the happier decisions management ever has to make.
*Technology and modern equipment promise to be major time-savers, and often are. But such equipment is often high in capital investment and must be chosen carefully with the capabilities of staff in mind. Too often offices have acquired equipment and technology the staff was not trained--or competent enough--to operate. Many proprietors have also discovered that the cost of training staff equalled or exceeded the cost to purchase the equipment.