Service Companies and the Importance of Repeat Business

 

 

Contributed by Brandon Hogan, P.E., Operations Manager 

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Service Companies and the Importance of Repeat Business

Engineering, Procurement, Construction (EPC) projects are hard and a very difficult field to work in. Every project is unique. Every client is different. Even within a given client company, project managers may have varying preferences with regards to project execution. As contractors, our job is to figure out how to make the client successful, while satisfying the safety, logistical and technical requirements of the job. The client must agree that the project was successful or working for them again won’t come to pass. This is a big deal. Service companies are dependent on repeat business.

Why the dependency on repeat business?

The world is small. Especially the world of oil, gas and chemicals. It seems as though this market is huge, and it is, in terms of capital. However, in terms of numbers, it is small. There are a relatively small number of owner/operating companies that support a large number of service companies. The only way to sustain a healthy client base is to ensure a strong foundation of strong core/repeat customers.

Necessary components for repeat business:

1) Safety
2) The perception from all stakeholders that the project went well
3) A finished product that meets quality expectations
4) A product that meets budget expectations
5) A product that meets schedule expectations

This business is about partnerships.

For EPC companies, the goal is to be a client’s go-to company for years to come, not just for one project. Decisions should be made that are in the best interest of the partnership long term, as opposed to short sighted ones. Organizations must take into account the value of projected future income instead of looking at a project in a silo. Every project taken on or site accessed should be viewed with pride. The intent should be to continue to work there indefinitely. The way to get this done is to be the best at what you do, and to serve your client in a way that makes them successful.

It takes a long time to acquire a new client in our business, sometimes a year or more. There is a significant cost in this, both in real dollars and time, but also in opportunity cost that could have been spent pursuing other business. Once a client is obtained, the relationship should be nurtured and not taken for granted. The easiest way to do this is with responsiveness and respect. When a client calls, call them back. Answer their questions and take ownership in the relationship. Always get them the help they need. Be respectful and nice. The clients pay the bills.

It is not just the client that needs attention. All project stakeholders should be identified at the beginning of a project, and their satisfaction should also be maintained throughout. For example, the 3rd party inspector is also a stakeholder and deserves to be satisfied.

Work safe, smart, hard, and never be idle. A large part of what a client thinks is in the hands of its employees. Good client/employee interaction is a big part of maintaining a long-term relationship. The importance of this should be emphasized from upper management. Everyone who interacts with a client, whether it be by email, in person, or by phone, should think of themselves as a salesperson for their organization.

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Brandon Hogan, P.E. – Operations Manager at H+M Industrial EPC

B.S. in Chemical Engineering, MBA

Brandon has more than 14 years of industrial engineering experience in operations and project settings. Responsibilities included managing the operations of the Engineering, Procurement and Construction divisions. His past experience includes over 10 years of engineering with The Lubrizol Corporation in Deer Park including process design, capital project management and engineering optimization.

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Did you know you’re a salesperson? The importance of customer service.

 

 

Contributed by Brandon Hogan, P.E., Operations Manager 

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Did you know you’re a salesperson? The importance of customer service.

Did you know you're a salesperson? The importance of customer service. H+M Industrial EPC

I love going to big box stores to shop.  The workers there are so friendly and helpful.  Anytime I have a question, or need something off of the very top shelf, and enthusiastic worker is always at my assistance.  Your experience too?  Just kidding.  Although I have had some experiences like this, they have been relatively few.

Why do less than stellar customer interactions happen?  I think it is because not all employees recognize the impact one person can have on a client’s perception of the whole organization.  Many times, a single employee is the window that a client has into a company.  If the interaction is negative, the client attributes negativity to the whole organization.  And this is not an easy problem to solve.  Many people want to “do their job”, without realizing that they most likely have a direct impact on whether a client will choose to do business with their company.  Reception, receivables, payables?  All sales jobs.  Project management, engineering?  Sales jobs.  The list goes on and on.  Anyone who makes contact with clients or potential clients is that company’s representative.  It seems like common sense, yet most people have little appreciation for it.

In my company, we implement engineering and construction projects for clients.  Every job we do is different, requiring a custom approach that is dependent on technical requirements and the client company’s project approach.  Within each organization, the individual client project managers often have different approaches, pet peeves and requirements.  So every project has a unique set of constraints that affect the way it can be executed.  Many times, customers have one point of contact with our company. This makes it even more important for us to push that every employee is a salesperson. A bad experience with their point of contact can cause a customer to start having doubts about the company as a whole, which is unfortunate and something all organizations must really watch out for.

With all the moving parts from project to project, it is important to create consistency in as many ways as possible, so that the product feels like your product and a customer can recognize it as your company’s work.  One way to do this is a consistent customer service approach.  Customer service shouldn’t be confined to a “Customer Service Department”. Each employee must be held accountable for the experience they present customers.  It is the responsibility of everyone in the organization to help clients succeed.

How do you create a culture where every person in your organization will be a salesperson for you?  Frankly, I don’t know, but here is what we are trying:

  1. Telling employees that they ARE sales people (duh!).
  2. Implementing customer service metrics as a part of the evaluation process for all employees. This helps hold them accountable for their actions.
  3. Creating an environment that desires client long-term success, not just the success of any individual project profitability.

Customer service is a concept that should be spread throughout the entire organization, not just obvious positions like account management and business development. Everyone has a chance of communicating with a client, and the significance of great customer service from management must be made BEFORE that interaction happens.

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BrandonHogan - Did you know you’re a salesperson? – The importance of customer service.Brandon Hogan, P.E. – Operations Manager at H+M Industrial EPC

B.S. in Chemical Engineering, MBA

Brandon has more than 14 years of industrial engineering experience in operations and project settings. Responsibilities included managing the operations of the Engineering, Procurement and Construction divisions. His past experience includes over 10 years of engineering with The Lubrizol Corporation in Deer Park including process design, capital project management and engineering optimization.

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(How Not To) Serve Up Change Orders: The Importance of Project Scope Definition in Small Capital Industrial Projects

 

 

Contributed by Brandon Hogan, P.E. – Operations Manager at H+M Industrial EPC

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(How Not To) Serve Up Change Orders: The Importance of Project Scope Definition in Small Capital Industrial Projects.

Change Orders H+M Industrial EPC

If you’ve ever been to one of the “weigh the cup” frozen yogurt places, you have probably noticed that the only container options available are really, really big cups.  And without constant micro-management, my kids will soon fill the very large cups with three different ice-creams, seven kinds of candy and top off their leaning towers with whip cream and a cherry that ends up costing more than dinner did.  Good thing they take plastic.

As anyone involved in projects knows, jobs can also run wild without the correct controls in place.  The irony of small capital projects (<$20MM) is that small doesn’t mean easy.  However, due to the reduced capital allocation, small jobs aren’t always controlled as closely as large ones.  In some areas, this is prudent and common sense (who hasn’t been frustrated by a twenty page schedule for a two week job?).  But in other areas it is as important, if not more important, to closely control the small job.  With several jobs running concurrently and short schedules, they will finish quickly, and it doesn’t take much to blow a schedule or budget.

The most important aspect of a project, small or large, is the scope definition.  As simple as it sounds, this is the most common mistake we see repeatedly with projects from many different clients.

After a project is deemed potentially commercially viable and capital budget estimates are sought, it is key that the client or contracted engineering group consider the appropriate priority and sequence of actions that must be taken in order to ensure the budget will be reliable.  The key driver for the project should be identified and made clear from the beginning through the end to all parties involved.  Is it a safety project?  Schedule driven?  Is cost the main factor?  The driver should be posted as a North Star to the project to make sure that work in the weeds doesn’t change or mitigate the purpose of the job.

Preliminary Engineering deliverables should include Infrastructure Surveys, Equipment Specifications, P&IDs and Equipment Layout prior to budget level estimates.  Without these at a minimum, your budget nor EPC bids will be within acceptable limits.  Some owners believe in saving money in the engineering phase and not ordering these complete items.  Many times this will be proven to be an obvious mistake further into the project life when change orders arrive due to unclear scope.  Other times, the project will be negatively impacted, unknown to the owner, because of the less than optimal prices received in bids due to the perceived risk charged for by the bidding contractors.

Most long term contractors, contrary to some opinions, do not relish in delivering change orders.  Change orders can cause tension in the owner-contractor relationship and disturb schedules, supply chain and workforce planning.  An ideal project is one that is well scoped, bid at fair margins, and is installed safely, on time and in-budget.  A client’s value to a contractor is the present value of all future work, not just a single project, so it is in the contractor’s best interest for the owner to be as successful as possible.

So, the next time you let your kids get frozen yogurt, do like I do:  Make them take a scale and Gantt chart with them.

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BrandonHoganBrandon Hogan, P.E. – Operations Manager at H+M Industrial EPC

B.S. in Chemical Engineering, MBA

Brandon has more than 14 years of industrial engineering experience in operations and project settings. Responsibilities included managing the operations of the Engineering, Procurement and Construction divisions. His past experience includes over 10 years of engineering with The Lubrizol Corporation in Deer Park including process design, capital project management and engineering optimization.

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