How High-Performing Architecture Firms Improve Profitability and Cash Flow | 704

0:00Hire smart people, give them clear goals and the information that they need, and you'd be shocked.

0:30number of architects are using AI not to replace design thinking, but to eliminate the business bottlenecks draining time, energy, and focus. Today's guest is Ashish Desai, the CEO of Monograph, a platform that's becoming a major force in how architecture and engineering firms manage their businesses. Before stepping into the CEO role, Ashish spent many years focused on one core question. How do you help creative firms run with more clarity, confidence, and control. In this conversation, you'll hear a very grounded perspective on what actually moves the needle inside a practice from utilization and realization to why so many firms struggle with cash flow even when the work is there to what the best performing firms are doing differently right now.

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3:39Gilt, tax strategy built for architects. Don't wait for next tax season. Schedule your complimentary consultation at joingelt.com. That's J-O-I-N-G-E-L-T.com to learn more and mention BOA when you sign up. Ashish, welcome to the Business of Architecture. How are you? Good. Thank you so much for having me. I'm excited to chat. Excellent. Now, I'm very glad to have you on the show. So as I was just saying before we hit record, and as many of our listeners know, that us at Biggest Business Architecture, we're big fans of Monograph. And you are the CEO of the organization. And it's been one of these pieces of software that I really feel has made an enormous difference in a very short period of time to what we've seen directly with our own clients.

4:36Just looking at anecdotal evidence with our own client base, with people using Monograph, their financial empowerment, financial literacy, the ability to track profit moving throughout their business, the ability to have more confidence in setting their fees. and also the new sort of pipeline feature. So that's now a kind of current conversation that clients are able to have with a lot of accuracy has been massively, massively impactful to the running of profitable architecture practices. So thank you very much for all the work that you're doing in the industry and providing such an awesome tool that we like to advocate for.

5:24And perhaps we'll jump in and you could tell us a little bit about, you are the now CEO of Monograph. Perhaps you could tell us a little bit about how long you've been with the company and how would you describe your role? Yeah, thank you. Thank you so much. And thanks for the, just before we get started, I did want to say your community and your podcast and all of the support that you guys provide to the business owners is so helpful. and we see that with our customers every day. And they sometimes say, hey, business of architecture told us to do this. How come we can't do it here? And we're like, okay, we'll make that work.

6:05But yeah, back to your question. So I've been here at Monograph for almost three years. Most of that time I spent as the chief product officer. And so for those that are less familiar with tech or software businesses, Basically, the product team is the team that's most responsible for understanding the customer pain points, trying to come up with great solutions for how to do that and prioritizing that and working with our software engineering teams to implement that. And so I've spent, you know, a good part of my career doing that. And over the last couple of months, I've had the very amazing opportunity to step up into the CEO role.

6:52Robert, our co-founder and longtime CEO, is excited about kind of moving on to other opportunities. And he's a founder at heart. So I expect big things from him in the future. You know, and I think a lot of different things are on his plate right now. But, you know, so as as that transition happened, I've been able to take over a larger role as the CEO. You know, but mostly we're still we think of ourselves as a product company. And so a lot of what I just described, understanding the customer, figuring out the pain points, trying to come up with more solutions. That's all we're trying to do. And everything that you mentioned before is music to my ears.

7:37And I think we will continue to do even more to help our customers and help these small businesses be really successful. Awesome. So one report that you guys have become quite well known for over the last few years is the benchmarking report. I'm always, again, a big fan of the benchmarking report. It's another thing that I'll often share with our own clients. And a lot of the metrics in there will insist that our clients are actually tracking as well. I find it really interesting that this benchmarking report is, you know, kind of the source data of it is real time, real life clients with you guys being able to kind of look at it from the back end, keeping it anonymous, obviously.

8:28um and that's that's a very different way of data aggregation if you like than say how the professional bodies might do it by surveys and then there's options of you know things that you that you're going to choose from for an each or an answer um and it might not actually be as as accurate uh and often with the surveys that we'll see from the aia or for the reba in the uk my opinion is that it's often surveying a low functioning profession in the first place and so the results tend to be kind of quite low um and it's all interesting when we look at the benchmarking reports that you guys are doing that the upper quartiles are often quite you know they're really strong and it's a really powerful like just positive message to be sending out to the rest of the industry that when you get your financial literacy and numbers in place, this is the sort of results that you can be producing.

9:30So perhaps I could start just by asking the question of, you know, what's the philosophy behind the benchmarking report from you guys' perspective? Yeah, I mean, I think you hit a bunch of it right away on the head. So So like basically what we are trying to do is provide confidence to our, well, not just our customers, but to the broader A &E community that you can run a really strong business. And I think you guys are obviously doing that as well. But I think the narrative sometimes in the past, especially, and maybe even now, is that it's very challenging, which it is, to run a services business in the A &E space.

10:16You might have to work on really low margins. It's really hard to be profitable, all of these things. And while all of that is true, I think what we're trying to convey when we put out these benchmark reports is that there are ways and the proof is there. there are ways to be very, very successful, to be profitable, to be running strong businesses. And, you know, hopefully a lot of the things that you'll see in the report, not just point to the fact that it's possible, but also provide some of the steps. And we do that through, you know, obviously we believe that we understand our customers very well and that we have learned a lot from our platform, but we're also trying to use your peers as a way for you to learn.

11:03You know, you don't have to take our word for it. We do have plenty of architects in the company and engineers as well. But a lot of us are business folks. And so, you know, it might be a little less credible to say, oh, this guy comes along and is telling me how to run my business. And our philosophy with this report is, no, you know, of course, we have some suggestions, But the reality is you can learn from your peers. You can see what they're doing. And that's what we hope this report provides. Can you tell us a little bit about how you get the information or like how do people participate in the survey?

11:42Yeah, yeah. So, you know, you mentioned it earlier in other kind of comparable places where you might get a report like this. Often it's self-reported information. It's surveyed. So you have, like you said, a lot of the biases on whether you even respond, whether where you get this information is accurate. And of course, sometimes there's optimism and or pessimism when people fill out surveys. Right. For us, the beauty of Monograph is all of our customers. So we have over 2000 firms on our platform today. They are all, you know, for the most part, are using Monograph to run their entire firm practice.

12:25You know, we often, I guess historically we've referred to ourselves as a project management platform, but now we kind of started using the term firm management, firm, you know, your practice management, because we really do everything from helping you run your projects, do staffing, get your invoices, get paid. So we have a very good understanding of your entire business. And as you said, we're very careful. We anonymize the data. We remove outliers and things of that nature. But all of this data is based on actual people using the platform over long periods of time. And so we are able to pick up on trends.

13:07We're able to, as I said, use your peers to understand and kind of break things out. and this year we might get to this in a second but we actually were able to separate those that are actively paying for AI tools and trying to understand how that group might you know perform differently and again all of this is with the intention of helping folks learn from their peers. That's very interesting so actually got a way of distinguishing firms that are kind of investing into AI development and implementation and segregating it almost to see how they're performing versus those who aren't. Exactly. Yeah.

13:52Yeah. It was very fascinating. And some of the results were intuitive and others were less so. And it was actually pretty interesting to see what happens there. Not to go down an AI wormhole here. Yeah. Just very quickly, what sorts of things are you seeing firms using AI for in the business, not just in the sort of drawing technology? Yeah, yeah. And that's a good point. I think, you know, at least at this moment, Monograph is not involved in the design process. But yeah, within the business, I think there's a lot of great functions. And, you know, I think for us, we think of AI as just, you know, and I totally understand that AI can be a bit of a, you know, a challenging topic at times.

14:39But I think what we think of it as is an accelerator against, you know, a goal that we've always had. We think of ourselves as taking care of all of the stuff that you don't want to, running your business so you can focus on what you love. And so, you know, within Monograph, we have utilized AI in many ways, such as, for example, just a few things that we've done. We can take a signed contract that you might have with a client and scan that and then figure out what phases are a part of that, what timelines, what roles. And so that allows you to go from an inputting exercise that might have taken you 30 minutes or 40 minutes per project to just seconds.

15:30And we give you suggestions. And then from there, we can also tell you, oh, these are the people that can do those roles. So here's a designer. Here's a project manager. They all are available in the timeframe of this project. Here's who we'd suggest you put on here. Here are budgets that we can provide. So, you know, a lot of the things that honestly Monograph has done for many years, but now we can supercharge that and make that even better using AI. You know, all of those rote tasks, automatically creating invoices, things of that nature. And so I don't want to come on here and be an advertisement for Monograph.

16:07And so I'll digress here. But my point is that, you know, I think there are a lot of opportunities to, you know, make those business tasks, creating proposals, answering RFPs, things like of that nature that I would imagine that most folks don't want to, you know, spend a lot of energy on, you know, innovating on. You know, I always say, like, innovate on your core business, which is design, you know, which is problem solving for your clients. And don't innovate on running your business. You know, that's something that we know how to do. And if you just kind of follow our lead, we can help you run that.

16:47Yeah, that's great. And again, very interesting that there is so much opportunity here in AI. I know a lot of architects that they've been very focused on using AI in production and the delivery of the work. And that there are so many tools out now where so many of these sort of laborious tasks that we used to find massive amounts of time being sucked up. There is an AI solution for it. And again, it just frees up the time to be getting back into the core function of the business. um let's have a little look at the report itself and there are some benchmarking metrics or they're often relationships that's why i like to think of them there's never like just one number that's being measured it's a it's one number against another number which kind of creates a ratio which becomes much more useful for um determining uh uh you know trends and things to be looking out for in the business.

17:46And perhaps we can go through what those benchmarking numbers are and why you focused on them. And the first one is the revenue per employee. So effectively, that's the amount of net operating revenue per year divided by the full-time equivalent number of employees. So I'm assuming that you'd work it out by hours as opposed to bums on seats. Yep. Yep. Uh, yeah. So we like to think of this as kind of the headline metric. If I had to pick one number, um, that, you know, I would, uh, kind of use as understanding the health of, of your business, this would be it. And the reason for that, um, there, there are actually multiple reasons.

18:31One is it's actually quite easy. Even if you don't have a tool like Monograph or, um, you know, or any tool of, uh, of any kind, you, I hope you know how much revenue you made in a year and you probably know how many people work for you. So it's very easy to calculate. And then, you know, again, in this benchmark, you can see what's normal, what's low, what's high. And that really encapsulates, you know, a bunch of things. What it does is it tells you, number one, your efficiency. You know, ultimately, you're in a services business. And so how many people in your org are spending their energy on things that you can bill for?

19:11And then of that, are they doing that in budget and within time? And these are all kind of separate pieces, you know, the first being utilization, the second being realization. And then finally, are you making, are you actually bringing that money in? Have you had to write off any of that time? And that's kind of cash collection, right? So I think of that top line number of revenue per employee is encapsulating all of that and giving you a very easy way to say, like, are we doing well or not? And then once you identify that, if you're doing great, then great. Like I said, don't innovate on something that's working.

19:49But if you're not, then try to break it down and understand, is this a utilization issue? Is this a realization issue? Which again, basically means are you staying in budget? Are you doing things that you shouldn't be doing? Or do you have folks that are spending too much time on things? And then finally, are you collecting that money? And, and of course, from there, you can keep breaking it down. But, you know, what, what I think can always be challenging as a small business owner, as someone that maybe doesn't have a lot of experience, you know, in, in business is there's just so many things out there.

20:25There's metrics. Should I be doing this? Should I be doing that? I think by breaking it down just to three or four of these and understanding if you're good, bad or something else, you can then start breaking it down. And hopefully all of those things aren't bad. Maybe two out of three are pretty good. And then you're like, OK, this is an area I can focus on. And that's kind of how we've tried to break it down. What is it that you're seeing is a good benchmark? I think you guys use this as well, but I think right around the 200k per employee is, you know, that you're running really, really well.

21:03And that's what we often see is kind of a great benchmark to say if you're, like I said earlier, if you're, if you're above that, then you're probably doing most things well. And if not, then there's areas for opportunity. Do you find that it changes a lot across the country? So, for example, in more larger metropolitan areas, it's easier for firms to get up to that area than maybe in the middle of the country. It's a little bit different. You know, we looked at that and it's not as different as you might expect. And so it's actually quite interesting. And I think, you know, maybe it's because they're able to be more efficient with their folks or what have you.

21:48I haven't tried to understand why, but we didn't notice many regional differences. that's that's actually very positive to hear because i often um you know our kind of interactions with clients might be that oh it's easier you know if i'm in new york or california it's going to be easier than if i'm in arkansas and so that's very encouraging to hear that it's actually quite a nice spread across in terms of let's let's say uh if you're really high yeah is that an issue So like if you're at 400, 500, would that be a cause for concern? Or is that just you're doing amazing? It's unbelievable. Yeah, I mean, it's a very fair question.

22:31I do think that if it is way out of bounds, like in the four or five hundreds, you may want to make sure that you are not running your team into the ground, you know, like trying to understand why that is the case. So if you're, you know, for example, maybe, you know, maybe you are able to command very high rates, maybe because of the type of work you do or or the geography, you know, or what have you, then I think that's OK, obviously. You know, but I think what I would be more worried about is if that meant, you know, your your folks are working 80 hour weeks consistently and things of that nature, then I would I would be careful of that.

23:15So I think, you know, whenever you're above, obviously, it's not, you know, I think we try to simplify all of this. And as you mentioned earlier, there are lots of different pieces that go into any of these metrics. And so I do think it's fair to make sure you feel like you're in a place where you're running sustainably. But if you are, then great. That sounds amazing. there might not be as interesting you said there might not be a difference necessarily geographically with the numbers do you see some trends in different industries or different sectors yeah we do notice um i mean so the the interesting thing that we often see and i i don't know if it's as common um outside of our customer base but our customer base doesn't um of course there's areas of specialty, but in general, we see a pretty healthy balance between residential, commercial, institutional.

24:11And again, there are, of course, people that specialize in those areas, but on average on our platform, we see a very reasonable mix. And I think what's beneficial for that, I'm sure you guys have talked about that a lot, is what we've also noticed is that you know, the seasonality or the cyclicality can be different in the different industries. And so if you have, for example, a lot of institutional work and a new, you know, a new political party comes into play and, you know, that might change where their focus is, that can be challenging. And so I think what we've seen is the most resilient firms are the ones that have a healthy mix and don't rely too much on one particular type of area, which has allowed them to kind of find this nice balance.

25:06And so I do think that if I'm not mistaken, some of the commercial might, you know, yield you a little bit higher rates than residential or institutional. but at the same time that having that balance, I think is actually probably more important than trying to maximize, you know, your revenue, you know, just to kind of make sure that you're, you're protecting yourselves on the downside as well. With the firms that are kind of hitting that 200 mark, what would you say that they are doing well that's giving them this number or what sorts of things? Yeah. I mean, I think, you know, as I kind of referenced earlier, one thing that we did this time was break it up a little bit by whether you're using AI or not, or at least, you know, enough that you're paying for it.

25:55And what we found is that those that are actually have about a 20K per employee, you know, so about a 10 % improvement. And I think that that is pretty, pretty significant, obviously. And I think that that, again, I don't want to, you know, know, get too into AI, but I do think it plays or it makes it very clear that using technology is important, right? And so whether it's AI or whether it's, you know, something else, just a way to automate away a lot of the challenging work is important. And so what we found is, for example, actually, this was a surprising result that those firms, their overall utilization was kind of the same or even maybe a little worse.

26:47And so at first you're like, wait, how does that work? But what we found is that actually what is happening under the scenes or behind the scenes is that the highest performing, like the folks that can bill the highest hours are spending a lot less of their time on kind of the rote business stuff. And they are spending almost all of their time doing billable work. So principals or high-end designers, they're no longer spending as much time doing things that aren't unbillable. And so even though the overall utilization was similar, the utilization for those high-value folks was much higher. And so that, I think, you know, leads to, you know, a good piece of advice, which is like really think about where you earn your revenue and are those folks spending their time on the right things?

27:42You know, if you have other folks that maybe aren't going to build time anyway, then how do you put a lot of the work on them? How do you and push down the work? A lot of things that we talk about at Monograph is, you know, there are firms where a lot of the work still, you know, for better or for worse, falls on maybe the owner or the principal who's also the person that can earn the highest rates. And so why are they doing your invoices? Like they shouldn't be doing that. Like why why why aren't your individual project managers doing all the invoices? Because they're the ones also they're the ones closer to it.

28:19And so, number one, you don't want a bottleneck. But number two, you don't want your highest value folks. And I mean this not highest value in terms of revenue. That's not a judgment on their actual value to your customer. But their highest value in terms of revenue, they should be spending as much time as possible doing that revenue generating activity. And so I think being really thoughtful about that. And then staying on budget. So the other thing is, you know, some people have really high utilization, but then their realization isn't very good. And the reason for that is because, OK, great, they're doing all this billable time, but they don't have a good sense of where they are relative to the budget.

28:58They might take two weeks to do something that you thought was going to take, you know, four hours or what have you. And so that is, you know, helping to provide expectations for your employees. What do you expect them to be doing? How long should this take? Is that clear? How are we doing relative to the budget? A lot of transparency there is super helpful. That's another thing that we really talk about at Monograph is, you know, give your folks, you probably have very smart people working for you. Give them as much information as you can so that they can make smart decisions. Don't hold all that information to you.

29:39And what I mean by that is budgets, you know, hours that you think that they should spend. Try to push that down. What the fee was. Exactly. What the fee was. You know, I mean, I know this is a hot topic and I'm sure you've seen it too. So many of our folks, they come on and they don't like some of our permissions on our platform. And they're like, oh, I don't want the individual person to know how much we're getting for this. And it's like, well, why? Like, don't you think that it's a reasonable thing for them? if they know how much this costs and how much you're you're billing for them, don't you think they'd actually make really good decisions on how much time I should be spending?

30:18And if you think that, I mean, unless you're driving around in a Ferrari or whatever, like I, I don't think, you know, if, if your employee comes to you and says, Hey, how come you're charging this much? And I'm only getting this much. Well, you can explain to them overhead. You could explain to them all the other things. And I think they'd actually appreciate that. And so, yeah, so I think the ones that are very transparent, provide that budget, have a lot of clarity on what I'm, how much I cost, frankly, or how much, you know, we charge to the customer, then they make better decisions. And so they stay on time.

30:49And then the last thing I'll say is just making things a lot easier to pay. You know, it sounds silly, but, you know, there's nothing special about this services business. Like, just enable credit cards and don't pass on fees. Nobody wants to have a contracted amount and then get a bill and say, oh, actually, we're adding a bunch of stuff on here for credit card fees. I understand. It feels like you don't want to pay it. Great. That's the cost of running a business. And the truth is, you know, and I talk about this a lot when we are trying to educate our customers. When you don't have electronic payments on in Monograph, about 5 % of those invoices just never get paid.

31:33and when you turn it on, that goes down to 1%. So that's a difference of 4%. Most credit card fees are 3 % or less. And so you've already made 1%. I think people, there's a lot of hidden costs to not making it easy to pay. You're speaking my language here. And I spoke about it with Robert before, this idea of cashflow cadence coming into the business and a few percent on a credit card fee is well worth it for you to have a predictable cash flow. I mean, for me as a European, like in the, you know, working and seeing in the US about this idea of you mail checks to each other, like this is completely bonkers.

32:20It's completely bonkers. And so many times you'll hear a client who's got a problem with, you know, they can have a really great business. They can have a ton of work committed, signed, sealed, delivered contracts that are chugging away. They've got, you know, good marketing. They've got a good, healthy pipeline. But if their collections is not happening, you know, you can put a very healthy business at risk of bankruptcy at worst. Yeah. And it turns out you need the money. Yeah. I mean, that's the other thing is, you know, I can get on and on about payments. But even invoicing, like you said, But oftentimes, you know, we at Monograph believe you should be sending out an invoice every month, no matter what.

33:06And, you know, oftentimes some of our customers will come and say, well, we just bill on milestones and maybe that isn't going to happen for six months. You're like, well, why are you giving your clients a loan? Right. Like you're literally giving them a loan. And to your point, you're putting your entire business at risk. I'm assuming your employees are not going to wait every six months to get paid. So why are you doing that? And so like those types of things, I understand that there's a lot of history and this is how things have been done. But that doesn't mean that you can't change that. And honestly, you know, we've seen it where they say, oh, our client would never go for that.

33:44And the reality is this is how they run every other part of their business is how they pay for every other vendor. And you should, you know, treat yourself with respect and say, like, well, we need the same thing. And, you know, thus far, we've rarely seen that be an issue. I mean, of course, there are some folks that maybe work with governments and, you know, very particular things. And we understand that. But on average, you should be able to run these best practices and make sure that you're not stressing out about paying payroll, even though, like you said, you might be running a perfectly great business.

34:18But if you don't have the cash, then it doesn't really matter. Yeah, I think the cash flow issue in architecture is really understated. And, you know, like, you know, there's that kind of what's the phrase? Revenue is vanity, profit is sanity and cash flow is reality. Right. And I think, you know, that's very applicable in architecture where, you know, the numbers look good, the revenue looks good, even the profit looks good. But yeah, if this idea of collections is not sorted and has not got this kind of predictable heartbeat in the business, then yeah, we're absolutely, we're putting a lot of unnecessary danger into good firms, into good businesses.

35:03and it is it's a kind of cultural thing which is just sort of accepted of you know paid when get paid and if the developer hasn't got their money yet to go forward then architects were mr agreeable don't worry we'll help you out and it's like well hold on a minute why are we getting leveraged why is the developer leveraging their risk onto the architect the architect's not making any extra additional money on it and then now they're self-funding a project effectively for months and months on end. It's very, very precarious. Yeah, 100%. I mean, you know, I have more of a business background. And when I when I learned more about this industry, I was like, wait a second, you're effectively giving out loans to your customers?

35:44Why? Like, I don't understand this. Why? You know, and same with your consultants are not getting paid until you get paid. Like, what's happening here? This is this is a little bit wild. But, but, you know, I've come to realize that that's the way, but it doesn't have to be. I think there are ways that we can improve. And I know we just heard about you guys suggesting charging almost like a subscription fee. And I was like, oh, wow, that's really cool. And we got a little grief from one of our customers saying, hey, the way your invoices work, we can't do this. And I was like, oh, man, I got to talk to Ryan about this.

36:19Let's find this out. Well, I mean, that's really interesting, right because we we have a a lot of our clients you know set up effectively um like a subscription billing method so they bill up front at the beginning of each month before they actually do the work and it and for the clients who negotiate it well and there's and there's a whole plethora of different ways where you can negotiate this kind of um invoicing mechanism and for the clients who successfully implement it it's just a breath of fresh air and if the client doesn't pay on the beginning of the month then they it's a polite phone call we're really looking forward to carrying on the work with your fantastic project we haven't received any money from you this month and if everything okay we want to get started and it kind of just keeps the project running on as well and yeah and you know it's a kind of more and more it it what's been interesting actually is how many clients appreciate it because it helps them figure out their cash flow and helps them plan and forecast rather than you know billing on milestone events six months without an invoice or something silly and then they're scrambling for cash and if the architect has had it all clump up it can be very difficult to organize from the client side as well as for the architect yeah i love that i love that anything to make this whole process simpler and And, you know, I think that's what our general ethos is at Monograph is how do we make this simpler?

37:52How do we make it automated? How do we kind of just get this, again, get you to focus on what you love and let the business kind of run itself? Do you know when we're looking at utilization rate in an architecture firm, we might be looking at it kind of as an overall business metric. um do you often have architects divvy that divvy it up so that you know there are lower uh or or kind of people who are more involved in production they should have a higher utilization rate and the ceo should have a different utilization rate there might be different benchmarks at different at different levels of the firm yes definitely i mean i think you know what what's interesting you know as i was alluding to before is oftentimes your uh let's say your principal or or like maybe an owner or whatever commands the highest rates uh but then there's this kind of general feeling like oh well they um you know they are going to have the fewest billable hours because uh they have other responsibilities and while i understand that a little bit i think you know um as i would kind of highlight, I would try to be really thoughtful about where they're spending their time and are they actually doing pretty low value work?

39:09Are they creating invoices every month? Are they, you know, reviewing kind of staffing for projects that they're not even involved in? Like, how can you keep pushing some of the decision making to other folks that don't command those same rates. But to answer your question, yes, we definitely see, you know, different targets for different folks. And so you might imagine a production designer having, you know, very high goals for their, you know, 96 % or something along those lines. Whereas maybe a principal might have something like 50 because maybe they're doing some business development work and things of that nature.

39:49That being said, like I said, I would be very, I would spend a lot of energy trying to ensure that you feel like those high value or high revenue generating folks are are spending their time as as you know as optimally as they can be in terms of realization again going back to this you know what gets paid conversation yeah and you know when i bring this up to architects and we do some real life looking through their data, this can be a real eye-opener, right? Because obviously, everybody should be at like 100%. That's what we want. And there are firms who can get higher than 100 % if they've got good marketing and they're being really super efficient from what they put their budget as, et cetera.

40:38And then we get firms down at 50%, 60 % and it can be, whoa. What, from your experience, has been the cause of that? Like where are architects losing the realization rate? The number one issue is just not having a good idea of where you are against your budget. So, you know, of course, mostly, let's say, in a fixed fee project, you should be able to know exactly where you are right now with how much you've already kind of quote-unquote spent with the amount of time you've logged and the rates for that. And you should have a good sense of how much is left through staffing or some other mechanism and comparing those two.

41:26And if that's going to go over your budget, then you're already in trouble in terms of realization. And I think the ones where it's down in that 50%, 60 % range, it's a time lag issue. So, you know, the worst case scenario is the time you realize that you're over budget is when you're writing, when you're creating the invoice. That's the time when you're like, OK, let's see how much time do we spend? Oh, wait, that's way over what we're allowed to do. And sadly, that is very common, especially if you're not using tools such as ours, where you can actually see in real time that, you know, you're trending over.

42:05So that's been the number one issue. Of course, there are other issues. Maybe you're doing some hourly work and somebody just kind of spun their wheels for quite a while and you just don't feel right about charging that. You know, we see that a little bit, too. But that I actually think is a smaller issue, at least for most firms. It's more that they just really don't have realization that they're going, no pun intended, that they're going over until it's way too late. And they've spent many, many hours past where they should have. Yeah. And I think that's interesting because it's often kind of a cultural thing as well with like throw everything at the project, make sure that we put as many hours in as possible.

42:49When we talk about time management in architecture firms, it's often, well, that's the time of the deadline. And we're just going to squeeze as many human hours as possible between now and the deadline, as opposed to there being any kind of budget that people are working with as a set of goalposts. And particularly if there's a lack of transparency in a firm and project managers aren't privy to the fees or a budget or like an hourly budget, however it's translated, that can really spin a project off into the wrong direction. And then we see these lower realization rates. Yeah. In fact, I mean, this is actually something we do for our software engineering team.

43:31But what we do is whenever we're about to kick off a project, we do an estimation on how long we think it will take. And part of that is obviously so we have a sense of how long it will take. But the other thing that we're trying to do is signal to our employees that, hey, like we think this should take, I don't know, let's call it five days. And if you start getting into it and you realize that it's 10 days or 15 days or whatever, then let's come back and have a conversation because somehow we are very misaligned on what this should do. And I think similarly, what you could do with your tool, whatever that is, is try to use that same practice and tell your employee, hey, this is a task that I think should take five hours or two hours or what have you.

44:17And if you find yourself, you know, going way above that, then you better come back to me because the last thing I want you to do is spend that 10, 15 hours, log that into your timesheet. And then now I have to write it off. Now I have to say, hey, we really missed the boat. Let's have that conversation earlier. And so that's where I also believe very strongly in transparency and expectation setting with your staff, because that's how you can prevent this stuff from going off the rails ahead of time. I think to your point as well earlier that the majority of people in an architecture firm are smart, intelligent people.

44:53And the more knowledge that you entrust them with, the more informed they are to make better decisions. And I love it when we see team members, younger team members, being exposed to more financial data and financial literacy and how their work contributes to the bottom line of the practice. and they start getting really interested and creative of you know and disciplined with keeping on on track for those budgets it suddenly starts to make sense for them that their own uh you know bonus at the end of the year uh actually is impacted by their ability to keep on the on the within the goalposts of the budget of the project and they can enroll other people into that as well and it's a that's a very supportive culture that can be very very useful yeah 100 agree i mean I believe strongly in, yeah, hire smart people, give them clear goals and the information that they need.

45:48And you'd be shocked. I've done this my whole career. And I'm not doing it to be a nice guy. I'm doing it because it actually really works. And you'll be shocked. You could set some very crazy high goals and people will achieve them. And it's really impressive. And I've seen it over and over. um and so yeah this is a philosophy i've kind of developed over time realizing that this this is much more effective and frankly it scales a lot better than you you don't have to worry about all this you put it on them you know like this is your goal uh you better achieve it and and that works really well um so yeah you know i think it um yeah i couldn't agree more with what you just said love it what's uh next for monograph over the rest of 2026 and beyond yeah uh lots of lots Lots of fun things.

46:39You know, you mentioned Pipeline, which is our product. You know, we don't call it a CRM because, you know, CRM can mean a lot of things to a lot of people. But basically, we're helping you with tracking and finding more business. And so I think there will be a lot of improvements there. We launched our first version, I believe, in February of this year, and we're continuing to refine there. I think it's our most AI forward. We do a lot of things to suggest the rates that you charge. We're helping you build out your proposals so you don't have to spend hours and hours on that. We'll be looking at helping you answer RFPs and things of that nature.

47:17So I think there's a lot of really interesting things on that side. And then on the cash flow side, as you mentioned, we're continuing to improve what our abilities are there. moving beyond payments to helping you pay out your vendors to helping you manage your expenses and automating more of that. And just overall, what we're always trying to look for is listening to our customers, understanding where they're spending that extra time that they could be doing more valuable things and then figuring out, can we solve those problems? And so that's our whole goal, take out all of the business functions that you don't want to be doing off your plate.

48:01And yeah, hopefully we'll keep achieving that. Of course, that never ends, but that's what drives us every day. Amazing. Rashish, thank you so much for coming on the show and going behind the scenes a little bit in monograph and also just showing us the benchmarking report and the sort of insights that have been gleaned from that. So I really enjoyed talking to you and hope to have you back on again shortly. Yeah, thank you so much for having me. I really appreciate it. And yeah, I look forward to doing it again. Thank you to our recent listeners who left reviews for the podcast on iTunes. Your reviews help others find this podcast, so the rising tide raises all boats.

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