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Starting An Engineering Consulting Business

Updated on April 6, 2016

What Do Engineers Work On?

Engineers plan, design and project manage in various fields including:

  • Electrical Power Systems, in generation , transmission and distribution
  • Mining and mineral processing
  • Oil & Gas
  • Transportation , in highways, rail, aviation and marine
  • Telecommunications
  • Building Services
  • Manufacturing

Starting An Engineering Consultancy

04 NOV 2013 - If you have an engineering degree and have good experience under your belt, you may want to start your own consultancy firm .

Starting an engineering consultancy is like lining up a train of toy wagons on rails with the intention of pushing the train down a hill. Line up the wagons and you will enjoy the sight. Any misalignment will result in a train wreck.

You need to identify steps required and make a schedule.of how to achieve each task.

SWOT- Matrix
SWOT- Matrix | Source

Steps And Process

Starting and setting up a business is not an easy task, in fact there are business set up around helping people to start-up businesses. I recommend that one must do the process to minimize costs and to develop the right understanding from the beginning.

In a way, if one is successful in starting up, he will be tested enough and will use his experience as a guideline. What are the issues required to be accomplished? An engineering consultancy business is not a get rich quick scheme, it is one of the very long term business. It is likely that the process may take one to two years before meaningful returns are realized. Specifics will depend on jurisdiction and local requirements, how the following are likely issues that needed to be considered.

Professional Qualifications

Engineering consultancy business is regulated by law in most countries to protect the public from malpractice. Like dentistry or public certified accountancy. An accredited engineering degree in the discipline is usually required. Membership to professional engineering institutions and minimum experience working under a registered engineer are normal requirements in most countries.

First, gather your qualifications and membership details including work references in the prescribed manner and schedule a meeting at the local office responsible for registration. Advice from practicing engineers may be in hand at this stage. Usually two or three engineers in good standing may be assigned to assess your suitability.

You may want to check with International Federation of Consulting Engineers (FIDIC) on how you can access your local association of consulting engineers' offices.

Business Plan & Raising Capital

Remember the seeds of success or failure? This is where you plant most of them. A few must be spared to be planted under legal and insurance issues.

If you are entering this business to satisfy your passion of engineering design or any such high sounding reasons, my advice is simple: Set up a portion of your living room for your hobby, I suggest model trains. In this business, passion is a must and it will not add anything more towards success.

Starting up an engineering consulting firm requires a solid business plan like any other business. This is a step where you may need professional services, your bank may help you with planning for a fee. Having said that, you should research and seek advise on coming up with a bankable business plan. Even if you plan to use your own capital, which is advisable, a good advise is that you should approach this as if you are using borrowed money that will need to be repaid with interest from the first month.

A business plan may need to include some of the points listed below:


  1. Macro and micro-economic assessment
  2. Detailed industry analysis, you must have in depth knowledge of the industry including trends, players, drivers and your competition including the technical understanding which we assume you have if you are at this stage.
  3. Market analysis, what portion of the market are you going to take? Realistically as well as worst case
  4. Cash-flow - this is the make or break issue. When and how much cash will be coming to your consultancy? Cash, not paper receipts or IOU notes!
  5. Your strategy and internal operational plan


Legal Issues and Insurance

In some countries a corporation requires at least two shareholders. You may also want synergies such as an electrical engineer with a civil engineer. In cases like that legal agreements must be crafted to safeguard individual interest. A back to back agreement covering all possible scenarios including how to manage a break-up must be signed.

Engineering is a public service industry, you will design public facilities and you will need the services of said lawyers all the time. Consider retaining the service of a lawyer. The same goes for insurance, which is required by the law to indemnify you, this is called Professional Indemnity. There are other type insurances apart from Professional Indemnity that you must consider, such as Group Insurance for your workers, Health Insurance and insurance against damange or loss to equipment.

Company Registration with Government

This is relatively straightforward. An engineering consultancy must be incorporated like any other enterprise. If you are an alien in the country you want to set up business, you may need to check other issues closely such as shareholding structure.

Tax

Manage issues of taxation from the outset and avoid unnecessary problems.

Company Internal Processes

This is the cutting edge issue, a business exists because delivers what it promises to deliver. The promise is set up here. A detailed article on setting up an engineering consulting office will cover the points indicated here.

At this stage issues regarding the technical work, how it will be carried out, the tools of trade, office set, organogram and issues to do with invoicing. This plan is confidential to the company because this is your 'How To' document.

In summary the following issues may be included, among others:


  1. Technical Set-up - if you are in the highways industry you must develop the methodologies,procedures and method statements. Create your own e-library.
  2. What tools do you require? Computer Aided Design (CAD) software, printers and plotters, how to file
  3. How are you organized and your communication protocol with outsiders, who is the principal , how do you invoice and invest your money

Marketing and Prospecting

In most countries engineering firms are not required to advertize their services. This is in line with most professional services such as doctors and lawyers. The principle is that such professionals operate on the basis of a license of competence as discussed above, and as such all in good standing are good enough to do the work. Clients will select professionals of their choice based on reputation.

A new consultancy firm msut make its arrival know because it has no reputation to lean on. One step of setting up is to make contacts with would be clients.

Woman In Engineering

Are You Encouraging Girls To Study Engineering?

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Summary

In professions where entry is regulated by legislation, successful set up of a business and obtaining the license is half the journey. Indeed success or failure may be realized at start up.

This article presented some of the steps required to start up an engineering consultancy firm.

Working in engineering is exciting, challenging and satisfying in that one lives to see his creation serving society. Engineers are encouraged to go into business and utilize their knowledge and experience under own initiative. They can do so when they start their own engineering businesses.

Locomotive ChS4-109
Locomotive ChS4-109 | Source

Paperwork

Project files must be properly catalogued
Project files must be properly catalogued | Source

Office Management

Engineering consultancy like an business, requires office management. Consultancy business relies 100% on professional work offered to corporate and government clients. Such a high level well heeled clientele demands high level of presentation.

There are two aspects to office management. Ambiance and proficiency.

Ambiance is that factor which the client pays heavily for without asking for it. Like the front garden, the flowers and the art on the walls. In this case it also includes the attire that your professional engineers wear. I will jump to proficiency because its equally crucial.

Proficiency here refers to delivery. Delivery of the whole package. It says nothing of an organization to look good in appearance yet it takes forever to deliver technical work or to answer to daily office calls.

An engineering firm is first and foremost a technical service industry, however the clients are commercial business who have investment needs. Paperwork, paperwork and paperwork.



Engineer Drawings

Engineering drawings are very crucial documents that must be handled with care and must be produced on demand
Engineering drawings are very crucial documents that must be handled with care and must be produced on demand | Source

Engineers at work

Engineers must be good communicators
Engineers must be good communicators | Source

Comments

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    • Ferhan Patel profile image

      Ferhan Patel 

      2 years ago from Montreal, Canada

      Great information.

    • businessesforsale profile image

      businessesforsale 

      5 years ago from Sydney, Australia

      Great hub! Another option is to buy an already existing business. Its worth scanning the market and seeing what is available.

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