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T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M A p r i l 4 , 2 0 1 6 , I s s u e 1 1 4 6

Pre-travel cost estimation

Being involved ... just enough Mistakes happen, and to minimize them without demotivating your people, a measured response is critical.

Only 26 percent of respondents to Zweig Group’s Work Travel & Reimbursement Spotlight Survey of A/E/P & Environmental Firms said that their organizations require employees to submit a pre-travel cost estimation before conducting business travel. Firms most likely to require such forms are architecture/interiors (50 percent), single-discipline engineering (40 percent), and multidiscipline engineering (13 percent). — Andrea Bennett, research and publications manager F I R M I N D E X Apex GeoScience...................................4 Braun Intertec.........................................3 Charlan Brock & Associates ...................8 Crafton Tull .............................................5 Environmental Consulting Group.............3 Gensler.................................................12 Herbert Smith Freehills..........................10 Herrington Architects PC ........................6 Jacobs Engineering Group Inc................2 Kleinfelder...............................................4 Newforma...............................................2 Peer Engineering ....................................4 Williams Blackstock Engineers................7

W e had a situation this week – a headline had been added to my recent article on millennials in the workforce by one of our TZL editors that inadvertently distorted what I wanted to say – and it caused some consternation from some of our readers and staff. As they say, “those things do happen” from time-to-time, but it indicated a need for us to change our review process here. These things happen in A/E firms every day. Someone puts something in an email they shouldn’t put in an email. Or a change gets made to a project right before it’s shown to the client when the principal-in-charge knows that is not the direction the client wants to go. Or a proposal goes out with something majorly wrong with it. There are many more of these situations we have all experienced. So yes, these things DO happen, but what matters is your response to it. A/Es typically respond by creating some sort of unsustainable review process that there’s no way to actually follow because it is so bureaucratic it eventually collapses. Or, the “boss” jumps in and starts trying to do everyone’s job – equally horrible and detrimental to the company. Neither of these is really the ideal way to handle things. People hate bureaucracy. More forms to fill out. More meetings. More steps to get something done or “out.” It is a huge demotivator. It slows everything down.

“You have to inject yourself – just the right amount of your input at the exact right time – so you get the end result you want but don’t demotivate anyone.”

Mark Zweig

MORE COLUMNS xz ENGINEERING INSIGHTS: Workload vs. staff Page 5 xz CONSULTANT’S CORNER: Plenty of M&As fail Page 9 xz FROM THE CHAIRMAN: Engendering trust and respect Page 11

Page 3 T H E V O I C E O F R E A S O N F O R A / E / P & E N V I R O N M E N TA L C O N S U L T I N G F I R M S Page 6 Plan B The magic is back in Birmingham See MARK ZWEIG, page 2

BUSINESS NEWS PINNACLE INFOTECH USES NEWFORMA SOFTWARE FOR WORLD’S TALLEST BUILDING Newforma , a project information management software com- pany transforming building and infrastructure project delivery, announced that Pinnacle Info- tech Solutions is using Newforma Project Cen- ter software to manage the massive quantities of project information generated by the design of Jeddah Tower in Saudi Arabia. Renowned as Kingdom Tower, the building will rise to 3,280 feet when completed in 2018. The Jeddah Tow- er is one of Pinnacle’s 154 projects managed in Newforma Project Center. Pinnacle Vice President Biswaroop Todi said, “Pinnacle’s role in MEP design calculation of the Jeddah Tower includes electromechanical calculations, value engineering, resizing of air handling and water handling equipment, design of the containment system, light layout and distribution panels, coordinated models, block wiring diagrams, combined services drawings, layout drawings, and conversion of IFC drawings to shop drawings. We also have to validate designs, conforming to the international codes and standards. We acknowledge that managing such high volumes of project information and collaboration would not have been possible without Newforma software. An instance of project management challenge is found in file transfers. To date, Pinnacle has used Newforma to exchange 4,038 files, having customized the Newforma transmittal document to conform to the engineer’s specifications. Using BIM/Revit technology with Newforma is enabling complete coordination to be conducted virtually.” Efficient collaboration is important for the project because Pinnacle has more than 75 team members in Saudi Arabia and India. Newforma software automatically records who has uploaded and downloaded what information and at which point of time, reinforcing accountability.

Take your advice from Mark Zweig to-go. Listen to this and past editorials from The Zweig Letter via the free TZL Podcast on Stitcher, iTunes and Soundcloud. zweiggroup.com/podcast

Pinnacle Project Manager Pantha Mallick and Assistant Manager Bireshwar Mallick said, “We use Newforma Project Center every day to ensure quality and streamline operations for some of the most prestigious and largest projects of the world.” JACOBS WINS CONTRACT AT NASA AMES RESEARCH CENTER Jacobs Engineering Group Inc. an- nounced it was awarded the Aerospace Testing and Facilities Operations and Maintenance con- tract at NASA Ames Research Center in Moffett Field, California. The contract has a base period of two years, beginning February 2, followed by three one- year options. It has a potential total value of approximately $250 million. Under the ATOM-4 contract, Jacobs is providing aerospace testing, facility operations and maintenance, IT system administration and administration services. The ground-based aerospace test facilities at the Ames Research Center include wind tunnels and NASA’s only high-enthalpy, high-speed arc jet facilities. As prime contractor for the test facilities, Jacobs is supporting a wide variety of experiments conducted by researchers from NASA and other Federal agencies. Jacobs’ work history at NASA Ames Research Center dates back to 1965 when it began operating the center’s 12-foot wind tunnel. Jacobs Senior Vice President Aerospace and Technology Ward Johnson stated, “This success is built on 17 years of direct experience on the ATOM contract and a relationship with NASA of more than 50 years. We are pleased and excited to continue our support for Ames’ world-class aerodynamic and aerothermal test capabilities, which are vital to current and next-generation aerospace programs.”

1200 North College Ave. Fayetteville, AR 72703 Mark Zweig | Publisher mzweig@zweiggroup.com Richard Massey | Managing Editor rmassey@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Sara Parkman | Editor and Designer sparkman@zweiggroup.com Megan Halbert | Design Assistant mhalbert@zweiggroup.com Liisa Andreassen | Correspondent landreassen@zweiggroup.com Tel: 800-466-6275 Fax: 800-842-1560 Email: info@zweiggroup.com Online: www.thezweigletter.com Twitter: twitter.com/zweigletter Blog: blog.zweiggroup.com

MARK ZWEIG, from page 1

It really just doesn’t work very well in actuality even if the logic behind it seems sound. And when it comes to quality, having any steps in writing that you don’t always follow can be the exact evidence needed to prove your negligence. And as far as the boss stepping in – this is part of the art of leadership. Don’t get involved when you need to and bad things can clearly happen. Get involved when you don’t need to and alienation and demotivation occurs. Do it all of the time and eventually you will be responsible for doing everything yourself. Your people will just throw up their hands. I think the only real answer to this conundrum that all of us find ourselves in (probably daily), is this: You have to inject yourself – just the right amount of your input at the exact right time – so you get the end result you want but don’t demotivate anyone. You’ll also grow better people who can make good decisions on their own over time and then not need as much of “your input” into what they do. And whatever grows our people is what we all need to be concerned with. That’s the only way for us to grow – as individuals and firms. Thoughts on this subject? Send me your emails at mzweig@zweiggroup.com. MARK ZWEIG is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/yr.). $475 for one-year subscription, $775 for two-year subscription. Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399- 1900, ext. 139, or email TheZweigLetter@ TheYGSGroup.com. © Copyright 2016, Zweig Group. All rights reserved.

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

P R O F I L E

Target Field, a 39,504-seat open-air ballpark, was constructed from the inside out due to space constraints. Braun Intertec provided construction materials testing and special inspections for the site.

Plan B Powerhouse CEO was not able to become a Navy pilot due to health issues, but his career at Braun Intertec sure did take flight.

By LIISA ANDREASSEN Correspondent

demand. So, with a bachelor’s in geophysics and a bachelor’s in geology from the University of Min- nesota, he started out with the firm as an environ- mental technician and was quickly recognized for his dedication to the company’s ongoing develop- ment. In 2000, he became a principal and vice pres- ident of the Environmental Consulting Group . In 2007, he was appointed president of Braun Inter- tec, and in 2009, was made CEO. In 2015, Carlson was named the winner of the EY Entrepreneur Of The Year award for the upper Mid- west. The award program recognizes entrepreneurs who demonstrate excellence and extraordinary success in such areas as innovation, financial per- formance, and personal commitment to their busi- nesses and communities. A CONVERSATION WITH CARLSON. The Zweig Letter: What are the key strengths for an effective leader? Jon Carlson:

J on Carlson, CEO of Minneapolis-based Braun Intertec (Hot Firm #40 and Best Firm-Multi- discipline #40 for 2015) – a 1,000-plus person, em- ployee-owned, geotechnical engineering and envi- ronmental consulting firm – says his initial plans to become a Navy pilot after college were thwarted by health issues, but he says that may have been the best thing. “I learned that due to a less than perfect kidney that my plans to fly with the Navy post-college were not going to be a reality, so I had to find a plan B,” he says. Well, plan B kicked in soon after college and that plan has remained a work in progress ever since. And, while he may not have had a chance to rise through the military ranks, he certainly seized the opportunity to do so as a civilian. Carlson started with Braun Intertec in 1988, a time when environmental consulting was be- coming a hot field and geoscientists were in

Jon Carlson, CEO, Braun Intertec

See Q&A, page 4

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

Q&A, from page 3

TZL: What’s been your greatest challenge to date and how did you deal with it? JC: Navigating our way through the Great Recession with relatively few staff reductions and positioning our compa- ny for growth when the economy improved. Our diversity of services, client markets, and geographies, which we de- veloped in the years leading up to the economic downturn, allowed us to quickly shift gears as the economic winds changed. We also were not afraid to take some risk and add talent during that time. “We encourage a culture of calculated risk- taking along with the concept that if we don’t make an ‘oops’ once in a while, we are not taking enough risk.” TZL: Why do you think you were given the EY Entrepre- neur of the Year Award for the upper Midwest in 2015? JC: I’m blessed with a great team! Nobody could have pulled off what we have since I was appointed CEO without a great team. In addition to our story of growth (i.e., growing net revenues from about $38M in 2009 to nearly $138M pro- jected for 2016), the EY team recognized our ability to es- tablish ourselves as the consultant and employer of choice, and how well we are able to leverage those skills across mul- tiple markets and service sectors. TZL: Are you married? Children? Pets? JC: I’ve been married to my wife, Jean, for almost 25 years. We have three children, a dog, and a cat. TZL: What’s one thing most people at the firm don’t know about you? JC: Not much! I’m a rather transparent person. For exam- ple, I keep a photo on my office wall to remind me and in- form others of my angiogram in 2008 when I had a stent implanted following a mild heart attack. This life on Earth is short and special – we need to keep all things in balance. TZL: What’s the last book you read? JC: In a Sunburned Country by Bill Bryson TZL: What’s the last movie you saw in the theater? JC: The Revenant . TZL: What’s the best piece of work-related advice you’ve ever gotten? JC: It was frommy Dad: “With patience and persistence you shall prevail.” TZL: Who is a leader you admire? JC: Abraham Lincoln. TZL: What do you enjoy in your spare time? JC: Skiing: alpine, Nordic, and water; traveling the world with my family; fishing and pheasant hunting; hiking and biking; tennis and golf.

z Business acumen z Command skills z Dealing with ambiguity

z Decision quality z Drive for results z Genuineness and empathy z High ethical standards and strong moral compass z Humility z Motivating others z Oral and written communications z Vision

These leadership qualities are critically important for the success of our firm. It’s important for our leaders to fully understand their strengths, and to leverage them to their fullest extent. Typically, our board and my direct reports rank me highest on my interpersonal, communication, and command skills. TZL: What’s your leadership style? JC: Collaborative and action-oriented. I try to balance my drive for results and how much the journey/process mat- ters. I’m also a strong believer in the value of mutually-ben- eficial, trust-based relationships. TZL: Tell me about the firm’s recent acquisition of Apex GeoScience (Tyler, TX). How’s it going? JC: Apex Geoscience Inc. is the largest of three consulting- group acquisitions we made in 2015. We also acquired Peer Engineering in the Twin Cities market, and the Kansas City office of Kleinfelder . Our acquisition strategy is heavily fo- cused on integration, so cultural fit is critical. The great- est challenge with the Apex integration has been migrating them to our systems (e.g., accounting, finance, HR/payroll, field-data collection), but this is also a great opportunity to accelerate the growth and development of the Apex team. “We understand why we want to grow, and we have an organizationally healthy reason for our growth – opportunity.” TZL: To what do you most attribute your firm’s growth? JC: We understand why we want to grow, and we have an or- ganizationally healthy reason for our growth – opportunity. Our vision is to be the consultant of choice for our clients and the employer of choice for our employees. We believe you can’t achieve one without the other. We also believe that growth must be sustainable, and our most important measure of sustainability is how well we are doing at main- taining and further developing our successful culture. Fi- nally, we encourage a culture of calculated risk-taking along with the concept that if we don’t make an “oops” once in a while, we are not taking enough risk.

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

O P I N I O N

Workload vs. staff How do you get a handle on billable hours and overhead without losing yourself in spreadsheets? Rely on the gut instincts of your department managers.

I ’m honored The Zweig Letter asked me to be a contributor. In the 15-plus years since Crafton Tull (Best Firm-Multidiscipline #43 for 2015) began our subscription, we have drawn on the newsletter’s wealth of information to help our business too many times to count. I hope I can live up to the high standard of this newsletter.

Matt Crafton ENGINEERING INSIGHTS

First, the obligatory disclaimer: I’m the CEO of a mid-sized architecture, engineering, and surveying firm located in the central part of the United States. Like anyone, it is my personal experiences that shape my views, and my opinions may or may not be applicable to your firm, depending on its size, location, or services offered. Many of the needs and processes of larger firms are decidedly different from those of mid-size or small firms. I think probably the most difficult issue managers in the A/E/P and environmental industry have to grapple with daily is workload versus staff. The fastest train to the poorhouse as professional service providers is to have a bunch of people without enough billable work to do. It takes revenue generating work to cover expenses (especially that of payroll), so the more our people

charge time to overhead tasks, the less revenue we produce, and the harder it is to make a profit. Industry managers use many metrics to gauge whether their business is operating as well as it should be. From reading different publications and talking to my peers, it seems that each firm uses its own variety of measures to varying degrees. Our firm is no different. We look at project variance (budget overruns), as a measure of project management effectiveness. Our departments have goals for revenue, income from operations, and sales (new contracts). However, for my money, pound for pound, staff utilization (billable hours divided by total hours), gives the quickest insight to profitability. I know when we hit a certain percent utilization, we’ll be profitable, and if we don’t hit that number (say, during the

See MATT CRAFTON, page 8

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

Birmi

P R O F I L E

Alabama Power Co. is preparing its former steam plant for redevelopment across from Railroad Park. / Birmingham Business Alliance

The magic is back in Birmingham Over the last five years, Alabama’s largest city has experienced a historic uptick in development, and if all goes to plan, the trend will continue.

By RICHARD MASSEY Managing Editor

tion. Buoyed by companies like Steris, CMC Steel, Evonik, and Oxford Pharmaceuticals, Birmingham doesn’t appear to be going anywhere anytime soon. And architects are feeling it – the good times are back again. “Most firms are between busy and exceedingly busy,” says Bruce Herrington, founder and presi- dent of Herrington Architects PC (Birmingham, AL). Asked about the difference between now and the recession, when Birmingham’s home county, Jef- ferson County, went bankrupt, and when private development all but stopped and firms were sur- viving on government contracts, Herrington says, “Night and day.” Herrington’s firm won the contract to design the $35-million Hill Student Center at the University of Alabama at Birmingham, which opened in Janu- ary. In his work with the city, Herrington is assist- ing with the evaluation of an eco-district/innova-

T he massive redevelopment in Birmingham, known as the Magic City, has reignited civic pride, created a real estate rush, and has put a lot of architectural firms to work designing historic ret- rofits, new multifamily residential complexes, and an array of commercial spaces. As the tides of design and construction continue to lap against the shores of Alabama’s largest city, an- other proposed project – an eco-innovation district as large as 50 city blocks – could, if approved, usher in another round of real estate development, with project values as much as $30 million. Along with local firms, Birmingham has attract- ed designers from Atlanta, Florida, New Orleans, St. Louis, and Texas, and ranging in size from boutique to global. Birmingham is a good place to do business, too, as recognized by Global Trade Magazine , which recently named the city one of the top Economic Development Corporations in the na-

THE ZWEIG LETTER April 4,

mingham

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tion district that will embody the link between downtown and UAB. The district would potentially require a 12- to 20- year buildout. “Development has been slow, but it’s in the works,” Herrington says. Bruce Katz, a leading urbanization and innovation expert with the Brookings Institution, was recently in town to tout Birmingham’s assets, and to galvanize public and private sentiment for the ongoing buildout of a tech and innova- tion infrastructure. Joel Blackstock, principal and president of Williams Black- stock Engineers , says the upturn has put pressure on his firm, both internally and externally. “It is still very competitive and we now see much larger national firms coming into Birmingham to do projects local firms used to do.” “We have grown our staff 5 to 10 percent over the last three years,” he says. “It is still very competitive and we now see much larger national firms coming into Birmingham to do projects local firms used to do. Birmingham is a relatively underdeveloped secondary market that has now been dis- covered and developers and architects from across the coun- try are designing and developing projects here.” Blackstock’s firm is heavily involved in the downtown revi- talization. The overall aim of Blackstock’s design, and the design of other firms, is to make the city center a good place to work and play. Thus far, they have succeeded, Blackstock says, as downtown is pulsing with a vitality “not seen in 30 years.” Meanwhile, the five-year run that Birmingham just com- pleted is one for the history books. According to the Bir- mingham Business Alliance, from 2011 to 2015, the city an- nounced 13,638 new jobs and $2.9 billion in capital invest- ment. By comparison, according to the alliance, in the pre- vious 10-year period, announced jobs were approximately 18,747, and capital investment was $2.5 billion. Economic development activity also showed a significant increase. Between 2001 and 2010, Birmingham averaged 55 announcements per year with 1,875 new jobs and $255.7 million in capital investment. Between 2011 and 2015, Bir- mingham averaged 67 announcements per year, with 2,727 jobs, and $581.7 million in capital investment, according to the alliance. A big part of the development effort is the Alabama His- toric Tax Credit, a three-year program enacted by the Alabama Legislature in 2013. Of the 52 redevelopment projects statewide, 20 are in Birmingham. As the tax credit

A Birmingham official on a hard hat tour of the Thomas Jefferson Hotel, which is undergoing a $22-million restoration. / REV Birmingham

Architecture firms with projects in Birmingham: z KPS Group, Birmingham z Herrington Architects, Birmingham

z Nimrod Long & Associates, Birmingham z Cohen Carnaggio Reynolds, Birmingham z Giattina Aycock Architecture Studio, Birmingham z Williams Blackstock Architects, Birmingham z Smallwood, Reynolds, Stewart, Stewart & Associates, Atlanta z Lord Aeck Sargeant, Atlanta z KPS Group, Atlanta z Page Southerland Page, Austin z BOKA Powell, Dallas z Wisznia Architecture, New Orleans z Charlan Brock & Associates, Maitland, FL z Hastings & Chivetta, St. Louis

See BIRMINGHAM, page 8

ER April 4, 2016, ISSUE 1146

MATT CRAFTON, from page 5

the amount of work and whether the right staff is on-hand to get the work done. However, from a top level management perspective, over many years of experience, we found a much simpler system. Each month, I ask our department managers to give me a quick guesstimate of their workload over future months one and two, months three and four, and months five and six. Those estimates are represented using arrows: an up, green arrow means they will be busy and will meet or exceed their target; a side-to-side, yellow arrow means they will be steady and may or may not meet their target; and a down, red arrow means they need work and will struggle to meet their target. Put them all together and you’ve got a pretty good picture of what the coming months will look like. Too simplistic? Maybe, but it works for us. We’ve found that this approach gives us a fairly accurate picture of what our workload will be for the coming six months. It also means we don’t have legions of people spending hours and hours in intricate spreadsheets trying to project revenue and costs down to the penny. And honestly, we’ve found we get as much accuracy with the simple system as we did with the complex. Granted, this system, like any other, requires integrity and accountability. Our managers know that I expect honesty in their arrow projections. If a manager paints an all green, arrows up, rosy picture, but doesn’t meet their target utilization, they know we’ll be having a talk about that. Again, I’m not at all down on PMs and department managers getting into the nitty-gritty of project planning. I’m all for it. But, from the top level perspective, this simple, gut feel approach works for our business. MATT CRAFTON is president and CEO of Crafton Tull, an architecture, engineering, and surveying firm based in Rogers, Arkansas. Contact him at matt.crafton@craftontull.com.

holidays), we aren’t profitable. Granted, like any other metric, staff utilization can be manipulated by the unscrupulous. You can pump up your utilization by charging an excess of hours to jobs, but then you risk running out of fees quickly. Or, you can charge actual billable time to overhead to keep your budget looking good, but your utilization suffers. We tell our people to “charge it like you work it” and let the numbers fall where they may. Most firms I know include integrity as a core value, so being honest on time sheets should be a given. If you’re going to have the word “integrity” on a poster on the wall, then you ought to practice it throughout your business, including the time sheet. So, how to manage workload versus staff, and better yet, how to predict what it’s going to be over the coming months? We used to spend many hours in spreadsheets in the pursuit of estimating our revenue versus costs over future time periods. Each project manager had a workload spreadsheet showing each of his or her projects, and each month they were to estimate the revenue for certain time periods. Those PM workload projection spreadsheets linked to department spreadsheets which then rolled up all the PM numbers for that department. We then added “marketing projections” for projects we were sure would be in-house in future months; and all departments were then linked and rolled into one giant spreadsheet showing projected company revenue for the coming months. I know firms that use similar systems, whether spreadsheets or enterprise software, to do this. You can get really intricate by projecting the hours each person will work on each project in each week. You can then roll that information into summary spreadsheets and reports to project how busy each person, department, office, or division will be. I’m not opposed to that. PMs and department managers gain real, useful insight by analyzing

BIRMINGHAM, from page 7

Birmingham.

expires in May, there is a concerted effort to convince the legislature to extend it for another seven years. While several historic structures have already been renovat- ed or are underway – the Pizitz Building, the Lyric Theater, and the Thomas Jefferson Hotel, among them – there’s still plenty of opportunity, according to real estate listings. At least three historic downtown properties were on the mar- ket in March for a combined $2.5 million. Historic preservation was far from the only thing taking place in Birmingham, then and now. Urban landfill, mul- tifamily housing, and retail development were key aspects to the Birmingham boom. No one knows that better than Butch Charlan, founding principal at Charlan Brock & As- sociates (Maitland, FL). In addition to other projects, Charlan’s firm designed LIV Parkside, a 228-unit apartment building. A major piece of the ongoing effort to create urban density, LIV Parkside contains 3,000 square feet of retail space. Charlan said the city has opened the door to firms and construction companies, making it easy to work in

“Evidently, there’s a friendly development market,” he says.

While small-scale redevelopment of historic buildings had been underway since the late 1980s, it took profound local, state, and national forces to kick start the massive redevel- opment now underway, says David Fleming, president and CEO of REV Birmingham, a local economic development or- ganization. The 19-acre Railroad Park, opened in 2010, transformed an old railyard into a lush public greenspace. In 2013, the Dou- ble-A Birmingham Barons baseball team returned to down- town Regions Field. And in that same year, the tax credit was approved. In keeping with the national trend of empty nesters and millennials shrugging off the suburbs and re- turning to the city, urban housing was suddenly in great de- mand. “All of that together has created a new wave of momentum in Birmingham, and that’s why you see a lot of cranes every- where,” Fleming says.

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

O P I N I O N

Plenty of M&As fail When firms look at the numbers, but not the people, chances are good the deal will be plagued by big problems.

W hen mergers and acquisitions fail, the event is often marked by surprise and shock. “The numbers worked, the market seemed ready, and the products were compatible, so what could possibly have gone wrong?” The literature shows (and common sense supports), that most often the problems can be traced to the lack of attention paid to the integration of cultures, staff, processes, best practices, and philosophies.

Gerri King CONSULTANT’S CORNER

back. It’s important to remember that there is good information in resistance, so it’s essential to determine the cause of the resistance and to then allow time for processing it. Finding out why people are concerned will produce useful information and show employees that management wants to know what they think. To minimize the typical pitfalls that can kill a merger or acquisition, consider these suggestions: “Communicate even when there is nothing much to say. Silence erodes trust, and rumors start when there is a lack of information.”

As a result, retention of key employees, at all levels, is compromised, and resentment and fear increases among staff and stakeholders. Communication becomes dysfunctional, internal conflict is elevated, morale, and thus productivity, decreases, and business continuity is jeopardized. When two or more organizations come together, dramatic changes occur in the work environment. To address concerns and anxieties, the tendency is to focus on all the anticipated positive results. What is often ignored, however, is that positive change can be every bit as stressful as negative change, because with every gain, there is a loss. Sometimes it’s as benign as giving up the familiar, i.e., changing computer systems or answering the phone differently. But often the tradeoffs are much more difficult and people begin pushing

See GERRI KING, page 10

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

BUSINESS NEWS HERBERT SMITH FREEHILLS STRENGTHENS NEW YORK-BASED LATIN AMERICA OFFERING Herbert Smith Freehills has strengthened the New York hub of its global Latin America offering. Projects and infrastructure partner Juan-José Zentner relocated to Herbert Smith Freehills’ New York office on March 1 to advise clients on the development and financing of major in- frastructure projects. Zentner joins Internation- al Arbitration partner Christian Leathley and the rest of the team to focus on Latin America from the New York hub, with an emphasis on mining, power, and general infrastructure op- portunities in the region. He was previously based in Herbert Smith Freehills’ office in Mel- bourne, Australia. Fluent in English and Spanish and of Argentinean heritage, Zentner has represented the firm’s clients in South America for more than a decade, during that time living and working in Chile for more than a year. He specializes in all forms of design, engineering, procurement, and construction contracts and offtake

agreements. He also has extensive experience in corporate, project and structured finance. Herbert Smith Freehills’ highly regarded Latin America Group comprises an experienced global team in Madrid, London, Paris, Melbourne, Sydney, Perth, Tokyo, Beijing, and other offices across the firm’s international network. Co-led by Leathley, the New York hub includes U.S. and U.K.-qualified lawyers, fluent in Spanish and Portuguese, with specialist projects and infrastructure and international arbitration experience. The practice offers expertise in mining, power and general infrastructure and represents a large Australasian client base – which is one of the most active currently investing in Latin America. “With the current pressure on commodity prices, many global corporates are looking to strengthen their balance sheets by selling assets and restructuring their investments, while others are acquiring or developing assets

to capitalize on opportunities,” Zentner said. “Many of the banks, trading houses, pension funds, infrastructure funds and other investors we represent have large offices in New York with mandates to invest in Latin America. As the majority of the financing for cross-border transactions in Latin America originates from New York, there is acute demand for our transactional expertise in the City.” “We established the New York hub for our Latin American practice to better serve clients with interests in the region,” Leathley said. “Juan-Jose’s relocation to New York allows us to provide a broader, integrated offering that includes counsel on international best practice for risk allocation, bankability of project documents and project structures, arbitration and dispute resolution, with a multi-lingual team that has deep roots in the region. The development of this capability it key to the firm and we will continue to add strength to our local team.”

GERRI KING, from page 9

to know what’s ahead if they’re kept in the dark? z Continually discuss the reasons for the merger or acquisition and the rationale for decisions made along the way. z Be sure that transitional teams are developed very early on for all pivotal areas and layers of the organization, and that team members are fully representative of the employee base. Facilitated sessions are the most successful because it’s easier for someone who does not have a stake in the outcome to be completely focused on the process. z Based on cultural assessment and mapping, use appropri- ate work teams to merge departments and make decisions regarding small issues (such as what forms to use), and larger strategies (such as how to handle customer service). While deciding upon best practices and new policies, cultural assimi- lation will be a by-product. z Provide leadership and supervisory training as though it were a completely new, start-up company – because it is! z Label the transition activities as a learning process for all. It is a reminder that new territory is being experienced and goes a long way to explain the confusion and occasional chaos that will inevitably be present. z Set up periodic re-evaluations over the first two or three years that ensure problems will be addressed long after the new organization is formed. Too little time and too few resources are devoted to creating a common vision, and on implementing a smooth integration process. Keep in mind that employee satisfaction can be responsible for the success or failure of M&As because in every area there are bound to be incompatibilities when two or more companies come together. But when the impact on humans is recognized and addressed, even diverse organizations can emerge as productive and satisfying work environments. GERRI KING, Ph.D., is a founding partner and president of Human Dynamics Associates Inc., in Concord, New Hampshire. For more information, visit gerriking.com.

z Involve HR at the earliest possible juncture and commit to ad- dressing all issues and processes from a “people perspective.” z Develop a cultural assessment that helps the two groups identify their differences and appreciate all that they have in common. z Develop forums – in all areas and at all levels – for sharing institutional history, vocabulary and acronyms, formal and informal networks, management and work styles, and sources of institutional pride. It’s nearly impossible to develop a new allegiance without mourning the loss of former loyalties. z Identify expectations and problems and design a realistic process for addressing them. Remember, the people who do the job every day know how to solve the problems, so include employees from all departments and all levels in transition planning. “Keep in mind that employee satisfaction can be responsible for the success or failure of M&As, because in every area there are bound to be incompatibilities when two or more companies come together.” z Develop a new strategic plan and unified goals, objectives, and overriding messages that reflect the newly formed orga- nization. z Communicate even when there is nothing much to say. Si- lence erodes trust, and rumors start when there is a lack of information. If legal considerations prevent early communica- tion, then promise that you will share as much as possible as soon as you can. Many companies have lost their key, skilled people because they could no longer wait for “the shoe to drop.” Sadly, in many cases it never does. But how are people

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

O P I N I O N

I ’ve been thinking a lot lately about the place of “trust” and “respect” in the work we do. What is it, how do we get it, give it and sustain it? Why do some people and teams we work with thrive on it, taking all the stress out of the work we do, and others seem to foster conflict, antagonism, and tension? Engendering trust and respect Those of us in the A/E/P industry have a choice to make. Should we be adversaries or colleagues? Colleagues is the right answer.

Ed Friedrichs

I’ve been aware of the degradation of trust and respect in our society for some time. I often refer to it as a loss of civility. But that’s only the symptom. I’m currently in a work setting where the respect level among the entire team is quite high, causing me to examine closely why this is the case. In this circumstance the team includes an architect, engineers, contractor, client/developer, city staff, and elected officials. In other words, it comprises nearly everyone needed to bring a program from an idea to a design, to permits, to construction, and to reality. This program is in Reno, Nevada. What difference does that make? Different locales and companies have personalities, just like sports teams, police departments, and all manner of entities. By and large, Reno is a more respectful town than many

of the places where I’ve lived and worked. I’m much more likely to observe civility here – not always, just more often. I expect you’ve noticed this in your own work. One community treats you as an adversary, while another accepts you as a partner trying to make the city a better place. A contractor bombards you and the client with requests for information, delay claims, and change orders, while another sits down with you and works through their question or concern as a partner. Each setting contains something I’ll call a “respect coefficient.” I define that as an attitude among all involved of mutual trust and respect toward each other, as people and as firms. It also means a respect for See ED FRIEDRICHS, page 12

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

BUSINESS NEWS DODGE MOMENTUM INDEX INCREASES IN FEBRUARY. The Dodge Momentum Index climbed 0.5 percent in February to 126.1 (2000=100) from its revised January reading of 125.5. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. February’s increase was the third consecutive month- to-month gain for the Index, as a 1.0 percent pickup by commercial planning reports overcame a slight 0.1 percent decline by institutional planning. While commercial planning activity is still below the levels present throughout much of 2015, it has made a moderate recovery following the decline witnessed in late-2015. Institutional planning, despite easing back in February, continues to be above last year’s levels due to the generally upward trend registered over the course of 2015. In February, seven projects entered planning with a value that exceeded $100 million. For the commercial building sector, the leading projects were a $190 million office renovation in New York City; a $140 million hotel and casino in Gulfport, Mississippi; and a $129 million mixed-use project in Long Island City, New York. For the institutional building sector, the leading projects were a $500 million medical complex in Indianapolis and a $180 million hospital in Valhalla, New York. Dodge Data & Analytics’ monthly Dodge Momentum Index is a 12-month leading indicator of construction spending for non-residential building. The index is an early and accurate leading indicator of future construction spending.

ED FRIEDRICHS, from page 11

proud of. An agreed-upon mission that we strive to achieve together means we do well together, our enterprise does well, and each of us does well as individuals. In achieving that com- mon goal we’ll all share great pride in what it’s done for our community. It takes hard work and patience to adhere to and deliver on these three commitments. There are frequently obstacles and attitudes based on past experience to overcome. Conflicting ideas and circumstances spring up all the time. How we deal with them either builds or destroys trust and respect. I have learned to ask one simple question, and teach others to do the same when a disagreement arises. I don’t blurt out what’s wrong with the other person’s idea, or tell the person how we’re going to do it because they’re so obviously wrong. I simply say, “Tell me more about that.” I sincerely want to explore the issue thoroughly together, demonstrating a respect for everyone’s point-of- view. I may learn something that changes my mind or vice versa. At the very least, we build trust when we are each committed to working together to find the best solution to the issue at hand. We make a commitment to not stop the conversation until all parties concur with a decision and direction. I’ve found this very effective in interacting with public officials and staff as well. If we invest the time to seek out and agree to common goals for what we’re trying to accomplish, we build trust. If we demonstrate respect for each person’s ideas, we build trust further. What a wonderful experience it is when the entire city council or planning commission turns to an outlier, who has stubbornly refused to help find a solution, and tells the person to please take it up with one of them after the hearing. These are not simple habits to form, but are very effective when you do. Please try them and let me know how they work for you. EDWARD FRIEDRICHS, FAIA, FIIDA, is a consultant with Zweig Group and the former CEO and president of Gensler . Contact him at efriedrichs@zweiggroup.com.

and commitment to the mission, a shared notion of what we’re doing together, the process we’re using, and what the positive effects and benefits will be for our community. A caveat: The group I’m currently working with subscribes to a “no a-- holes” rule. This applies to individuals as well as companies. The firm’s principals have been quite selective about the people they’ve hired and the consultants and contractors with whom they partner. In other words, people and firms with a high respect coefficient. There are exceptions. We’re committed to a specific locale and can’t choose to pick up our tent and go somewhere else. Many cities start out with a predisposed adversarial attitude toward developers and architects, based on previous experiences when trust was betrayed because truth was not a priority. City officials may have become embittered, or caught up in their own power/ego trips. “We make a commitment to not stop the conversation until all parties concur with a decision and direction.” Trust and respect are reciprocal. We can choose to trust and respect, but if the response is still adversarial, we will not have a fruitful relationship. We have to learn how to build respectful and trusting relationships. Building such relationships starts with three commitments: 1)Always tell the truth. The slightest deviation from truthful- ness destroys trust instantaneously. 2)Learn deeply about every person with whom we’ll in- teract. Asking another person about themselves, who they are and what they value is the highest form of respect. Talk- ing primarily about yourself degrades the relationship quite quickly. 3)Work toward defining a shared mission. A clear under- standing of purpose and intent on the part of each partici- pant will lead to a successful outcome that everyone will be

THE ZWEIG LETTER April 4, 2016, ISSUE 1146

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