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J u l y 1 3 , 2 0 1 5 , I s s u e 1111

T R E N D L I N E S

Knowing what you want Sometimes firm owners feign ignorance to avoid spending time, money necessary to achieve their goals.

How firms are organized

60%

50%

40%

30%

20%

10%

I t’s been said before: “You can’t get what you want if you don’t know what that is.” Nowhere is that more true than when you own a business. If you cannot articulate where you want that business to go and what you want it to be like, you’re sunk. However true this may be, I see a lot of A/E and environmental firms with owners who don’t seem to really know what they want – at least they act like they don’t. Here’s some of what we see/hear on a daily/weekly/ monthly basis: 1)“I want to grow, but I don’t know if I really want to grow.” This conflict is present in half or more firm owners. Growth sounds kinda good because it makes the firm more valuable and boosts the ego, yet it requires spending money on things that may or may not pay off. That lack of certainty, coupled with a career path that, perhaps, has an end in sight, results in inaction. 2)“I want to hire people, but I don’t want to spend what it takes on recruiting or pay- wise to actually hire someone.” Common problem! We see a lot of people paying lip- service to the idea of hiring but not succeeding at it, because it is expensive. The owners, once again, may be closer to “harvest” time than they are “planting” time. So, the inaction gives the owners the appearance of not knowing what they really want. 3)“I know we need better clients/projects/ fees, but I don’t really want to spend any more on marketing.” This situation exists in

“If you cannot articulate where you want that

Zweig Group’s 2015 Financial Performance Survey of AEP and Environmental Consulting Firms finds that 55 percent of firms surveyed consider discipline/function to be the most successful organization type. Forty-one percent of firms consider market sector/client type to be most successful, while 11 percent feel organizing by geography is the most successful. Three percent of the sample selected “ Other .” — Leah Santos, research analyst assistant F I R M I N D E X BluMetric Environmental Inc. .............................. 4 Dudek ................................................................... 7 Fraley AEC Solutions LLC . ................................. 10 GLMV Architecture .............................................. 6 MBP ..................................................................... 7 Mobley Contractors Inc. ...................................... 3 Parsons Brinckerhoff . ........................................ 11 Pennoni.................................................................. 2 Primoris James Construction Group .................... 3 Primoris Services Corporation ............................. 3 Thornton Tomasetti ........................................ 2, 12 T.Y. Lin International ............................................ 7 Wideseth Smith Nolting........................................ 2 WSP Global Inc. ................................................. 11

Mark Zweig

business to go and what you want it to be like, you’re sunk.”

MORE COLUMNS xz BRAND BUILDING: Taking the plane off auto-pilot Page 5 xz MARKETING MATTERS: Is it time for a client break-up? Page 9 PLUS xz FIRM SUCCESS: WSP Global reaches strategic plan objectives a year ahead of schedule. Page 11

See MARK ZWEIG, page 2

Winning the bid

Risk & liability

Page 3

Pages 6, 7

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 LT I N G F I R M S

ON THE MOVE

THORNTON TOMASETTI PRINCIPAL NAMED AIA FELLOW International engineering firm Thornton Tomasetti (New York, NY) has an- nounced that Gunnar Hubbard , a principal and the firm’s sustainability practice leader, has been elected a fellow of the American Institute of Architects. He was honored dur- ing the Investiture of Fellows Ceremony at the 2015 AIA Convention in Atlanta. WIDSETH SMITH NOLTING WELCOMES CIVIL ENGINEER IN TRAINING Blaine Green has joined the engineering department of Wids- eth Smith Nolting ’s Alexandria, Va., office. As an engineer-in-training at WSN, Green’s responsibilities include interpreting design criteria and developing site plans. He is in-

volved in programming, design develop- ment, building code review, construction budget analysis, and conducting field work. He is also responsible for general inspection/ observation, in addition to assisting other en- gineers in completing designated tasks. Widseth Smith Nolting is a multi-disciplined firm of more than 180 employees providing engineering, architecture, land surveying and environmental services. PENNONI PRESIDENT RECEIVES ENVIRONMEN- TAL ACHIEVEMENT AWARD Pennoni (Philadel- phia, PA), an award-winning multidiscipline engineering, science, and design consulting firm, has announced that its president and

NEVER MISS A BEAT Catch up on past editorials from Mark Zweig with the free TZL PODCAST! and is a national and local advocate for environmental issues and regulatory policies, such as the U.S. Environmental Protection Agency’s Superfund and Hazardous Waste Management programs. CEO, Anthony Bartolomeo , was recognized by the Pennsylvania Environmental Council and presented with the PEC Achievement Award. Bartolomeo was selected “for exemplifying PEC’s motto – ‘conservation through cooperation’ – in all his work to protect the environment on the local, state, and national levels.” Bartolomeo has more than 30 years of experience in environmental engineering

MARK ZWEIG , from page 1

most firms for two reasons. One, many firms don’t need more work now. They have all they can handle and can’t/won’t hire more people to do it. The second problem is most owners don’t really believe there’s a link between marketing spending and results. So, we talk about it but don’t actually do anything, giving the appearance of not knowing what we really want. 4)“I’d like to get out of the business, but I don’t know what I’d do if I did get out.” This condition also exists in many firms with many owners. They really are tired of the grind but don’t know what else to do with their time. Perhaps their spouses would drive them nuts with too many “honey do’s,” or they’re just more interested in remaining productive than they are in eating dinner at 4 o’clock. Either way, their lack of ability to decide what they want drives the other principals crazy and may create ownership- and leadership-transition problems. 5)“I want my people to act like owners, but I don’t want to have any more own- ers.” Again, a common situation. These people want to have their cake and eat it, too. Even if you can’t make everyone who you’d like to be an owner into an owner, you can share information, bring people into certain decisions, and treat them with the respect you’d give an actual owner, and you can pay them accordingly. We see a lot of indecision here. 6)“I want my people to be better managers, but I won’t give them any training nor any time to actually be a manager.” The desire to make employees better man- agers clearly isn’t strong enough to actually invest in people. If it were, they’d do it. 7)“I want my people to take more responsibility for dealing with clients, but I don’t want them taking over any of MY clients.” Again, how badly do these own- ers really want to pass the baton? If you did make that decision, you would pass the baton. Common problem. Don’t be one of these people! So do people in this business really not know what they want? Or are they just unwilling to be honest about it and act accordingly? You tell me...

zweiggroup.com/podcast

38West Trenton Blvd., Suite 101 Fayetteville, AR 72701 Mark Zweig | Publisher mzweig@zweiggroup.com Andrea Bennett | Managing Editor abennett@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Liisa Andreassen | Correspondent lsullivan@zweiggroup.com Richard Massey | Correspondent rmassey@zweiggroup.com

MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

Tel: 800-466-6275 Fax: 508-653-6522 E-mail: info@zweiggroup.com

EDITOR’S NOTE THE ZWEIG LETTER ran a sidebar regarding claims not covered by Professional Liability Insurance in Issue 1109 on June 22. It has come to our attention that the first two items in the graphic could be misinterpreted. Please note: ❚ ❚ Damage to a client’s property, is covered by an A/E PLI policy, if the cause of loss is an architect’s or engineer’s negligence. By the same token, bodily injury caused to a member of the public and economic loss incurred by an A/E’s client is also covered. ❚ ❚ Actions of principals/directors/officers, if directed at damage to the business itself (i.e., a bad management decision) or one where a competitor sues, are likely not covered by an A/E professional liability policy, but would be covered by Directors & Officers Liability insurance, as noted in the graphic. However, actions by these individuals (officers, principals, directors), in the course of their role as design professionals for claims brought by clients or third parties, are most definitely covered by the A/E professional liability policy. TZL seeks to provide its readers with the most accurate information possible and regrets the error. Please let us know if you find errors by emailing abennett@zweiggroup.com.

Online: www.thezweigletter.com Twitter: twitter.com/zweigletter Blog: blog.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 e-mail TheZweigLetter@TheYGSGroup.com . © Copyright 2015, Zweig Group. All rights reserved.

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

P RO F I L E

The Arkansas Department of Highway and Transportation has awarded Primoris James Construction Group’s $60 million bid for the construction of bridges and their associated road approaches along Interstate 40 at Blackfish and Shell lakes.

Winning the bid Subsidiary of Dallas firm Primoris Services awarded $60 million in contracts for Interstate 40 bridge construction in Arkansas.

Source: Google Maps

“For most projects, it’s the lowest bidder,” Straessle says. “However, on big jobs like these, we not only take into consideration the low bid, but the num- ber of working days in which the project will be complete. There are 135 working days in a year.” The highway department does not keep a list of contractors that are contacted when jobs become available. Rather, the companies keep track of what’s on the horizon. “Projects are advertised on the department website and in The Arkansas Democrat-Gazette ,” Straessle said. “Contractors track projects in development and usually know when they are going to bid. This is a proactive approach on the part of contractors, as they plan which jobs they will bid.” Primoris is no stranger to big contracts. Founded in 1960, the companyprovides a rangeof construction, fabrication, maintenance, replacement, water and “They have to make sure they don’t default – financially or performance- wise. Some contracts have a financial penalty if not completed within a certain amount of time.”

By RICHARD MASSEY Correspondent

P rimoris James Construction Group , a division of Primoris Services Corporation (Dallas, TX), is building two bridges and associated road approaches on Interstate 40 in St. Francis County, east of Forrest City, Arkansas. Primoris, one of the largest publicly traded spe- cialty construction and infrastructure companies in the United States, was awarded the contracts, which totaled $60 million, by the Arkansas High- way and Transportation Department in March. No- tices to proceed were issued in April. The two bridges, one spanning Blackfish Lake and the other Shell Lake, are set to be completed in the first quarter of 2017. The projects are similar in size and scope and include 84 cofferdams, 36,780 linear feet of steel pipe, and 9,800 cubic yards of bridge concrete. Though eight contractors had proposal packets, only two vied for the job. Primoris outbid competi- tor Mobley Contractors Inc. (Morrilton, AR) by a margin of about $2.4 million. Primoris bid $26.9 million on Blackfish Lake, and $33.1 million on Shell Lake. The firm not only submitted the low- est bid, but also proposed the shortest timeframe needed to complete the work, according to highway spokesperson Danny Straessle.

See PRIMORIS, page 4

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

BUSINESS NEWS

ASPIRING ARCHITECTS PURSUING LICENSURE ON THE RISE At its 2015 Annual Business Meeting, the National Council of Architectural Registration Boards shared highlights from the new NCARB by the Numbers, a yearly report about the path to licensure. The report’s findings indicate progress in several areas: ❚ ❚ A record high of 37,178 aspiring architects either reporting hours through the Intern Development Program or testing for the Architect Registration Examination. ❚ ❚ 107,581 licensed architects reported by the 54 U.S. licensing boards, a 3 percent increase since 2011. ❚ ❚ The average age of an architect upon initial licensure fell to 33.3 years old, 2.7 years lower than in 2008. ❚ ❚ Racial and ethnic minorities made up 41 percent of the aspiring architect talent pool in 2014, compared with 22 percent in 2007. ❚ ❚ Women made up 38 percent of aspiring architects completing the IDP in 2014, compared with 25 percent in 2000. ❚ ❚ Women also accounted for 35 percent of candidates completing the ARE last year, nearly twice the percentage in 2000. BLUMETRIC WINS $3.2 MILLION ENVIRONMENTAL ENGINEERING CONTRACT BluMetric Environmental Inc. (Ottaway, Canada), a cleantech company, has announced that it was awarded a contract valued at more than C$3.2 million in the first year of a possible five-year span to provide environmental engineering services to Vale Canada Limited. The contract allows for the future addition of similar services and for future contracts over the five years. As part of the project, BluMetric will undertake drilling, monitoring, and pumping of wells, aquifer tests, and groundwater and surface-water sampling. Data collected during the project will be incorporated into the existing GIS-based Environmental Information System developed by BlueMetric for Vale. UNITED NATIONS TRANSFORMS BUSINESS’ COMMITMENT TO SUSTAINABILITY Sustainability is now on the global business agenda, but there is an urgent need to turn words into action, according to the conclusion in the independent report, “Impact – Transforming Business, Changing the World,” prepared by DNV GL, a firm that enables organizations to advance the safety and sustainability of their business through classification, technical assurance, software, and advisory services, on behalf of the United Nations Global Compact. The report concludes that the UN Global Compact, as the world’s largest corporate sustainability initiative, and the business community have had an impact on the development of sustainability over the past 15 years. Recommendations that must be implemented to accelerate progress toward a more sustainable future are also highlighted in the report. For more information, visit dnvgl.com.

More BUSINESS NEWS, page 12

WE WANT YOUR NEWS Send press releases about your firm’s recent hires, promotions, projects, mergers, and acquisitions to abennett@zweiggroup.com .

PRIMORIS , from page 3

EVALUATION CRITERIA USED BY CLIENTS In the second edition of Successful Project Management for A/E/P & Environmental Consulting Firms , author Ernest Burden transcribes interviews with real-world clients about how they evaluate design firms’ proposals: ❚ ❚ Public Client: “The long list is whittled down to five or six firms. The bigger the project, the bigger the firm that gets it. They receive the RFP, and we select the consultant based on their technical expertise, how they relate to the project, and how they present their proposal in relation to the project. Then they are ranked going into the presentation. Once they are ranked No. 1, we negotiate the fee.” ❚ ❚ Quasi-public Client: “Our process of selection is very much like public agencies, since we get federal money for research. We always go out with an RFP. We always select on the basis of the RFP and not necessarily the lowest fee proposal. What we look for is somebody who is most responsive to what we’ve requested in the RFP. We limit big projects to big firms.” ❚ ❚ Private Client: “The process we take is a little bit different: We set up an internal architectural office, and we do the preliminary test layouts, programming, in- house preliminary budgeting; so that, by the time we’re ready to go out for an RFP, we have a budget and a direction for a crop-of-work. We request that the design firm review it and give us their expertise to fit out our space. We’ll send an RFP to give to eight firms and, based on the data we get back, level that and shortlist them, so we can get to meet the proposed teams at the presentation. We want to make sure we are all on the same pages and that our personalities agree with each other and how it will all come together.”

wastewater, and engineering services to major public utilities, petrochemical and energy companies, municipalities, state departments of transportation, and other entities. Between steady growth and outright acquisitions, Primoris has emerged as a national company that has even contracted in Canada. In April, Primoris announced $218 million in contracts for the installation of underground natural gas pipelines in Florida and Pennsylvania. In January, the company announced $140 mil- lion in contracts for the installation of a crude oil pipeline in Texas and more natural gas pipelines in Pennsylvania. The con- tracts were awarded to the Rockford Corporation , a Primoris subsidiary. “For most projects, it’s the lowest bidder. However, on big jobs like these, we not only take into consideration the low bid, but the number of working days in which the project will be complete.“ All bids submitted to the Arkansas highway department are re- viewed by an awards committee, which makes sure all the math is good, the bonding and insurance are appropriate, and that the bid is complete. Once the contract is awarded, it’s up to the contractor to live up to its word. “They have to make sure they don’t default – financially or per- formance-wise,” Straessle says. “Some contracts have a financial penalty if not completed within a certain amount of time.”

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

MARKETING A SUPPLEMENT OF THE ZWEIG LETTER

Taking the plane off auto-pilot Don’t let the current market surge allow you to become too busy or lazy to effect needed changes, and don’t underestimate the time and resources this will require. O P I N I O N

H ave you ever been at the controls of a plane when autopilot is turned off? I had an opportunity to do this many years ago on the small, single-engine company plane that my previous firm owned. As I held the controls, I assumed that if I just held them steady where they were, the plane would remain on course. That was not the case. When the pilot turned off the auto-pilot feature, the plane immediately started to dive and moving the controls was much harder than I was expecting. After about 10 seconds of terror – that felt like 10 minutes – the pilot took the controls and steadied the plane.

❚ ❚ Cover letters are not saying enough. Studies show that your clients’ attention spans and ability to recall facts from your marketing documents is highest at the very beginning of their review. This means the cover letter of a proposal needs to give the most at- tention to crafting a powerful message that speaks directly to the reader. However, instead of doing this, we often reuse cover letters and just change the project name and contact information before in- cluding standard boilerplate material. We also start every letter with “we are pleased to submit this pro- posal for the above referenced project” or something similar. To maximize your chances of getting the at- tention of your client, write a powerful and personal letter from scratch for every submittal. ❚ ❚ You marketing staff is too busy. As the current market surge continues, I am seeing an unfortunate trend in nearly every firm I work with: Marketing departments are doing more proposals than ever with no end in sight. This is the enemy of creativity – and of these critical support roles to provide the level of service they are capable of. More proposals means they are in more of a sales-support role and critical marketing activities are not getting done at all. True marketing is essential for building and maintaining a strong brand to empower the firm to “Auto-pilot takes us to a destination at a steady, direct course. In the context of our business, it can also enable market trends and changes to go unaddressed, allowing many problems to accrue.”

As I was discussing a part of our business with Mark Zweig last week, I used the analogy of taking that part of our business off auto-pilot. As soon as I said it, the story above came to mind, and it made the analogy even more powerful. All of us have experienced the auto-pilot scenario at some point. Whether it is one part of our business or the entire firm, being on auto-pilot is easy and maintains the status-quo. The chances of turning the auto-pilot feature on are enhanced when we get busy or lazy. Auto-pilot takes us to a destination at a steady, direct course. In the context of our business, it can also enable market trends and changes to go unaddressed, allowing many problems to accrue. In my experience, every part of the business is subject to this risk. As a consultant, I see many marketing departments that are stagnated after being on auto-pilot for so long. They become simply a proposal grind that is never-ending, often yielding market benchmark results that are unacceptable, in my opinion. Here are some issues that tend to manifest from auto- pilot status. ❚ ❚ Your boilerplate marketing material is out of date. I am referring to those standard introductions and descriptions of the firm and its services. Nearly every firm I work with as a marketing consultant has an outdated – or even irrelevant – boilerplate. It’s not unusual to find material that is 10 or more years old! I am not a fan of boilerplate text because it never gets looked at and just fills up space. Our lives are now bombarded with “content” – from social me- dia to other marketing mediums. Firms should strip all standard material out of marketing materials and only say the most powerful messages that can influ- ence purchasing decisions. Less is more!

See CHAD CLINEHENS, page 8

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

Risk &

of- out un lar are GLM are tur bee clie reg tha say ing agr and bee ins agr in abl agr abi ate Mc lar or que

Firms under fire Organization leaders say design firms must weigh the risks before agreeing to clients’ contractual requirements related to idemnification.

❚ ❚ Don’t accept. GLMV had a long-term relationship with a healthcare system, which was purchased by another organization with its own agreements. GLMV con- tacted its risk group and set up a phone call negotiation to review its concerns. After a lengthy conversation, the risk group acknowledged the concerns, but said, “Thank you for your concerns, but this agreement cannot be modified; that is our policy. Other firms in your area have already accepted it.” GLMA declined to work with the client because of internal risk. “Clients say that they have never had to enforce the indemnity language, but then why is the clause in the agreement?” What does this second scenario really communicate as the larger issue? Do the firms that agree to these con- tracts sign the agreement first and read the language later, or do they worry about it only when it becomes a “potential claim”? “We suspect the answer is ‘yes’ on the latter, but it is making it more and more difficult to win proj- ects when their stock answer is, take it or leave it,” McKee says. “We find ourselves turning down oppor- tunities with potential clients because the risk of out-

By LIISA ANDREASSEN Correspondent

“I know we’re not alone,” Larry Van Horn, senior vice president and CFO of GLMV Architecture (Wichita, KS), an 85-person firm says. “We’ve been experiencing recurring instances – from different par- ties – regarding contractual requirements that are un- acceptable and uninsurable.” Mac McKee, executive vice president and chief risk officer at GLMV, agrees that many contract terms re- garding indemnification are becoming onerous, unin- surable, or outside the company’s risk tolerance. The questions then become: When do you accept? When do you not? Here, he shares two real-life scenarios and their outcomes: ❚ ❚ Accept. GLMV received an RFP from a large company for a three-year, on-call agreement that would be their sixth renewal. GLMV has a great track record with the company. The contract language is similar, but, with its new merger, management wants to toughen up the agreement. Through GLMV’s legal counsel and insur- ance broker, it negotiated for a shorter term but was only able to make the indemnification language a little better, because the client was not willing to make ad- ditional changes. So, GLMV weighed the odds of the existing relationship and the large amount of work and chose to accept this agreement.

Larry Van Horn, Senior VP & CFO, GLMV Architecture.

tra nit cho ❚ ❚ Th c l c ❚ ❚ A

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Mac McKee, Executive VP & Chief Risk Officer, GLMV Architecture.

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THE ZWEIG LETTER JULY 13,

Zweig Group is social and posting every day! C O N N E C T W I T H U S

& liability

facebook.com/ ZweigGroup

twitter.com / ZweigGroup

linkedin.com/company/ ZweigWhite

blog. ZweigGroup .com vimeo.com / ZweigGroup

FIRMS SPEAK OUT AND SHARE THEIR INSIGHTS When Frank Dudek, president of Dudek (Encinitas, CA), a 300-person environmental consulting firm, was asked if he ever runs into problems with contractual agreements, he replied: “Yes, don’t all firms?” It appears that most do. We talked with three about their chal- lenges and solutions. Private versus public clients. “We practice al- most entirely in California, which has laws that protect design professionals to some degree, so most government agreements comply with – or will be made to comply with – those provi- sions and are therefore very similar,” Dudek says. “For non-design professional work, the language is usually less protective, but the li- ability is usually less also.” As a result, Dudek signs most government agreements without comment, but has oc- casionally received edits. For private clients, particularly development companies and con- tractors, the firm sees more requested edits. “If they are unwilling to comply on significant issues, we walk,” he says. “That said, with long-term, trusted clients of either type, we are more tolerant, having established a rela- tionship of trust, and tend to work out issues between staff.” Dudek says that the firm will employ an out- side former lead counsel from a large A/E firm that reviews most of its agreements as-need- ed, recommends changes, discusses strategy, negotiates with clients’ attorneys if necessary, and explains the risks to project managers when they sign to help avoid pitfalls. Know client history; manage risk. John Flint, se- nior vice president and managing director of lines of business at T.Y. Lin International (San Francisco, CA), a full-service infrastructure con- sulting firm with more than 2,500 employees, says that the risk must be weighed first. “In some cases, clients are not prone to litiga- tion, and their claims history is such that even though the clauses are unreasonable, there is little risk to the designers signing standard contracts as long as you deliver competent work,” he says. “You need to know your client well. In other cases, the commoditization of engineering services has squeezed all of us. This is reflected in the terms and conditions of agreements we are asked to sign. We find that if we identify all walk-away conditions up front, then we can focus on the issues that are negotiable to us and really make a difference in managing risk.” Dave Petrone, corporate counsel for MBP , (Fairfax, VA), a 273-person multi-disciplined construction consulting firm, says that the

firm is regularly asked to sign indemnification agreements that pose potentially significant uninsurable risks. He says the reasons vary: Some clients may not understand what indem- nification obligations can be insured under a professional liability policy, others may not be concerned about whether the obligation is in- surable, and others may use clauses that have been in existence for many years and have not been revised. Deal breakers. For Dudek: ❚ ❚ Assuming other parties’ liability for negli- gence or partial negligence ❚ ❚ Agreeing to provide service higher than the industry standard ❚ ❚ Unlimited and poorly defined liquidated and consequential damages ❚ ❚ Unrealistic schedules ❚ ❚ Defense costs before establishment of neg- ligence For T.Y Lin: ❚ ❚ Parent company guarantees ❚ ❚ Subsurface conditions related items For MBP: ❚ ❚ Any indemnity clause that subjects a profes- sional services firm to uninsurable risks Final words of wisdom. Flint: “If you approach every request with a clear statement of the level of risk that is priced into a proposal or assumed as part of contract negotiation, you can usually get the other side to understand your position and the exposure you are being asked to take on. Don’t be shy about stating clearly what the risk means to you. And be prepared to say how far you can move in the client’s direction and what it will cost (them) to do so. Usually the client understands your risks, and is unwilling to pay for the level of indemnification that he thinks he needs. But always be willing to walk away if the terms are too unreasonable. Finally, it is important that all involved in these negotiations think and act as owners – like it’s their money.” Petrone: “At minimum, all firms need to con- sider key factors when evaluating any unrea- sonable contractual liability terms and condi- tions to include indemnity clauses, and if given the opportunity to do so, try to explain the risks of such clauses, and suggest alternative language that might be acceptable to the cli- ent which is still fully protective of the client’s rights.” Dudek: “Stick will clients who truly value your services and will provide flexibility and trust.”

HOT OR NOT? What do you think? Is contractual liability a major issue for A/E/P and environmental firms today? Email your thoughts, experiences, and insights to Andrea Bennett at abennett@zweiggroup.com, and we’ll feature them in a future issue of THE ZWEIG LETTER .

of-pocket defense costs could far outweigh any returns on projects, unless the designer is one of the large firms. As an ESOP, our pockets are not that deep.” GLMV WEIGHS IN – DEFEND OR NOT? “We are a responsible midsize architec- ture/interior design firm that has been successful in the past with clients that have been reasonable regarding the indemnity liability that we share on projects,” McKee says. “We have been through train- ing regarding contracts, have master agreement templates – based on AIA and other documents – that have been reviewed by our attorney and insurance broker, and we review all agreements with a principal that is in charge of contract review. Prob- ably 70 percent to 80 percent of our agreements have limitations of li- ability clauses that have been negoti- ated with the client.” McKee adds that the firm is regu- larly on the phone with its attorney or insurance broker when there are questions/concerns regarding con- tract language or one-sided indem- nity clauses. He says GLMV ranks its choices as: ❚ ❚ There should be no indemnity, be- cause the firm assumes additional liability even if the language is ac- ceptable. ❚ ❚ Agree to a mutual indemnity clause to cover the architect’s negligent per- formance for professional services. ❚ ❚ Agree to a client indemnity, if they insist. McKee says that these contractual problems tend to occur with larger

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See RISK & LIABILITY, page 8

ER JULY 13, 2015, ISSUE 1111

CHAD CLINEHENS , from page 5

MORE ADVICE, IN 140 CHARACTERS OR LESS... Chad Clinehens and Mark Zweig lead Zwieg Group’s #BecomingABetterSeller seminar. Insights from the recent one-day event in Madison, Wisconsin, include: ❚ ❚ MZ: Don’t talk over clients’ heads and use unfamiliar acronyms. ❚ ❚ CC: You must share the promises from your presentation with your project team. ❚ ❚ CC: Every “no” takes you to a “yes.” Stay calm and cool and keep trying. ❚ ❚ MZ: Effective sellers focus on benefits to the client, not features of the firm. Marketing must be designed around clients’ needs and all of the firm’s operations must align with this concept. ❚ ❚ CC: Your competitors have a strength that’s your weakness, and you have strengths that are their weaknesses. Your job in a proposal is to exploit your competitors’ weaknesses and showcase your strengths. STAY CONNECTED! Zweig Group: @ZweigGroup TZL: @ZweigLetter Executive Search: @ZGRecruiting

achieve critical growth into new areas, both geographic and service. If you had 30 percent growth over the past year, have you added 30 percent more marketing resources? I doubt it. Scale up your marketing department with the rest of the firm. If you have an ambitious growth and/or diversification plan, you might need to add even more market- ing resources proportionate to the rest of your business. As this historic market surge continues in our industry, I am seeing many departments and firms going into auto-pilot mode. The reason for this is our focus is shifting to completing the incredible volume of work that firms have right now. This stretches all resources and commands an “all hands on deck” atmosphere. Meanwhile, we are not spending the time necessary to look ahead and plan for that upcoming weather system that could cause us turbulence. Even worse, there might be a mountain ahead that we could crash into. Not putting critical business functions into auto- pilot mode while we all work to get this work done is difficult to resist. It’s more important than ever to do it now, while you have the financial resources to invest. Once a downturn comes onto the horizon, it is too late. Take the controls now and change your altitude to a nice climb, taking your firm to new heights. Be looking far ahead now and steer your plane to avoid the things coming that will certainly cause your firm turbulence or even casualties. CHAD CLINEHENS is Zweig Group’s executive vice president. Contact him at cec@zweiggroup.com.

McKee asks: “Clients say that they have never had to en- force the indemnity language, but then why is the clause in the agreement?” “We believe that some lawyers feel they need to insert ‘de- fend’ early in the indemnity clause to make sure that it gets included and don’t necessarily understand – nor want to – that the professional liability insurance is based on the neg- ligence of the architect,” he says. GLMV has considered increasing its professional liability insurance limits, but, in respect to a defense provision, the amount of its limits is not really relevant because no profes- sional liability insurer covers a contractual provision that extends liability beyond those damages attributable to neg- ligence. However, McKee explains that the firm would still need to weigh the cost of the additional insurance against the size and types of projects to pursue, and that doesn’t always work because some clients are looking for “unlimited liabil- ity” insurance, which cannot be purchased. “As a practical matter, we don’t think most firms are willing to accept unlimited liability on projects,” he says. Where does your firm stand on the issue of unreasonable indemnity clauses and more specificity, regarding the use of “defend” in client-drafted indemnities? “I know we’re not alone. We’ve been experiencing recurring instances – from different parties – regarding contractual requirements that are unacceptable and uninsurable.”

RISK & LIABILITY , from page 7

design-bid-build clients and the firm is starting to see the change on design-build projects, too. “We don’t usually hear the same concerns from the contrac- tor on D-B because their contractual liability coverage pro- vided under a commercial general liability policy is broad and typically covers liability of the client and provides cov- erage for defense,” he says. McKee says that for GLMV to agree to “defend” on behalf of the client implies that it will retain defense counsel and expert witnesses on their behalf, something he doubts the client would delegate to the architectural firm, or any other party for that matter. It also bears noting that the same law firm is unlikely to be able to defend both the architectural firm and the client because of potential conflicts. “Accordingly, for pragmatic reasons unrelated to insurance, it seems to make sense for both parties to defend them- selves, with the understanding that the architectural firm will indemnify the client for all loss, damage, cost or ex- pense – including any reasonable attorneys’ fees and other costs of defense – to the extent caused by the architectural firm’s negligence in the performance of services pursuant to the agreement, after they have been found negligent,” McK- ee says. “Also, under the law, our firm – any firm – already has a professional obligation to perform services in a non- negligent manner, and if the firm fails to do so, the client has recourse in tort.” So, whether to accept work under these onerous provisions becomes a business decision that firms must make; mostly, it depends on howmuch a firmwants the work or a relation- ship with a particular client. Firms struggle with these deci- sions, and, if they go ahead with that client, such decisions aren’t taken lightly.

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

MARKETING A SUPPLEMENT OF THE ZWEIG LETTER

Is it time for a client break-up? Take an honest look at your client relationship and ask yourself if it’s still mutually beneficial; if it’s not, it is time to do the hard thing. O P I N I O N

I n addition to working at Zweig Group, I also run a small horse-boarding and horseback-riding lessons program out of my home, a farm on 13.5 acres just outside of town. I started this business in 2011 at a different location as a way to subsidize the costs of my own horses’ feed and to make some improvements to my property. Many of my boarders became friends and were great companions for horse shows and as farm-sitters if I needed to travel.

Christina Zweig

Though I’ve always been conscious of keeping it small, since it was never meant to support me financially, after a move to a new and better location, my side business rapidly gained momentum and started to grow. Suddenly, I found myself with 12 horses to care for, multiple students, children riding who needed supervision every day of the week, and two other outside instructors working out of my property. I was proud of my beautiful property and my reputation of providing a high-level of care, so I rarely said no to requests from boarders. Before I knew what was happening, dozens of people were at my house every day. A literal parking lot developed in my side-yard, and people who I often didn’t know very well were at my house and using my bathroom at all daylight hours. Every single extra second of my time was taken up with horse activities, and I was unable to do things like go to the grocery store or go out to dinner after work. I even had to pay my sister to run to the store for me, so I could use what precious daylight was left to finish chores around the farm. After a misunderstanding about a boarding agreement made with the parents of a teenage girl and the girl herself, I was berated with multiple lengthy texts from the teenager and “While it might not be prudent to fire a client in the middle of a job, there are certain things to take into consideration when making the decision to pursue additional services or work in the future.”

suddenly came to a horrifying reality: My horse business had become a “runaway train,” and it was completely off the tracks! Although mucking stalls is different than providing design services, many A/E/P and environmental firms fall into the same trap that I did and don’t stop to look objectively at their current client situation. While it might not be prudent to fire a client in the middle of a job, there are certain things to take into consideration when making the decision to pursue additional services or work in the future. If some of your client relationships don’t give you a good feeling, ask yourself: ❚ ❚ Does the math add up? If you’re losing money on a client and the relationship isn’t bringing future opportunities, it’s probably time to re-evaluate your fees or the client. ❚ ❚ Does the work fill you with dread? If every time you have to converse with this client you get off the phone with a bad taste in your mouth, it’s probably time for a break-up. ❚ ❚ Are you proud to be working with them? If your client has a bad reputation, is always talking badly about other people and/or firms, or is doing such bad things with your work that you don’t want to be associated with him/her, it’s time to end the re- lationship. The last thing you need is a client talking poorly about your firm. ❚ ❚ Are there more problems and failures than suc- cess stories? It can be tricky to turn down work from a client you like, but if the work never goes as planned you might not have the strengths to really perform well for this client.

See CHRISTINA ZWEIG, page 10

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

RESOURCES

FRALEY SOLUTIONS OFFERS FREE EBOOK TO AID FIRMS IN BRANDING Fraley AEC Solutions LLC (Morgantown, PA), a growing marketing communications firm serving the architecture, engineering, and construction marketplace, has released a new free ebook: Designing an A/E Brand that Drives Selections . “ Designing an A/E Brand that Drives Selections will resonate with architecture, engineering, planning, landscape architecture, and land surveying firms that struggle to compete in a crowded marketplace,” author Brian Fraley, the firm’s founder and manager, says. “Readers will discover seven actionable A/E branding tactics bundled in a brief, easy-to-read, graphically rich format.” “Even leading professional design firms are struggling to compete in an increasingly competitive marketplace,” Fraley says. “My goal in writing this book was to harness more than 20 years of AEC marketing experience to create a helpful guide for our clients and friends that face these challenges daily.” Download your pdf of Designing an A/E Brand that Drives Selections at fraleysolutions.com/ publications/designingaebrandebook. LATEST ZWEIG GROUP PUBLICATION OFFERS INSIGHTS ON, EXAMPLES OF INDUSTRY PRESS RELEASES How successful are your firm’s press releases? Do they have the necessary components to catch the attention of the media? Are they written effectively? Reduce stress, save time, and increase your chances for press coverage with Zweig Group’s A Guide to & Samples of Press Releases for A/E/P & Environmental Consulting Firms ! This go-to manual is a complete update of A/E Press Releases (2011) and includes insights from industry reporters and editors, information on search engine optimization, a crash-course in press release writing, and an extensive collection of press releases used by real-world A/E/P firms to generate coverage of their companies’ anniversaries and awards, projects and services, and mergers and acquisitions. The digital version of A Guide to & Samples of Press Releases for A/E/P & Environmental Consulting Firms also includes internal links for easy navigation and external links to additional sources. The print version of A Guide to & Samples of Press Releases for A/E/P & Environmental Consulting Firms is $149, and the ebook is only $99. For more information, email info@zweiggroup.com or visit zweiggroup.com/books.php. Have you purchased this book? Tweet us what you think @ZweigLetter #AEPpressreleases or email your review to abennett@zweiggroup.com.

During the Becoming A Better Seller seminar, Mark Zweig and Chad Clinehens recommend that technical professionals publish articles, ebooks, and white papers to establish themselves as experts in their fields. Do you have a topic you’d like to write about? If so, email Andrea Bennett at abennett@zweiggroup.com. We’d love to feature you in TZL as a guest speaker or to promote your book and/or white paper.

CHRISTINA ZWEIG , from page 9

APPLYING IT TO A/E/P & ENVIRONMENTAL CONSULTING FIRMS...

10% 15% 20% 25% 30% 35% 40% 45% 50%

Many of my clients paid late, showed up at inconvenient times, and weren’t respectful of my personal space or property. Additionally, when I ran the numbers, I learned I was working for free – at best – and usually at a large personal expense. Although it may be scary to turn down work from a client, especially one that you already have a relationship with, it’s probably the best thing for both parties. If you’re unhappy with your client, they are probably unhappy with you, and your time and resources can be put to a much better use. I had to face the scary fact that I had become a doormat and the only solution was to fire some of my bad clients. Telling these people they had to leave was very difficult, but once I imagined a future for myself not working 80-hour weeks, having more ability to travel, not bending over backward for ungrateful clients, and having some personal time at my own home, it was an incredible relief!

0% 5%

Respondents to Zweig Group’s 2014 Project Management Survey cited managing clients’ expectations (43 percent), managing their time (32 percent), managing team members (30 percent), and staying within the budget (23 percent) as their Top Four challenges. If clients have unreasonable expectations and take up too much time, it might be time to break-up with them. More on Project Management: Zweig Group’s 2015 Project Management Survey will be released on August 14. In the meantime, check out the new edition of Successful Project Management for A/E/P & Environmental Consulting Firms at zweiggroup.com/books.php. Managing clients' expectations Managing my time Managing team members Staying within the budget

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

F I RM S U C C E S S

Ahead of schedule Combination of organic growth and acquisitions enable WSP Global to reach operational and fiancial objectives of strategic plan one year early.

By LIISA ANDREASSEN Correspondent

“This strategic plan is one of continuity and is built on our technical capabilities, our quality service

E mployees, clients, operational excellence, andexpertiseare the four fundamental principles that drive growth and success at WSP Global Inc. (Montréal, QB), a 32,000-person management and consultancy services firm to the built- and natural-environments. Isabelle Adjahi, director of communications and investor relations, says that the firm’s leadership is truly delighted that they were able to achieve both the operational and financial goals of WSP’s 2013-2015 strategic plan one year ahead of time. In 2014, the firm doubled its size through organic growth and the acquisition of 10 companies – enhancing its expertise and geographic reach. Among these acquisitions was Parsons Brinckerhoff , which helped WSP Global to reach the objectives of its 2013-2015 strategic plan one year ahead of schedule. From shaping the global skyline to creating bridges, carbon disclosure reporting, highways, and more, WSP’s staff in 500 offices around the world is making the firm’s success possible. WSP’s employees comprise a global network of experts, active in more than 30 countries. The firm’s financial goals for 2015 are:

offering, as well as our

ability to seize opportunities.”

Net revenues

$4,100 million - $4,600 million $390 million - $430 million

EBITDA Tax rate

Approximately 25 percent

Seasonality and EBITDA fluctuations

20 - 29 percent, the first quarter being the lowest and the third quarter the highest

Free cash-flow as a percentage of net earnings

100 percent 75 - 80 days

DSO

Amortization of intangible assets related to acquisitions

Approximately $60 million Approximately $90 million

Capital expenditures

LOOKING AHEAD. By the end of 2018, WSP aims to: ❚ ❚ Reach $6 billion in net revenues through a combina- tion of organic and acquisitive growth. Of this, $1.3 billion should be achieved through acquisitions of complementary and like-minded firms and the bal- ance generated organically, which should translate into a 5 percent annual organic growth; ❚ ❚ Deliver EBITDA margins higher than 11 percent; ❚ ❚ Remain below the 85-days DSO mark; ❚ ❚ Generate free cash flow equal or higher to its net earnings; ❚ ❚ Maintain its leverage between 1.5-2 times EBITDA; and

❚ ❚ Reach a workforce of 45,000 people across the globe

Pierre Shoiry, president and CEO, says, “This stra- tegic plan is one of continuity and is built on our technical capabilities, our quality service offering, as well as our ability to seize opportuni- ties. It sets out various priorities and initiatives aimed at achieving excellence by broadening our array of services, including creating a company- wide differentiation in the area of advisory servic- es, which will enable us to develop more strategic relations with our clients by assisting them in the optimization of their assets and the development of their capital investments.”

See WSP, page 12

THE ZWEIG LETTER JULY 13, 2015, ISSUE 1111

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