TZL 1448 (web)

July 11, 2022, Issue 1448 WWW.ZWEIGGROUP.COM

TRENDLINES

Finance and accounting staff

When considering a transition, it’s important that you stay flexible and don’t wait until the end to plan your exit. The founder animal

FIRM INDEX Balfour Beatty.........................................................8 Ceetech..................................................................... 10 Deuel & Associates..............................................4 Fluor Corporation...............................................12 Mancini Duffy ........................................................... 6 Pennoni.........................................................................4 RSK Group................................................................10 SEPI..................................................................................4 MORE ARTICLES n ALAN LLOYD: The value of loyalty Page 3 n Entrepreneurial mindset: Christian Giordano Page 6 n LAUREN RHODES MARTIN: Beware of the liquidated damages clause Page 9 n MARK ZWEIG: Managing a lot of stuff Page 11 Finance and accounting staff as a percentage of total staff was analyzed among firm participants in Zweig Group’s 2022 Financial Performance Report of AEC Firms . This follows a common theme among nontechnical staff in which the department staff percentage decreases as the total firm size increases. Because of this increase in responsibility for finance staff in larger firms, financial directors see a bump in base salary relative to industry norm. Participate in a survey and save 50 percent on the final or pre- publication price of any Zweig Group research publication.

I ’ve heard numerous times that you should start your business with an exit strategy in mind. It seems like very few business owners (in the AEC space) do this. Lots of decisions have to be made as an AEC firm establishes itself. What should we name the place? Do we have clients? What markets should we serve? Who are/will be my key people? These are a few of the practice-based questions that need to be resolved. Then there are questions regarding how the organization is put together, corporate governance, tax status, location, licensure, etc. At the beginning of an organization’s development, most firms are not looking at the long-term operating strategy nor the exit strategy. Reevaluating these subjects as a firm grows and evolves is critical. Question everything consistently and don’t be complacent in the “way we’ve always done it.” The various realms of expertise needed to run an AEC firm are complex and require subject matter experts to provide guidance at every turn. From legal, tax, benefits, risk, insurance, and other more technical matters, owners of small and growing firms are tasked with making numerous (and frequent!) decisions that can have long range impacts on the way the business will function – not to mention how the business will transition ownership. This is important! Identifying all the hurdles and constraints when selecting a particular business solution is impossible and certainly not an exact science. There is no silver bullet that accomplishes all the strategic and operational objectives a business leader must tend to, but there are certain decisions that can have lasting implications – good or bad. Maintaining some flexibility in your structure and not being painted into a corner with a decision should be at least one of the objectives here. Also, don’t wait until the end to contemplate your exit! Most of my time at Zweig Group is spent focusing on ownership transition and developing strategies to accomplish this initiative. I’ve seen numerous examples of perceived constraints regarding changes in ownership in design firms. Whether perceived or real, almost anything is possible if you have the right subject matter expert in your corner and have a vision of where you want to go with the business.

Will Swearingen

See WILL SWEARINGEN, page 2

THE VOICE OF REASON FOR THE AEC INDUSTRY

WILL SWEARINGEN, from page 1

There’s no shortage of tax mitigation strategies for the small firm owner. Similarly, there are a thousand ways an attorney can draft your documents. Legal documents designed and written by generalists, not focused on this industry, can be a real hurdle. Especially, if a firm creates expectations and programs around those documents that are not aligned with the overall philosophy of what business ownership means in this industry or at a specific firm. Owners should tie this philosophy directly to the collective vision for the firm and be communicating appropriately with key individuals. Determining control, decision making authority, methodology for transferring ownership, and continuously communicating with your key people is imperative to developing a sustainable business model. A few of the frequent offenders I see complicating overall strategy and the ownership transition conversation are: ■ ■ Voting and non-voting shares for control purposes. These can be useful but can complicate valuation, real or perceived benefits of ownership, and weigh on organizational structure. If you choose this path, commit to growth and be intentional about why you have voting or non-voting shares. There are plenty of other ways to delineate control/decision-making authority. ■ ■ Voting or non-voting shares based on licensing requirements. There are other ways to develop MSAs, formal relationships between “affiliate” or wholly owned entities. Depending on your location, try not to get wrapped up in who can and cannot be an owner in your firm. Focus on getting the right business partners together. ■ ■ Reporting exclusively along operating entity lines for tax or other purposes. Using the previous strategy, but not looking at the entities or business units as “one firm.” This can get really ugly. ■ ■ Focusing on tax mitigation strategies and not focusing on the business objectives. Running personal expenses, owning real estate inside your corporation, and other “tax strategies” can complicate things as you expand and look to transition ownership. ■ ■ Using deferred compensation as a transition strategy. My experience with these is that after three to five years, the existing ownership start to really question the program for a variety of reasons. Is this a growth stock versus income stock – or neither? What are the benefits of ownership? Are the other owners aligned? Any one of these can cramp a conversation regarding strategy and certainly come into play when you are discussing ownership transition. There are generalists and then there are industry experts who can advise you on some of these matters. Find peer groups to network with, seek out industry experts in tax, legal, and strategic/ exit planning. Lean on your network to help you navigate the landscape of business ownership so you can focus on running a successful firm and creating value for your fellow stakeholders. Zweig Group helps firms develop solid, actionable plans to create smooth transitions. Click here to learn more about Zweig Group’s ownership transition advisory services. Will Swearingen is a principal and director of ownership transition advisory services at Zweig Group. He can be reached at wswearingen@zweiggroup.com.

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Chad Clinehens | Publisher cclinehens@zweiggroup.com Sara Parkman | Senior Editor & Designer sparkman@zweiggroup.com Shirley Che | Contributing Editor sche@zweiggroup.com Liisa Andreassen | Correspondent landreassen@zweiggroup.com Tel: 800-466-6275 Fax: 800-842-1560 Email: info@zweiggroup.com Online: zweiggroup.com/blogs/news Twitter: twitter.com/zweigletter Facebook: facebook.com/Zweig- Group-1030428053722402 Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year). Free electronic subscription at zweiggroup.com © Copyright 2022, Zweig Group. All rights reserved.

LEADERSHIP SKILLS FOR AEC PROFESSIONALS This program provides AEC professionals with the skills to become more competent leaders and helps attendees develop and affirm the leadership skills, strategies, and techniques necessary to grow personally and professionally. Join us in New Orleans August 11-12. Click here to learn more!

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

OPINION

The value of loyalty

With all the discussion about the “great resignation,” why isn’t anyone talking about the employees that aren’t jumping ship?

A quick internet search will show you that employee retention statistics have changed wildly over the past few years, and it’s not just because of the global pandemic. Employee loyalty statistics show that the average tenure of employment has decreased steadily over the past 10 years. On average, an employee will stay with their company for only four years.

Alan Lloyd, CIH, CSP, ENV SP

Social media isn’t helping, especially with the younger generation. Videos and articles on Facebook, Instagram, and TikTok are telling millennials and Gen Z employees they should change jobs every two to three years or they will be left behind! Loyalty is not something people talk about much lately, and even then, it’s usually in the negative. So, this begs the question, what is the value of staying at a company? What is the value of not jumping around every few years? What is the value of loyalty? As a Gen X executive who has stayed at the same engineering firm for more than 21 years, I often ask myself this question. And every time I answer, I determine the value of staying exceeds the benefits of leaving. With that knowledge, I’ve been able to

lead by example trying to instill the same values in my team. While we can’t always avoid turnover, my small team of 24 environmental, health, and safety professionals grew to 75 in just over five years – and two of those years were during the pandemic! What is it that makes me stay? Is it the company? My team? Honestly, the answer is going to be different for each person, and even my answer changes with time. But I have found that there are three main benefits that have been consistent throughout my two decades at Pennoni. The three values of loyalty that I’ve seen in my career have included: 1. Taking risks to chase your dreams. Loyalty is

See ALAN LLOYD, page 4

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

TRANSACTIONS SEPI ACQUIRES CLEARWATER, FLORIDA MULTI-DISCIPLINED LAND DEVELOPMENT CONSULTING FIRM TO EXPAND SOUTHEAST FOOTPRINT SEPI announced its third Florida location through the acquisition of Deuel & Associates of Clearwater, Florida. The acquisition of Deuel & Associates is aligned with SEPI’s long-range strategy of: ■ ■ Southeastern U.S. expansion ■ ■ Geographic expansion in the growth market of Florida ■ ■ Diversifying into non-DOT markets ■ ■ Adding growing, complementary services

■ ■ Building and expanding existing land development and landscape architecture services Deuel & Associates’ broad base of expertise will provide an enhanced client experience benefiting both our public and private sector clients. “The opportunity to add such an amazing firm to SEPI and continue to expand our footprint in the Southeast is one we couldn’t pass up,” said Sepi Saidi, CEO of SEPI. “This acquisition positions us as a powerhouse firm across a variety of service offerings pertaining to land development, and across the AEC industry as a whole. We look forward to welcoming Deuel & Associates to the SEPI team.”

Deuel & Associates is a multi-disciplined land development consulting firm first established in 1954 by C. Fred Deuel, where he served as president of the company until his retirement in January 2007. Notable Deuel projects include developments such as the Clearwater Marine Aquarium, Calvary Baptist Church Athletic Field Complex, various City of Pinellas Park projects, Alexander Orthopedic Centers, and various projects for the Philadelphia Phillies spring training facility. The firm is led by Al Carrier, PE, PSM, Brian Barker, PE, MSEM and Chris Chin, PE and is well-regarded within the West Coast Florida marketplace.

performance, will allow for steady linear career growth, advancement, and compensation. Not only does time allow for advancement, but it also builds relationships. 3. Building connections and relationships. Nothing should be more treasured than loyal friends and collaborators! Psychological studies show that gratitude is intrinsically connected to loyalty. Many of us in the AEC world already know this applies in the sales world. The more connected you are with a person and the more they get to know you, the more they are likely to work with you. The same applies in the workplace, especially with coworkers. When you change jobs, it takes time for your colleagues to get to know your personality, expertise, and abilities. Sometimes building these relationships can take years! If you change jobs frequently you are less likely to build roots and long- lasting connections. Developed relationships allow us to be true to ourselves and our values. Every employer, not just those in the environmental, health, and safety industry, will always need to deal with employee recruitment and retention. But instead of managing employees knowing they may leave every three to four years (or less), why don’t we manage employees to stay more than 20 years? Or maybe for an entire career? To keep our employees, we need to educate and mentor them on the value of loyalty. As employers and managers, however, we need to ensure that we are giving our loyal employees additional trust, consistent increases in compensation, and ways to build and develop relationships. As the EHS practice leader for Pennoni, I have found that vision and grit by a leader sets the course of a group of people, but it requires shared goals and values from everyone. The shared vision set by the leader propels a team down the path toward a single goal, while loyalty is the glue that keeps everyone together when things get tough. Alan Lloyd, CIH, CSP, ENV SP, is vice president and EHS practice leader at Pennoni, a multi-disciplined engineering firm based in Philadelphia. Connect with him on LinkedIn.

ALAN LLOYD, from page 3

valuable because it allows us (employees and employers) to take risks with people we trust. Earning trust of an employer will often allow you to be loyal to your own dreams and aspirations. Employers are more likely to allow long-term employees to chase career goals that sometimes may not fully align with existing business plans. Every time you change jobs, you must “re-prove” yourself to an employer. My tenure at Pennoni has earned me the trust of our president and COO to take risks like expanding our service line into industrial hygiene – something very different for a traditional engineering company. Taking risks can then lead to more success and, hopefully, more compensation. “As employers and managers, however, we need to ensure that we are giving our loyal employees additional trust, consistent increases in compensation, and ways to build and develop relationships.” 2. Getting promoted and recognized. Everyone wants to make more money, get promoted, and be recognized. The lure of a promotion or raise by a new company is difficult to ignore because it is immediate gratification. It is hard to be loyal when it feels like it comes at a cost. Patience can be hard, but it can also be more rewarding. Being loyal means being devoted and, yes, can also mean being vulnerable, but that never means being naive. Employers don’t want blind trust. Loyalty must be a two-way street and compensation and growth is part of that trust. You must know your value and fight for it. If the employer doesn’t recognize your worth, it is time to move on, but when did patience become such a negative trait? Over my tenure at Pennoni, I have been promoted nine times and I don’t think I’ve hit my ceiling yet. Loyalty, combined with quality

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

PROFILE

Entrepreneurial mindset: Christian Giordano President of Mancini Duffy, a national design firm based with a 100-year-old history and tech-forward approach specializing in architecture, planning, and interior design.

By LIISA ANDREASSEN Correspondent

G iordano believes that the world of architecture and design is due for a reinvention. And, as he approaches his leadership role at Mancini Duffy (New York, NY) with the benefit of 20 years of experience, he’s well poised to push industry boundaries. Internal innovations include a research and development arm – the Design Lab – which focuses on technologies that create an immersive design process. “At Mancini Duffy, we’re working to create an entrepreneurial mindset – one that encourages new ideas and ways of looking at things,” Giordano says. “We’re also very cognizant of the importance of a healthy work-life balance. We want people to want to be here.” A CONVERSATION WITH CHRISTIAN GIORDANO. The Zweig Letter: Can you tell me what you have up your sleeve for reinvention? Christian Giordano: On one level, it starts with firm culture. There’s still a great deal of “old-school mentality” out there

when it comes to managing and leading an architecture and design firm. There’s a tremendous amount of young talent out there, but they’re often discouraged by the traditional hierarchy and, as a result, leave the profession. At Mancini Duffy, we’re working to create an entrepreneurial mindset – one that encourages new ideas and ways of looking at things. We’re also very cognizant of the importance of a healthy work-life balance. We want people to want to be here. On the tech side, we’ve authored a proprietary software that helps with speed of decision making. It combines REVIT with a virtual reality software. TZL: You have a podcast called The Anti-Architect and also sell some merchandise with that tagline. What’s behind the name? What are you hoping to achieve through this branding? During your podcasts, what’s been one of your more memorable guests/interviews and why? CG: It actually started with Zweig Group. I brought them in as a consultant after I bought the company and they suggested that I needed to become a thought leader. I’m not big on

THE ZWEIG LETTER JU

writing so I suggested a podcast that focused on what we can do, together, to improve the profession as a whole. I interview people, ask questions, share experiences and lessons learned. The name Anti-Architect just sort of evolved from that. For the most part, I don’t enjoy going to events where there are lots of other architects; I find it a little boring. Frankly, I want to be the only architect in the room. Most people get it. Now, we have thousands of listeners each week and many other architects are listening. Now that it’s working, I want to up the game a little, so I’ve hired someone who preps people for TED Talks. It’s unexpected and fun! The guests I enjoy the most are the ones who are candid and not afraid to tell the truth. “I try to empower people and be a resource and encourage them to follow their passion.” TZL: Ownership transition can be tricky, to say the least. What’s the key to ensuring a smooth passing of the baton? What’s the biggest pitfall to avoid? CG: When I purchased the firm, I hired Zweig Group as a consultant and they made the process pretty painless. Looking back, I think it was important for both parties (buyer and seller) to want to make it work. We had open communication. A pitfall is to put your personal priorities first. It’s important to lay out a set of common goals and go from there. TZL: What benefits does your firm offer that your people get most excited about? CG: On the HR side, we have things like summer Fridays off and we pay for a portion of vacations (up to $2,000) to encourage people to take time off. We also give solid bonuses and compensation. More than this, we offer opportunities and encourage the entrepreneurial mindset. We’re also very transparent and lay out the vision for the company so there are no surprises. TZL: How has COVID-19 permanently impacted your firm’s policy on telecommuting? CG: It not only affected our policy on telecommuting, but also on real estate. We downsized from a 20,000-square-foot office to 15,000 square feet which saves on rent. We also went to a “hotel” model. When people come into the office they can sit at any desk they want. Everyone has the same laptop, etc. And, since no one has a set office this helps with collaboration. People sit near different colleagues all the time and it makes everyone

more mobile. Overall, we’ve rejuvenated the office experience. People can also work at home two days per week; some people choose to come in more. We’ve struck a great balance and I’m open to more flex arrangements too. TZL: What role does your family play in your career? Are work and family separate, or is there overlap? CG: I’m lucky. I met my wife at work. She was an interior designer. She knows the profession and the demands that go along with it. My kids know that work means a lot to me and I involve them in aspects of my job. We have career work days, office and family BBQs, etc. I think it’s important for my kids to see that work is important. Maybe it will rub off on them in the future. It’s really all rolled together. TZL: What skills are required to run a successful practice? What do you wish you knew starting out that you know now? CG: I wish I had gotten more formal business management training or gone on to get an MBA. The first time someone asked me about top- and bottom-line revenue, I looked at them with a blank stare. I learned these skills on-the-job, which is both good and bad. They don’t teach you things like how to read a P&L sheet or how to understand cash flow in architecture school. TZL: Diversity and inclusion are lacking. What steps are you taking to address the issue? CG: It seems this has always come naturally for us. About 60 percent of our staff is comprised of women. Many of the women are involved in leadership groups at the AIA level. One of our partners started an organization called “She Builds Waves” – a collective of women who make waves in the built industry by engaging each other and striving for more, together. “We’re working to create an entrepreneurial mindset – one that encourages new ideas and ways of looking at things. We’re also very cognizant of the importance of a healthy work-life balance. We want people to want to be here.”

HEADQUARTERS:

New York, NY

NUMBER OF EMPLOYEES:

200

YEAR FOUNDED: 1915

OFFICE LOCATIONS:

■ ■ New York, NY

■ ■ Millburn, NJ

■ ■ Red Bank, NJ

MARKETS:

■ ■ Corporate

■ ■ Healthcare

■ ■ Hospitality

■ ■ Aviation

■ ■ Multi-family

SERVICES:

■ ■ Architecture

■ ■ Interiors

See ENTREPRENEURIAL MINDSET, page 8

■ ■ Planning

ULY 11, 2022, ISSUE 1448

ON THE MOVE BALFOUR BEATTY PROMOTES SARAH BRAND TO VICE PRESIDENT OF NATIONAL BUSINESS ACQUISITION Balfour Beatty announced the promotion of Sarah Brand to vice president of business acquisition for its national operations. In this role, Sarah is responsible for the development and support of strategic pursuits. Working in cooperation with various teams her primary focus is with Federal acquisition. Sarah also supports Public-Private Partnership programs with the company’s Buildings and Investments operations, and she is active in researching U.S. Rail opportunities and partnerships within existing Balfour Beatty geographies. Since starting her career at Balfour Beatty in 2008, Sarah has successfully led planning, design integration and delivery efforts for various civic and social projects partnering with a range of clients from private developers to federal government entities. She has also guided project teams through the

successful execution of design-build or team-based delivery methods and played an integral role in the pursuit and delivery of many high-profile projects including the National Science Foundation Headquarters, the Utah Data Center, Most recently, Sarah led the design team on the $700 million design- build-finance-operate-maintain Joint Government Center in Broward County, Florida Mark Konchar, Balfour Beatty senior vice president and managing director of U.S. Rail operations commented, “Sarah is a rare talent who blends technical expertise with relationship building. She is a proven leader who performs at the front-end of highly strategic opportunities, while building positive, collaborative relationships that ultimately delivers projects through the lens of diverse perspectives. I am excited to work alongside Sarah as she propels Balfour Beatty services and delivery forward to the benefit of our clients.”

Sarah is a graduate of Duke University where she received Bachelor of Science in civil engineering with an emphasis in structures and certificate in architectural engineering. She is a professional engineer in Virginia, certified Core Clarity instructor, Designated Design- Build Professional and LEED Accredited Professional. Balfour Beatty is an industry-leading provider of general contracting, at-risk construction management and design- build services for public and private sector clients across the United States. Performing heavy civil and vertical construction, the company is part of Balfour Beatty plc, a leading international infrastructure group that provides innovative and efficient infrastructure that underpins our daily lives, supports communities and enables economic growth. Balfour Beatty is ranked among the top domestic building contractors in the United States by Engineering News- Record.

ENTREPRENEURIAL MINDSET, from page 7

TZL: You created the “Toolbelt.” How has this changed the face of your business and do you use it for all projects? CG: This is our virtual reality software and we use it on all projects now. It helps to make the client a real part of the process and gives them ownership. It also helps with speedier decision-making. For instance, what a regular architect can do in three weeks, we can do in three hours. We can get to the design part of the process almost immediately and it’s been very well received and successful. TZL: What type of leader do you consider yourself to be? CG: Inspirational. I try to empower people and be a resource and encourage them to follow their passion. TZL: Your firm recently acquired Gertler & Wente Architects. What was the main impetus for that? How will it help to drive the company forward? CG: It had to do with the desire to diversify our work, sectors, and geographic reach. We’ve always been known for designing high-end corporate interiors – and still are – but we wanted

Mancini’s T3 staff event on May 12, 2022 at the firm’s new headquarters at 520 Eighth Avenue in NYC.

to move into other areas too – hospitality, healthcare, aviation, etc. I knew Jeff Gertler and asked what he had planned for his company after he retired. He said, “No one has made me an offer.” So, with that, an offer was created and an acquisition happened. We now have 20 more people on board, including Jeff, and I hope they are as happy as we are as we took a great deal of time and effort to integrate. They have much experience in the healthcare and multi-family market and we’re excited to expand into this area.

OWNERSHIP TRANSITION ADVISORY SERVICES Ownership transition is a necessary step in the life cycle of your firm. Let us help you evaluate the many options available. Retiring and departing owners along with future owners/leaders all benefit greatly from a well-designed map for ownership. We can help keep your business thriving and protect both departing and next-generation owners. We help firms develop solid, actionable plans to create smooth transitions. Our consultant team has helped hundreds of firms develop actionable ownership transition plans and has seen just about every scenario you could imagine. We are ready to bring this expertise to your firm. Click here to learn more!

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

OPINION

More owners (or their lawyers) have tried to insert these clauses into design contracts, and this should be a red flag for AEC firms. Beware of the liquidated damages clause

O wner/contractor agreements typically contain a liquidated damages clause, which is designed to protect the owner from the financial consequences of project delays caused by the contractor. While these arrangements are understandable as completion dates are significant to owners, new efforts to insert the clauses in design contracts represent potentially significant uninsured exposures for AEC firms.

Lauren Rhodes Martin

When contractors submit a price for their work they also contractually agree to the completion date. So, by the time the contractor is awarded the contract, it usually has the contract documents and has used them to price the job and complete a construction schedule. Once a notice to proceed is issued to the contractor, the contractor essentially controls the schedule. Liquidated damages clauses in construction contracts were first initiated – and quickly became widespread – because actual damages are difficult to establish in the case of a delay. To avoid the likelihood of disagreements and related litigation, the owner and contractor agree upfront to a reasonable daily amount that will substitute for actual damages. The daily amount will generally be assessed against the

contractor for every day or business day the project is late. Nonetheless, even with the presence of a liquidated damages clause, delay damages can still be costly to prosecute and defend. In effect, the daily amount stipulated in the contract must be reasonably consistent with what actual damages might be. If the amount selected is deemed excessive, a court may decide the clause is not enforceable. Generally, however, liquidated damages are the exclusive remedy if the project is late. As mentioned, during the past several months, more owners (or their lawyers) have tried to insert

See LAUREN RHODES MARTIN , page 10

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

TRANSACTIONS RSK GROUP WELCOMES RENOWNED MECHANICAL ENGINEERING FIRM CEETECH RSK Group is expanding its existing mechanical and engineering provision through the acquisition of East Anglia, U.K.-based firm Ceetech. Ceetech designs, specifies, installs and maintains infrastructure for a wide range of public-and private-sector clients including hospitals and education, leisure, retail, industrial, custodial and military facilities. The company has a solid reputation for engineering excellence,

Established in 2001, the firm employs a strong team of about 70 people and has a variety of multi-million-pound design- and-build projects on its books. RSK will expand its existing M&E provision by leveraging Ceetech’s expertise. By combining this with the experience of RSK’s existing consulting engineering practice, Silcock Leedham, the group will be able to provide a full M&E design- and-delivery capability in-house. Kerry Briggs will continue to head the business as the managing director

and will be supported by the existing management team as the business joins RSK’s Geosciences and Engineering division under the direction of Divisional Director George Tuckwell. “These are really exciting times for Ceetech,” stated Briggs. “Everyone has worked very hard over the last 21 years to build a company with an enviable reputation for being user-friendly and delivering quality workmanship from design, through installation to ongoing maintenance; and, with the support of RSK, we can build on this.”

Most professional liability policies specifically exclude liquidated damage claims, as they are not available to the owner unless they are in the contract. However, in that case even if the professional liability policy doesn’t contain a specific liquidated damages exclusion, the contractual liability exclusion will apply, so coverage may be denied on that basis. The only time a design firm’s obligation to pay liquidated damages might fall under their professional liability coverage is if it can be established there were actual and measurable damages to the client caused by a delay attributable to the firm’s negligence in providing professional services. In these situations, the owner would have to allege negligence and prove damages. Depending on the policy language, even these circumstances could be problematic for design firms. Rather than face potentially serious coverage implications because of a liquidated damages clause in a contract, go into contract negotiations well prepared to explain why they are appropriate for contractors, but not for design professionals. Your arguments may include citing the different nature of the design firm’s responsibilities in the contract, as well as the contractor’s role in the preparation and control of the schedule. You can also point out the different sizes of contracts involving design firms versus those for contractors. Make sure the client understands that a liquidated damages provision represents an uninsurable obligation and that taking on uninsured risk is not contemplated in establishing design fees. Take time to remind clients that they require your firm to have professional liability insurance so there will be coverage in the event of negligent performance. Certainly, it isn’t in the owner’s interest to insert obligations that won’t be covered by insurance you’re contractually required to have in place. Finally, you might consider entering contract negotiations ready to suggest a replacement clause as an alternative that recognizes the client’s milestone expectations and ties meeting those milestones to the standard of care. The clause can stipulate that any services be performed as expeditiously as is consistent with professional skill and care and the project’s orderly progress. Lauren Rhodes Martin is a risk manager and claims specialist at Ames & Gough. Connect with her on LinkedIn.

LAUREN RHODES MARTIN , from page 9

liquidated damages clauses into design contracts. This should be a red flag for AEC firms as liquidated damages are not covered under professional liability policies. In some cases, these clauses relate specifically to design completion dates. Of course, a number of factors can contribute to delays in the completion of design documents, including: consultants’ and owner’s consultants’ timely completion of work; permit reviews and comments; and redesign by owners. In the latter circumstances, owners might view their adjustments as minor, but they may in fact have broader impacts. As recent experiences that arose during the pandemic illustrate, there are many intangibles. Furthermore, there typically are low actual damages associated with design delay; a notice to proceed with the construction has not been issued, and no construction has been priced or scheduled. Thus, any actual damages may potentially be less than the amount stipulated in the contract. In other situations, however, the liquidated damages provisions relate to all aspects of the contract, including the construction completion date. Even though the design professional has no responsibility for construction and no control over the schedule, there still are time-related aspects of a design professionals’ performance during contract administration. They include submittal review turnaround, RFI responses, change order review, and review of the payment certifications. If not completed on a timely basis, these issues can affect the contractor. Nonetheless, they generally do not constitute a valid cause of delay. That stated, suppose a contractor claims the design professional failed to meet these time aspects of the contract and delayed construction. In that case, nothing precludes the owner from making a negligence claim against the design firm, passing on the contractor’s claim. Without a liquidated damages clause, this type of claim should not result in significant insurance coverage issues if there is an alleged breach of the standard of care. Professional liability coverage is tied to negligence; claims are paid when it is established that there are breaches of the standard of care and resulting damages.

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

FROM THE FOUNDER

Managing a lot of stuff

Give yourself a chance to get a lot done and you may be surprised at your ability to keep all those plates spinning.

W hen I look back on the insane life I was living just a few short years ago – managing two businesses at the same time, working as a teacher of entrepreneurship in The Walton College at the University of Arkansas, having four daughters and a stepdaughter and trying to be a decent parent, in addition to owning a large number of commercial and residential rental properties AND building hot rods and antique auto and motorcycle restorations – I don’t know how I did it all.

Mark Zweig

The first thing I will admit is I didn’t always do a great job with everything. There were plenty of complaints to go around. That said, I never went broke, never got sued, no one got killed or injured, and my kids all grew up. So, in some ways I was successful. This morning I woke up at 4:50 a.m. thinking about everything I wanted to do today. While none of it is really that important, I have things I want to get done and will get done. If you are feeling overwhelmed by your “do” list, let me give you my thoughts about five things that may be helpful: 1. Get up early. If I can get up at 5 a.m. or earlier, I can get seven hours of work done by noon. If I got up at 9, it would take me until 4 p.m. to get the

same amount of work done, and by then the day is nearly over. Think about that. 2. Have a list. I always have my “do” list and I keep it in notes in my phone. When I am done with something, I take it off my list. The phone is always close by whereas paper and pen may not be; hence the reason I keep it there. 3. Keep everyone in your life informed of your plans for the day. If you want to be able to balance all this stuff, you need to keep your spouse or other family members informed of how you plan to spend your day. It doesn’t mean they won’t be included in any of your plans but rather

See MARK ZWEIG, page 12

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

BUSINESS NEWS FLUOR JOINT VENTURE COMPLETES LOS ANGELES INTERNATIONAL AIRPORT’S AUTOMATED PEOPLE MOVER TRAIN GUIDEWAY STRUCTURE Fluor Corporation has announced that its joint venture team, LINXS Constructors – comprised of Fluor, Balfour Beatty, Dragados USA and Flatiron – has completed construction of Los Angeles International Airport’s Automated People Mover train guideway structure for Los Angeles World Airports. The guideway is the latest construction milestone for the $4.9 billion mega infrastructure project, which is scheduled for completion in 2023. The centerpiece of Los Angeles International Airport’s Landside Access Modernization Program, the Automated People Mover, is a 2.25- mile electric train system that will feature six stations: three stations inside the central terminal area that connect to the terminals via elevated pedestrian walkways and three stations outside the central terminal area that connect to new off-site parking facilities, regional light rail transportation and a rental car facility. “The Automated People Mover project is a critical investment for Los Angeles’ infrastructure as the city prepares to host the 2028 Olympic and Paralympic Games,” said Thomas Nilsson, president of Fluor’s Infrastructure business. “This is a logistically-challenging project that requires close coordination with numerous public and private entities.”

“The Automated People Mover will be so much more than another way to get to Los Angeles International Airport. It is the piece of the puzzle that will end the congestion that has been plaguing our airport for decades,” said Los Angeles Mayor Eric Garcetti. “This project is a historic investment in our city’s transportation future, and today’s milestone brings us another step closer to our ultimate goal of bringing modern, reliable public transportation to our airport.” “Los Angeles no longer has to imagine a transformed Los Angeles International Airport. Rather, we can see the future through our own eyes with the completion of the 2.25 miles of Automated People Mover guideway that will one day soon carry train cars filled with travelers and employees,” said Justin Erbacci, chief executive officer, Los Angeles World Airports. “Over the last two-and-a-half years, we have seen the guideway rise up from its foundation to become a fully completed track, providing us a glimpse at what will provide time-guaranteed access to the airport, ensuring greater mobility for all of those coming to and from Los Angeles International Airport.” Guideway construction began in November 2019 with the first underground support columns being placed, followed by the first concrete column pours in January 2020 and the first guideway segment pour in September 2020. A total of 69,700 cubic yards of concrete

were poured since 2019 to complete the structure, along with more than one million work hours. “The completion of the guideway structure is a remarkable milestone for the project as we are one step closer to realizing a new transportation experience at one of the world’s busiest airports,” said Sam Choy, project director at LINXS Constructors. “We will soon leverage this accomplishment with train car testing later this year.” Fluor’s Infrastructure experience in California includes design, construction and program management services for the Los Angeles Metro Rail projects, San Bernardino highway improvement program, the LA Exposition Light Rail, the Sprinter Mainline and San Marcos Loop projects and construction of the San Francisco-Oakland Bay Bridge. Fluor Corporation is building a better future by applying world-class expertise to solve its clients’ greatest challenges. Fluor’s 41,000 employees provide professional and technical solutions that deliver safe, well-executed, capital- efficient projects to clients around the world. Fluor had revenue of $12.4 billion in 2021 and is ranked 196 among the Fortune 500 companies. With headquarters in Irving, Texas, Fluor has provided engineering, procurement and construction services for more than 100 years.

find something you want to get into. But that is a slippery slope. Once that happens, you are taken off task. It’s hard to get back on it. None of these five points may seem all that profound. But who says they have to be? Most of what you can accomplish is entirely up to you. Give yourself a chance to get a lot done and you may be surprised at your ability to keep all those plates spinning simultaneously! Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com. “None of these five points may seem all that profound. But who says they have to be? Most of what you can accomplish is entirely up to you.”

MARK ZWEIG, from page 11

they need to know what you expect to accomplish that day and why it’s important or you won’t have their support. 4. Work on the most important stuff first. This is where most people fall down. They make out their lists religiously, but then do all the easy stuff or whatever attracts them the most first, even if it isn’t what is most important to get done. You have got to learn to stop procrastinating on the important stuff and instead attack that head-on as your No. 1 priority. That way even if you don’t get it done you will make progress. 5. Put your phone down. A big part of being able to stay on task is from avoiding distractions. If you are like me, your phone is probably your biggest source of distraction. You can always get on LinkedIn or Twitter, or some other social media or news site you follow, or check your email and

THE ZWEIG LETTER JULY 11, 2022, ISSUE 1448

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