TZL 1414 (web)

T R E N D L I N E S O c t o b e r 2 5 , 2 0 2 1 , I s s u e 1 4 1 4 W W W . T H E Z W E I G L E T T E R . C O M

Overhead rate

There is a bridge to opportunity that can lead us to a landscape where the change we seek is possible. A bridge to innovation

I t is an exciting time to be a part of this industry although, on a day-to-day basis, it may not feel that way. Indeed, there are plenty of challenges and concerns out there to keep us occupied. People are feeling a lack of purpose combined with high burnout, record high utilization, overwhelming backlog, difficulty recruiting and retaining great people, and an absence of meaningful training/mentoring. That is simply the beginning. Looking at the economy on a macro level, there is cause for concern. Looking at drivers within AEC, there is a lot of optimism. This leads to many of us feeling the need to capture as much as we can before the economy falls off a cliff. If necessity is the mother of invention, these times of uncertainty and pressure are precisely the mix of factors that will allow for a transformation – a bridge to opportunity and innovation if we are willing to seize it. The goal is to remain solution-oriented, rather than problem- oriented. Transformation generally emerges from an organization or industry at times of chaos, struggle, division, or major change. At the individual contributor level, it will require resilience, emotional intelligence, strength and mercy, confidence and humility, patience, and persistence. Those who remain focused on a just purpose stand to transform the competitive landscape and capture more value in a short timeline than arguably at any other point in history. Research has shown that companies with a high level of purpose outperform the market by 5 percent to 7 percent per year, which is on par with firms that have best-in-class governance and innovation capabilities. My argument would be that it drives innovation capabilities. They also grow faster and have higher profitability. Take a moment to reflect on the compounding effect that can have over time. One profession I like to look toward when thinking about how labor constraints and pressure have contributed to change is surveying. They’ve faced some of the aforementioned challenges earlier than other parts of our industry. What has resulted is an incredible adaptation and adoption of technology. Zooming out to look at the pandemic period to date, you see a skyrocketing adoption of AI. According to PwC, 52 percent of companies accelerated their AI adoption plans because of the COVID-19 crisis. Eighty-six percent say that AI is becoming a “mainstream technology” at their company in 2021. Harris Poll found that 55 percent of companies reported they accelerated their AI strategy in 2020 and it is only looking like this trend will further accelerate. AEC is not typically thought of, internal to the industry, as a first adopter of technology and work practices. I believe we are in the middle of a global transformation, however, that will affect just about everything. The opportunity to shake the old narratives is ripe. Many were labeling this “Industry 4.0” prior to the pandemic and

In Zweig Group’s 2021 Best Performing Firms Report of AEC Firms , top- performing firms are compared to the industry using several surveys and reports released in 2021. Financial performance among these firms was a key part of the analysis as more than 20 financial metrics are broken down in the report. One particular metric of note was overhead rate, which relates total overhead costs to direct labor costs. Top-performing firms are consistently lower than the industry in this metric, explaining their ability to consistently churn out higher profit margins. Participate in a survey and save 50 percent on the final or pre- publication price of any Zweig Group research publication. F I R M I N D E X AECOM. ................................................. 8 A M King.................................................4 Dewberry................................................2 MWM Design Group. ..............................6 raSmith...................................................4 VLK Architects......................................12 Westwood Professional Services, Inc....10 MO R E A R T I C L E S xz BRIAN KING: Rethink annual performance reviews Page 3 xz Going first: Julia Harrod Page 6 xz ROGER MARQUIS : Self-perform general contractors Page 9 xz MARK ZWEIG : The working capital problem Page 11

Phil Keil

See PHIL KEIL, page 2

T H E V O I C E O F R E A S O N F O R T H E A E C I N D U S T R Y

BUSINESS NEWS DEWBERRY AWARDED NORTH CAROLINA RESILIENT COASTAL COMMUNITIES PROGRAM CONTRACT Dewberry , a privately held professional services firm, has announced that it has been selected for the North Carolina Resilience Coastal Communities Program by the North Carolina Division of Coastal Management. As part of the contract, Dewberry will develop a community resilience strategy framework for four coastal communities by conducting impact analyses to inform planning, holding community outreach programs to identify needs and priorities, and identifying and prioritizing key opportunities for adaptation strategies based on risks and resources available. The vulnerability assessments will consider natural features, coastal and rainfall hazards, range of flood conditions, critical infrastructure, built

environment, community input and partnering, and social vulnerability. “The NCRCCP is a critical program that will help support resilience efforts for coastal North Carolina communities for years to come,” says Dewberry Project Manager and Associate Beth Smyre, P.E. “Resilience planning is critical to a community’s ability to respond and recover from climate-generated events. We are excited to support Craven County and the towns of Cape Carteret, Pine Knoll Shores, and Swansboro in realizing their respective visions for community resilience, just as we have done for other communities across the country.” Established in 1956, Dewberry is headquartered in Fairfax, Virginia, with more than 50 locations and more than 2,000 professionals nationwide.

Interested in learning more

about the projects and ideas driving the AEC industry forward? Learn more with Civil+Structural Engineer Media.

PHIL KEIL , from page 1

my argument would be that the pandemic has only added accelerant to that already burning fire. Industry 4.0 is just a label to represent the fourth industrial revolution that moves us from the first industrial revolution (mechanization through water and steam power) to the mass production and assembly lines of the second, to the fourth industrial revolution that will accelerate the adoption of automation through smart and autonomous systems fueled by data and machine learning. This includes the Internet of Things, the Internet of Systems, 3D printing, AR, and VR, for example. Looking at the major trends, it can sometimes feel that the individual has little power to make change. I believe the opposite. I think we can empower the individual as we never have before. It allows for decentralized systems and information accessible by all. What this means practically within our companies is that young leaders will have more influence than ever before. A few things you can do at an individual level to position yourself well to reap the rewards of this transformation include: ❚ ❚ Keep your word and establish trust ❚ ❚ Quickly acknowledge where failure has occurred and demand change ❚ ❚ Anticipate different viewpoints and pushback ❚ ❚ Know when to be restrained and when to push forward ❚ ❚ Set the example ❚ ❚ Understand your team’s emotional needs ❚ ❚ Refuse to allow dwelling on past failure and disagreement ❚ ❚ Control your own emotional outbursts ❚ ❚ Protect your team from blame There is a bridge filled with opportunity and potential that can lead us from where we are today to a landscape where the change you’ve been seeking is possible. The environment is ripe for transformation. It is up to you to seize the day, work harder, and go farther. PHIL KEIL is director of strategy services at Zweig Group. Contact him at pkeil@zweiggroup.com.

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Zweig Group’s 2021 ElevateAEC Conference & Awards Gala Phil Keil will be a speaker at Zweig Group’s 2021 ElevateAEC Conference & Awards Gala in Denver, November 3-5. Click here to learn more or to register for the AEC industry’s top in-person learning and networking event of the year.

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

O P I N I O N

Instead, consider regular performance discussions and an annual strategy meeting to set, implement, and evaluate goals and initiatives. Rethink annual performance reviews

W hether the reviewer or reviewee, very few people enjoy annual performance reviews. For the reviewer, providing a performance review is a large responsibility. Conducting one properly requires a significant amount of planning and work. Reviewers must think back over a full year as they consider an employee’s performance. They should have a written document prepared with objective facts and observations. Then they are put in the uncomfortable position of providing some level of criticism, most of which will be poorly received and have a different impact than what was intended.

Brian King

Then there are the individuals being reviewed. Their anxiety and tension levels are elevated over concerns this review will have an impact on their career, advancement opportunities, and pay rate. They seek constructive criticism and ideas for improvement but fear negative criticism. Most come away from their performance review glad it’s over and that it only occurs once a year. Attempting to sum up an entire year of work in a one-hour discussion is pointless. Overall, most employees feel an annual performance review is yet another painful corporate process. It’s no

surprise that numerous studies have shown that annual performance reviews are ineffective and result in little, if any, performance improvements. But year after year, companies keep enforcing this process. A recent study by the Society for Human Resource Management found that more than 72 percent of companies continue to mandate and conduct formal annual performance reviews. I have been in the AEC industry for more than 35 years and have been part of numerous

See BRIAN KING, page 4

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

ON THE MOVE RASMITH WELCOMES SAMANTHA CARLSON AS LANDSCAPE ARCHITECT & PROJECT MANAGER Samantha Carlson has joined raSmith as a landscape architect and project manager to support the Site Design Group at the Milwaukee Site Studio. Carlson has nearly 10 years of landscape architecture experience including site planning, project management, and landscape plans for residential, institutional, and commercial developments. “Samantha brings exceptional design and leadership skills to complement the Site Design Group,” said Tom Mortensen, raSmith site planner, landscape architect, and senior

project manager. “Her contributions will be important as we take on new projects in various market sectors and expand our client base. She has a solid background in design and understands the dynamics of a wide variety of project types.” Carlson teaches a landscape design course at Milwaukee Area Technical College and is a member of the Wisconsin Chapter of the American Society of Landscape Architects. She holds a master’s degree in landscape architecture from the University of Illinois Urbana-Champaign and studied geography at Augustana College in Illinois. raSmith is a multi-disciplinary engineering

consultant established in the city of Brookfield, Wisconsin, in 1978. The firm’s services are focused on our public and private sector client needs in planning, design and construction including site planning and design, structural engineering, municipal engineering, transportation and traffic, surveying, development management, ecology, landscape architecture, LiDAR (3D laser scanning), unmanned aircraft systems, construction services and geographic information systems. raSmith works on projects nationwide from our seven locations in Wisconsin, Illinois and California. The firm employs a staff of 220.

BRIAN KING , from page 3

often with small teams that share common work functions. We evaluate last year’s goals and consider what was accomplished, what was missed, and analyze the reasoning. We decide if those goals are still relevant and important based on what we seek to accomplish in the upcoming year. We then set new goals and initiatives, evaluate resources, and develop opportunities for personal growth. Other than the time spent evaluating the past year’s goals, our annual meeting is a very forward-looking exercise. There is no anxiety, uncertainty, or criticism. Our teams actually look forward to our yearly sessions as an exciting start to the year ahead. “Attempting to sum up an entire year of work in a one-hour discussion is pointless. Overall, most employees feel an annual performance review is yet another painful corporate process.” This process of regularly scheduled one-on-one meetings, and an annual planning and strategy meeting has replaced the annual performance review process for most people at A M King. In doing so, we have seen increased performance, greater attention to the overall goals of the business, and personal and professional growth among our teams. It is time for the business world to phase out the traditional annual performance review process. These sessions are not productive and don’t improve the business. Companies should implement a system that fosters open communication among work teams and sets meaningful goals and initiatives for both the business and its employees. This is the process that will improve the business and produce greater results. BRIAN T. KING is the founder and president of A M King, a design-build firm that provides multiple services required of highly complex facilities in niche markets throughout the United States. To connect with Brian and gain more of his insights, visit briantking.com. This article was originally published on groundbreakcarolinas.com. Reprinted with permission.

annual performance reviews as both the reviewer and the reviewee. It’s safe to say I can’t recall any of these reviews as significant, and I certainly don’t remember a lesson learned or meaningful experience from any of these sessions. The structured process does not allow for creativity or development of new ideas. Communication is stifled and measured. In my experience, never have these reviews resulted in greater outcomes, improved performance, or increased profits to the business. The ineffectiveness of annual performance reviews does not, however, negate the need for employee feedback. Most employees want feedback and to understand how they are performing. They also want to understand how they can improve their performance, advance their career, and increase their pay. There is also inherent value for the business in providing feedback and criticism. Companies want employees operating in the most efficient and productive manner. Employers also need opportunities to address both employee concerns and areas for development. The primary problems with the annual performance review process is that they are conducted annually, and they are considered a review. In order to move beyond this archaic process, I suggest having performance discussions on a regular basis, and an annual strategy meeting to set, implement, and evaluate goals and initiatives. I meet at least monthly with those who report to me, and we address a number of topics. Some of these meetings are very formal, while some are more relaxed. We look at how their time is spent and their level of productivity. We discuss the challenges they are facing, allowing me to provide advice and feedback. If I believe they are headed in the wrong direction in certain areas, I bring it up for discussion. If they are not performing well in some aspects of the job, we talk openly about how to solve the problem. If they also have direct reports, we talk about who is excelling and who is struggling, determining what we need to do to make sure everyone on their team succeeds. Our annual meetings are then a session of planning and strategy, sometimes with just an individual, but more

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

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P R O F I L E

Going first: Julia Harrod President at MWM Design Group (Austin, TX), a firm that continues to embody its founders’ core values of personal integrity, responsibility, and service.

By LIISA ANDREASSEN Correspondent

H arrod began her work at MWM Design Group in 1990 as a civil engineering technician. Her energy and determination led her to become the firm’s president in 2007. She helped the firm grow from a civil/survey firm to a multidisciplinary firm that also includes architecture, landscape architecture, and permitting. She’s passionate about her career and has devoted a significant effort to the betterment of the engineering profession as a whole through service to TSPE/NSPE, and to the promotion of careers in STEAM to schoolchildren throughout central Texas. With more than 30 years’ experience, she’s successfully overseen hundreds of utility, roadway, airport, and land development projects. Her primary responsibility is to lead the firm’s strategic initiatives and oversee financial operations. “I come to work each day with the understanding that I’m here to serve all of our staff. They are who I report to,” Harrod says. “As a leader, setting the example is important – ‘going first,’ being willing to do anything I ask of others,

holding myself accountable, showing empathy, and striving for continuous improvement are important cornerstones of my leadership style.” A CONVERSATION WITH JULIA HARROD. The Zweig Letter: The MWM website notes that its focus has always reflected the importance of harmony between work and play. Can you provide some examples and tips for how you make that happen? Julia Harrod: As a long-standing business, it would be easy for us to coast and be “good enough,” but we’ve committed to be excellent through continuous improvement. Our top priority is to be the most “FAWSOME” (For And With) place to work. We evaluate all decisions that we make as a company against our mission to balance being supportive of our people, trusted advisors to our clients, accountable to our company, and good stewards of our community.

THE ZWEIG LETTER OCTO

While many firms may laser-focus on one of these areas, we’ve found that our balanced approach, while more difficult, is much more rewarding. By doing more than just paying lip service to each of these areas, we’ve been rewarded with a culture of inclusivity, connectivity, and excellence that’s truly unique. From day one, through our recruiting/ onboarding process, our employees know that they are welcome and supported. Our continuous improvement plan, provision of a life coach, and consistent feedback gives employees the support and professional development they need. Our in-house activities and community service programs allow employees to take a break and develop a strong sense of community. And our open-book project reporting, quarterly newsletter, and quarterly all- hands underscores our transparency, giving employees solid information about what’s going on with the firm and their role in our success. We consistently hear from our employees who come to us from a different company that they’ve never experienced anything like MWM. We’re proud of the intentional work we’ve done to achieve this level of success with our culture. “I wish I knew earlier in my career the importance of taking care of oneself, truly listening to others, and being intentional. When I focus on these three things, I’m able to bring my best self to my job, help others, and advance the firm’s goals.” TZL: How do you anticipate COVID-19 permanently impacting your firm’s policy on telecommuting? JH: We already had a flexible policy on telecommuting and quite a few people took advantage of that opportunity. Having all office staff work from home for more than a year has given everyone a chance to experience what it’s like to work and manage remotely even if they were initially reluctant. We’ve been able to evaluate the impact of how, when, and where we work on effectiveness, collaboration, and culture. We’re now in the process of re-imagining our office space to optimize collaboration and connection while taking advantage of remote work to accomplish focused tasks. I want people to look at their schedules and see what works best for them based on what they’re working on at the time. I’m

willing to try different models and pilot programs and look forward to getting data from the team about what’s important to them. “From day one, through our recruiting/onboarding process, our employees know that they are welcome and supported.” TZL: Trust is essential. How do you earn the trust of your clients? JH: Trust is key to our business. I believe it starts with ensuring there’s trust within our firm by aligning our actions with our values. Everyone at the firm knows we have each other’s back. I think that the true test of someone’s character is how they handle a mistake. Managers and client-facing staff never “throw anyone under the bus.” We all own up to mistakes and make it right. We’re quick to take personal responsibility for mis-steps and to acknowledge others’ contributions for accolades. TZL: What skills are required to run a successful practice? What do you wish you knew starting out that you know now? JH: When I started out, I thought it was all about being right. I honestly thought that working harder and striving for perfection at all cost was the answer. I wish I knew earlier in my career the importance of taking care of oneself, truly listening to others, and being intentional. When I focus on these three things, I’m able to bring my best self to my job, help others, and advance the firm’s goals. TZL: What type of leader do you consider yourself to be? JH: I believe that being a servant leader is important. I come to work each day with the understanding that I’m here to serve all of our staff. They are who I report to. As a leader, setting the example is important – “going first,” being willing to do anything I ask of others, holding myself accountable, showing empathy, and striving for continuous improvement are important cornerstones of my leadership style. TZL: What benefits does your firm offer that your people get most excited about? JH: We’ve hired an independent life/career coach for the firm. Our coach meets with all employees and supports our emphasis on continuous improvement for the firm See GOING FIRST, page 8

HEADQUARTERS: Austin, TX

NUMBER OF EMPLOYEES: 50

YEAR FOUNDED: 1980

NUMBER OF OFFICE LOCATIONS: 1

SERVICES:

❚ ❚ Civil engineering

❚ ❚ Surveying

❚ ❚ Architecture

❚ ❚ Landscape architecture

❚ ❚ Permitting

HISTORY: Originally Martinez and Wright Engineers, MWM Design Group was founded in Austin, Texas in 1980 by Roberto Martinez and Michael Wright to provide civil engineering and land surveying services to both public and private clients throughout Texas.

CORE VALUES:

❚ ❚ Through genuine teamwork, consistently exceed client expectations. ❚ ❚ Treat every employee and every client like family. ❚ ❚ Serve the community’s best interests, both professionally and personally.

OBER 25, 2021, ISSUE 1414

BUSINESS NEWS AECOM AWARDED THIRD CONSECUTIVE ENVIRONMENTAL REMEDIATION CONTRACT FROM THE U.S. ARMY CORPS OF ENGINEERS AECOM , the world’s trusted infrastructure consulting firm, today announced that it has been selected by the U.S. Army Corps of Engineers Baltimore District to continue providing nationwide environmental remediation services through the MAMMS III contract. The multiple-award contract, with a shared program ceiling of $240 million, includes five base years and up to two additional option years. “Our dedicated environmental experts consistently deliver for the USACE and have a flawless safety record on this technically complex and challenging work,” said Lara Poloni, AECOM’s president. “We look forward to continuing to partner closely with the U.S. Department of Defense and local communities to return previously restricted lands to safe, sustainable, recreational and residential uses.” AECOM has supported the USACE Baltimore

District’s remediation programs for more than 26 years. Under the new contract, AECOM and its specialty subcontractors will continue to provide a wide range of environmental services, including investigations, field activities, engineering, remedial actions and design, and support for environmental-related regulatory programs. environmental “We’re proud to continue this longstanding partnership with the USACE to restore land, water, and air quality to sites nationwide,” said Frank Sweet, chief executive of AECOM’s global environment business. “This important work ties directly to our firmwide environmental, social and governance objectives, which are rooted in our commitment to delivering a better world.” Throughout its decades-long involvement with this critical work, the AECOM team has remained on the leading edge of technical innovations, consistently pursuing research and development to improve efficiencies and capabilities. AECOM leverages its U.S.

Department of Defense Advanced Geophysical Classification Accreditation to successfully remediate impacted sites across the nation. AECOM is the world’s trusted infrastructure consulting firm, delivering professional services throughout the project lifecycle – from planning, design and engineering to program and construction management. On projects spanning transportation, buildings, water, new energy and the environment, our public- and private-sector clients trust us to solve their most complex challenges. AECOM’s teams are driven by a common purpose to deliver a better world through unrivaled technical expertise and innovation, a culture of equity, diversity and inclusion, and a commitment to environmental, social and governance priorities. AECOM is a Fortune 500 firm and its Professional Services business had revenue of $13.2 billion in fiscal year 2020.

GOING FIRST, from page 7

JH: One of our foundational principles is “continuous improvement” both individually and as a company. We update our focus yearly and develop quarterly priorities and strategic goals to implement changes to increase client service, support for our staff, corporate accountability, and community stewardship. We’re typically working on four to six key strategic projects at any given time. “We evaluate all decisions that we make as a company against our mission to balance being supportive of our people, trusted advisors to our clients, accountable to our company, and good stewards of our community.” TZL: Have you had a particular mentor who has guided you – in school, in your career, or in general? Who were they and how did they help? JH: I’ve had many mentors throughout my career. In particular, the first personal coach I worked with helped me understand that I needed to take a holistic approach to my life – that work and personal life were not separate. Nancy Oelklaus, Jon Stigliano, Mark Cook, Brad Clossen, and Jennie Leov are professional coaches who have guided me over the years as well as numerous engineering leaders I met through NSPE including Trish Smith, Kyle Womack, Bill Fendley, and Dan Witliff. TZL: In one word or phrase, what do you describe as your number one job responsibility? JH: To drive the culture of the organization and maintain the strategic vision.

and all individuals. Our coach also conducts a yearly, 360-review that allows employees to provide anonymous feedback to each other, managers, and leaders. She then offers guidance and coaching to individuals on feedback received. TZL: Tell me a little about how you moved into your current role of president? How long have you been with the firm? Did you work there in another role prior to your current position, etc.? JH: I’ve been with MWM since 1990. I started fresh out of architecture school as a draftsperson, then pursued my degree in engineering and rose through the ranks to become a principal in 1999 and president in 2007. I’ve always had a stereotypical engineering mindset. When I first started out, I tended to be focused mostly on speed and efficiency. I worked hard on my ability to collaborate and empathize with colleagues and it has paid off both for myself personally as well as the firm. TZL: It is often said that people leave managers, not companies. What are you doing to ensure that your line leadership are great people managers? JH: As mentioned earlier, a coach is available to all staff. In particular, she works with all managers on communication and mentoring skills and is available to facilitate discussions as necessary. She provides training and guidance in areas such as feedback conversations, career pathing, and mentoring so that all employees are supported consistently. TZL: Is change management a topic regularly addressed by the leadership at your firm? If so, elaborate.

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

O P I N I O N

T he terms “self-perform” and “in-house labor” are used by some general contractors to describe the services they offer, but what do these terms mean and, more importantly, how does an architect or owner stand to benefit by hiring this type of general contractor for a project? Let’s explore. What is a self-perform general contractor and why should your firm consider working with one? Self-perform general contractors

Roger Marquis

SELF-PERFORM DEFINED. By definition, a general contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project. If we focus on the portion of the definition which relates to “management of vendors and trades,” we get to the heart of the terms “self-perform” and “in-house labor.” When a general contractor employs a team of craftspeople and manages the performance of their work, this is what is meant by “self-perform” or “in-house labor.” The opposite of this would be when a general contractor outsources the work by hiring a team of subcontractors, and is then responsible for managing that team throughout the lifespan of

a project. Fitting between self-perform and the use of subcontractors is a hybrid scenario, where the general contractor subcontracts out certain trades (e.g., mechanical, electrical, and plumbing) and self-performs the remainder. While there is no right or wrong as to how a general contractor chooses to manage and/or perform various trades, there are certainly some benefits for an architect or owner to know about, as it relates to self- perform or in-house labor: ❚ ❚ Nimbleness and control. One of the main benefits a self-perform general contractor can offer is the nimbleness and control of assigning tradespeople to a construction project. If, for example, the project requires an extensive amount of painting, to keep

See ROGER MARQUIS, page 10

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

ON THE MOVE PATRICIA ZACHARIE LEADS WESTWOOD’S LEGAL TEAM Westwood Professional Services, Inc. is pleased to announce that Patricia Zacharie has joined the firm as general counsel. Zacharie’s legal career spans over 25 years in both the public and private sectors. With more than half of her career serving as in-house legal counsel, Zacharie has extensive experience partnering with executive teams, supporting business clients, and executing in fast-paced, dynamic, and entrepreneurial environments. Zacharie will oversee Westwood’s Legal team and all aspects of the firm’s legal functions, including risk management and compliance, contract negotiations and client service agreements, litigation and dispute resolution, employment matters, and mergers and acquisitions. She will help guide Westwood’s growth, strategically integrating the business

goals with legal resources and related client management needs. “Pat’s experience in managing teams to effectively respond to the ever-changing regulatory environments and business transactions is key to success in our industry,” says Bryan P. Powell, PE, Westwood’s Chief Operations Officer. “We look forward to leveraging her extensive experience to continue our strategic growth.” Working in both the public and private sectors, Zacharie has advised C-suite and senior executives in all legal aspects of a company’s operations and her work has been instrumental in revenue and business growth. Zacharie has also served as a corporate board member and corporate secretary for a corporate-sponsored non-profit. Zacharie received a bachelor’s

degree in economics from the University of Texas at Austin and her JD from Southern Methodist University Dedman School of Law. Westwood is a leading multi-disciplined AEC industry professional services provider for national wind energy, solar energy, electric transmission, private development, and public infrastructure projects. Westwood was established in 1972 in Minneapolis, Minnesota. Through a focus on its people, culture, and clients, Westwood has quickly expanded to serve clients across the nation from multiple U.S. offices. View more Westwood facts. In 2021, Westwood placed No. 4 and No. 21 respectively on Zweig Group’s national Hot Firms’ and Best Firms to Work For lists, and received two awards for Zweig Group’s Marketing Excellence Awards.

ROGER MARQUIS, from page 9

❚ ❚ Lower labor costs. When it comes to the cost of using a self-perform general contractor, prices should be more advantageous for the architect or owner, because there is no middle man to factor into the project’s cost, as would be the case by using subcontractors. ❚ ❚ Increased site safety. Another benefit a self-perform team offers is site safety. A self-perform team would know the general contractor’s requirements and guidelines for safety that much more than a subcontractor, so chances are the job site would be less prone to having accidents. “To know the many benefits a self-perform general contractor can offer, it’s certainly in an architect’s and owner’s best interest to explore the opportunity to collaborate with one and see if it makes sense given a project and its scope of work.” MANAGEMENT IS KEY. While I have provided several benefits for using a self-perform general contractor, one item an architect or owner should be aware of is how well the self- perform team is managed. Here, I am referring to whether or not the contractor has the resources and tools necessary to properly manage its in-house team. For all the benefits that have been given, many of these cannot be realized if the team is not managed well and given the tools and resources it needs to properly perform its respective trades. In summary, to know the many benefits a self-perform general contractor can offer, it’s certainly in an architect’s and owner’s best interest to explore the opportunity to collaborate with one and see if it makes sense given a project and its scope of work. ROGER MARQUIS has practiced business development in the AEC and design industries for the past 10 years. Prior to this, he managed business development and marketing at his own company, where he manufactured, marketed, and sold nautically-styled travel accessory bags. Roger is active in his local CoreNet and SMPS chapters. Connect with him on LinkedIn.

the project on schedule the general contractor may assign extra painters to help out, and can do so at a moment’s notice. Here, the general contractor is in complete control, and there is no need to contact a painting subcontractor and go through the process of asking and/or negotiating for additional people to be put on the project if, in fact, they have them available to begin with. ❚ ❚ Coordination and harmony. Another advantage of having a team of assorted trades working together from one project to the next: They already know each other and how best to get the work done. It’s like a baseball team that has played a number of seasons together, where the shortstop knows instinctively how to toss the ball to the second baseman, so the second baseman can throw the ball to first base and execute a double play. In the world of construction, this all lends itself to having a certain amount of coordination and harmony on the job site, which are often unspoken attributes for a general contractor to possess. ❚ ❚ Finish ahead of schedule. By using a self-perform general contractor, there is the potential to have the project finish ahead of schedule. Here’s an example: Suppose you have a multi-room private residential project which requires a full- gut renovation. As the work progresses from demolition to framing to hanging drywall to painting, etc., what typically happens with subcontractors is that one trade will complete their portion of the project before another trade comes on the job site. While this may keep things somewhat orderly, it doesn’t help the project move along any faster than it could. Instead of waiting for all of the drywall to be hung from one room to the next, a self-perform general contractor can bring in their painting crew and have them start taping and plastering in the rooms where the drywall has been hung. There’s no need to wait. If this can happen from one stage of the project to the next, theoretically, the project could finish sooner than expected. Another way to think about it: Consider the mass production of a product versus custom- made. With mass production, a steady stream of products are made one after another in a very timely and efficient manner. With custom-made, products are made one at a time, which requires more time and there’s less efficiency. When considering this aspect of self-perform, it should not be inferred that quality needs to suffer, because it doesn’t.

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

F R O M T H E F O U N D E R

The working capital problem

The AEC industry is facing unprecedented demand for what we do. If there was ever a time to say that slow-paying clients are not acceptable, it is now.

I was talking with my 10-year-old daughter’s friend’s father this weekend when he dropped her off for a play date. He is assuming more of an operations role in the architecture firm that he is employed by. Inevitably, our discussion turned into one on the topic of unbilled WIP and collection of accounts receivable. He mentioned that they have some clients that take as long as a year to pay their bills. At the same time, they are having difficulty staffing up to meet the demands of their clients.

Mark Zweig

My first thought was if his firm wasn’t as old and as large as it is, they could never afford to do that! The working capital problem is one that a lot of people in this business don’t understand. It’s a huge problem, and one that needs a lot more attention and education if AEC firms are going to deal with it. Per Wikipedia, “Working capital is defined as current assets less current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and negative working capital.” They go on to say, “A company can be

endowed with assets and profitability but may fall short of liquidity if its assets cannot be readily converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses.” While normally accounts receivable would be considered part of an AEC firm’s current assets, when clients take a year to pay their bills, you can hardly call it that. No bank would normally allow you to borrow on an accounts receivable-based line of credit for anything over 90 days old.

See MARK ZWEIG, page 12

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

BUSINESS NEWS VLK RECOGNIZED FOR BUSINESS ACHIEVEMENTS AND CORPORATE CULTURE IN 2021 VLK Architects continues to earn numerous acknowledgments for its success in the AEC industry and the greater business community. VLK’s honors achieved new heights of recognition for its performance, growth, and company culture during an incredibly challenging 2021. Among the accolades for growth and performance, VLK was once again recognized for the strength of its company culture and as a great place to work. This year the firm was among the 2021 AIA Houston Emerging Professionals Friendly Firm Award, Zweig Group’s Best Firms to Work For, and Fort Worth Inc. ’s Best Companies to Work For. While the 2021 rebound brought a considerably more optimistic business climate and an economy in fast recovery, the lingering effects of the global pandemic continue to profoundly impact the AEC industry. “The lessons we learned from the pandemic have made us an even stronger firm,” said Sloan Harris, VLK Architects CEO and partner. “Our clients usually don’t have the luxury of flexibility regarding the completion of their buildings. It’s our mission to develop feasible solutions to keep these projects on schedule and within budget despite the industry-wide challenges.”

The whiplash of supply and demand over the last 18 months has resulted in major disruptions in the supply chain for construction materials, resulting in shortages and severe price spikes of critical materials like steel and wood. The construction industry further suffered from a shortage of skilled workers and high unemployment rates, contributing to the struggle to meet scheduling requirements during construction. Finally, extreme weather events like the frigid artic blast in February and Hurricane Ida in September caused even more interruptions to construction progress. “Tapping an extensive network of engineering, materials, and construction partners, VLK established systems of new protocols to identify materials alternatives and time-saving approaches,” Managing Partner Todd Lien explained. “These issues became opportunities to demonstrate our agility and resilience as a solutions resource for our clients. It also underscored the value of bringing experts together to collaborate for the ultimate good of our industry.” Here is the comprehensive list of VLK’s 2021 awards and recognitions: Firm culture, employee satisfaction, and benefits: ❚ ❚ Fort Worth Inc. Best Companies to Work For in Fort Worth: No. 25 among Small/ Medium Companies

❚ ❚ Zweig Group Best Firms to Work For: No. 25 among AEC Firms and No. 4 among Architecture Firms Growth and performance: ❚ ❚ Architectural Record Top 300 List: No. 56 ❚ ❚ Building Design + Construction Magazine Top 90 Architectural Firms of 2021 No. 29 for Top 160 Architecture Firms of 2021 ❚ ❚ Zweig Group Hot Firm Award: No. 20 among all AEC firms and No. 2 among Architecture Firms ❚ ❚ ENR Magazine Southeast, Southwest, and Texas/Louisiana Region Top 10 Design Firm: No. 7 among Architecture Firms; Top 50 Design Firm Overall: No. 38; and No. 3 among Education Architecture Firms in 2021 ❚ ❚ ENR Magazine National Top 500 Design Firms: No. 281 ❚ ❚ Inc. Magazine’s 5000 2021 List of Nation’s Fastest-Growing Private Companies: No. 3,993 With offices throughout Texas, VLK Architects provides architecture, planning, and interior design services to automotive, K-12, higher education, corporate, and institutional clients throughout Texas.

MARK ZWEIG, from page 11

usually means at least 35 percent to 40 percent of your profits have to go to owners, unless they want to dig into their own pockets to meet their tax obligations from the money they make on their firms. In the above example – for a $20 million revenue company with $18 million in expenses and a $2K profit, they would have to pay out roughly $800K to owners at a minimum just so they can meet their tax obligations. If their clients take 90 days on average to pay their invoices, that means they need $4.5 million in working capital and with $2 million in profit less $800K in owner distributions. That means they would have to make $2 million a year for FOUR years – paying NO bonuses to employees and paying only enough in distributions for owners to meet their tax obligations and nothing more. If clients take longer than 90 days to pay, this number goes up. That’s crazy! AEC firms must stop tolerating these kinds of slow-paying clients. We cannot afford to finance the other guy’s (or gal’s) business. We – as a group of companies or “industry” – are facing unprecedented demand for what we do. If there was ever a time to say that slow-paying clients are not acceptable, it is now. You cannot keep working this hard for so little payout just to fund your working capital needs. Put the spotlight on the problem and get tough NOW ! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

So what are the implications of that? The firm will need to have enough cash to keep paying all of its people and all of its other overhead for the time it takes their clients to pay them for their work. That’s a tremendous amount of money. If you have a $20 million annual revenue firm and your operating expenses are $18 million, you need $1.5 million of liquid cash for each month of your average collection period. So a 90-day average collection period means you need $4.5 million in liquidity just to keep your doors open. If it is a year, you would need $18 million in liquidity to cover that. “The working capital problem is one that a lot of people in this business don’t understand. It’s a huge problem, and one that needs a lot more attention and education if AEC firms are going to deal with it.” If you are an owner in your firm, you don’t want to have to leave that kind of money in the till. If you are organized as an S-Corp, LLC, or other type of legal pass-through entity for tax purposes, you need to be able to allow your owners to extract enough distributions to cover your taxes. That

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

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