TZL 1296

T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M M a y 1 3 , 2 0 1 9 , I s s u e 1 2 9 6

Debt to equity

Managing by getting involved

I f you look at the reasons many AEC businesses fail – or at least fail to reach their potential – you’ll find that their owners are not involved enough with their businesses. Sometimes that means doing things that are far below your “highest and best” use. There are many reasons for this. Of course, it is motivational to the lower level workers to see the boss being willing to do the very jobs that they have to do every day. But more than that, the boss gets to see firsthand what the problems and frustrations are with the way work is being done. You also get to hear the chatter of the workers, which can be educational. One of my friends owns a regional chain of pizza restaurants. He has 10 “stores” in total. He started the business 25 years ago and does eight figures revenue-wise annually. But he still gets involved in every single aspect of his business, including delivering pizzas during their busiest times. He told me once that if you really want to know what your business is all about, there’s nothing better than cleaning bathrooms. You see and hear everything. AEC firms aren’t all that different. We’d like to think we are, but we aren’t. We still have people. Some of them are dysfunctional or in the wrong roles. We still have legacy systems – ones we have had for a long time but may no longer serve us well. We still have clients. They have their specific wants and needs that the business has to meet or exceed.

“There’s a lot to know about your own business that you cannot know if you aren’t intimately involved with every detail of it at some point.”

In Zweig Group’s 2019 Financial Performance Survey of AEC Firms , the debt to equity ratio was computed for each survey participant. This ratio represents a firm’s long-term financial leverage and is calculated by dividing total liabilities by total owners’ equity. Plotting the ratios relative to firm growth rate, it’s no coincidence that fast- growth firms typically have a lower debt to equity ratio, improving their long- term stock. Participate in a survey and save $320 on any Zweig Group research publication. Visit bit.ly/TZLsp to learn more. F I R M I N D E X AC Martin Group.....................................7 ATI..........................................................6 Burns & McDonnell. ................................2 CH2M...................................................12 Jacobs..................................................12 SWA Group...........................................12 WGI. .....................................................10

Mark Zweig

MORE COLUMNS xz JEN NEWMAN & DOUG PARKER: Outsourcing market research Page 3 xz JOAN DELOREY & JARED MAXWELL: Key factors Page 9 xz HANK THOMAS: Too good to stay Page 11

Page 6 Leading with integrity: Paul DiDonato See MARK ZWEIG, page 2

T H E V O I C E O F R E A S O N F O R A E C F I R M S & M A N A G E M E N T C O N S U L TA N T S

BUSINESS NEWS BURNS & MCDONNELL RECOGNIZED FOR INNOVATIVE HAWAII AIR NATIONAL GUARD PROJECT In 2014, the Hawaii Air National Guard awarded Burns & McDonnell a contract to design a new jet engine maintenance shop at Joint Base Pearl Harbor-Hickam. The requirements were that it be flexible and adaptable for future mission needs, meet aggressive goals for sustainability, achieve 30-50 percent energy savings and be less expensive than building a new facility. As a result of meeting those design goals, Burns & McDonnell has been recognized with an Honor Award by the Hawaii Chapter of the American Council of Engineering Companies. Built in the 1970s, the Hawaii Air National Guard’s jet engine maintenance shop was a multipurpose, two-story facility totaling 32,000 square feet. It had two high-bay areas for maintenance, related shops, offices, storage, and other functional spaces. The second floor included space for a variety of administrative offices. Though it was clear maintenance operations needed an upgrade, funds were not available to construct an all-new facility. Renovation of the existing structure was the preferred option. While this approach saved significant dollars, it did create challenges. The first was that maintenance operations would need to continue as normal while renovations were underway. After evaluating several options, the solution was to move the entire operation to an adjacent hangar where maintenance operations could continue while the renovation was underway. Once maintenance operations were relocated, the interior space was gutted and roofing and exterior wall panels were torn off, leaving only the structural framing standing on the original concrete slab. The building exterior was replaced with high-performance insulated metal wall panels to greatly improve energy efficiency. Durable, split-faced masonry was then installed to protect the lower wall sections from damage. Translucent wall panels, high-performance, anti-

terrorism/force protection windows and high- efficiency mechanical systems rounded out the energy savings package. The interior space featured a reconfigured floor layout that achieved an additional 2,700 square feet of usable space. New mezzanine storage systems greatly expanded functionality and new exterior access doors greatly improved maintenance efficiency as well as added storage functionality. When it was completed in February 2018, the Guard took possession of a completely renovated facility at a final cost of $14.4 million, less than half the cost of building an all-new facility. It is easily adaptable to future mission needs, including the ability to service each $10 million F-22 fighter jet engine indoors, protecting each from exposure to the elements as each was prior to the renovation. Thanks to the full range of design features and mechanical system upgrades, the maintenance facility now achieves a 75 percent energy reduction, exceeding initial requirements and one of the features that helped the facility earn LEED Silver certification. “The Hawaii Air Guard handed us a challenge that we were proud to accept,” says Dave Barr, vice president and leader of the firm’s Federal Group. “This new jet engine maintenance facility will serve multiple needs and missions for the Guard for many years to come, all at a significant savings of taxpayer dollars.” Burns & McDonnell serves Department of Defense agencies, the commercial aviation sector and corporate and municipal energy clients in the Pacific region. During the past decade, the firm has designed projects in Hawaii, Guam, Diego Garcia, China, Japan, Malaysia, South Korea, Philippines, Singapore, Taiwan and Vietnam. Burns &McDonnell is a family of companiesmade up of 7,000 engineers, architects, construction professionals, scientists, consultants and entrepreneurs with offices across the country and throughout the world.

The Principals Academy ZWEIG GROUP’S FLAGSHIP

TRAINING PROGRAM FOR FIRM LEADERS

Elevate your ability to lead and grow your firm at this impactful two-day program designed to inspire and inform existing and emerging firm leaders in key areas such as: leadership, financial management, recruiting, marketing/business development, and project management.

SEATTLE MINNEAPOLIS NYC

6.5–6.6 7.17–7.18 10.31–11.1

http://bit.ly/PrincipalsAcademy

1200 North College Ave. Fayetteville, AR 72703 Chad Clinehens | Publisher cclinehens@zweiggroup.com Richard Massey | Managing Editor rmassey@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Sara Parkman | Senior Editor and Designer sparkman@zweiggroup.com Liisa Andreassen | Correspondent landreassen@zweiggroup.com

MARK ZWEIG, from page 1

If you, like many of our readers, are an owner or manager in your firm, you need to get out on the floor and see what is really happening with the projects your people are working on. Get there early and stay late to see who is actually committed. Open the mail to see who is paying and what your bills are. Get copied on all inquiries from those who want more information coming from your website. Hang out in the HR department to see who is calling in sick too often or causing morale problems with other employees. Go sit in the marketing department to see what their workload is and how they are handling it. Spend time with your accounting people to see who won’t turn in their time sheets and expense reports and who is holding up billing. Get to know the IT person so you can see if their head is screwed on straight. There’s a lot to know about your own business that you cannot know if you aren’t intimately involved with every detail of it at some point. There is so much to learn and it will be energizing for your people to see you in action! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

Tel: 800-466-6275 Fax: 800-842-1560

Email: info@zweiggroup.com Online: thezweigletter.com Twitter: twitter.com/zweigletter Facebook: facebook.com/thezweigletter Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year) $250 for one-year print subscription; free electronic subscription at thezweigletter.com/subscribe © Copyright 2019, Zweig Group. All rights reserved.

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

O P I N I O N

Building skills and confidence in doer-sellers is one way Jen Newman (center) and Zweig Group are Elevating the Industry.

Outsourcing market research

There are plenty of tell-tale signs your AEC firm needs a set of third-party experts to help you achieve your goals.

M arket research is the systematic action of gathering and interpreting information – using statistical and analytical methods and techniques – to gain insights into client wants, needs, and preferences. Market research is critical to maintain a competitive advantage and allows firms to gain invaluable information about economic shifts, current and changing market trends, areas for expansion, demographics, client preferences, and more, that all impact decision making and, ultimately, the bottom line.

Jen Newman

Savvy AEC firms rely on market research to provide fact-based data to proactively identify prospective clients, projects, services, and markets. Data gathered from research drives a lot of action items including the development of strategic plans, marketing campaigns, business development efforts, operational decisions, etc. Firms that forego market research and blindly pursue initiatives with no regard to market data run the risk of misdirected efforts, wasted time and lost revenue. If you want to keep a competitive advantage, market research must be conducted on a continual basis. There are two main types of research – primary and secondary. Primary research collects original data directly from the source – usually clients and prospective clients in a target market. Examples of primary research are interviews (telephone or

face-to-face), surveys, questionnaires (online or mail), and focus groups. Secondary research consists of collecting already-published data and includes reports and studies by industry experts, like Zweig Group’s library of surveys including the 2019 Financial Performance Survey of AEC Firms , government agencies, and professional organizations. This type of research can also be gained by reading articles in magazines, trade journals, and industry publications. Determining whether to use in-house staff or outsource your market research comes down to a cost/benefit analysis. Does the impact of obtaining relevant, vital information needed to allow your business to grow with your existing staff

Doug Parker

See JEN NEWMAN & DOUG PARKER, page 4

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

JEN NEWMAN & DOUG PARKER, from page 3

to hire more staff, and allows you to dedicate a specific budget item for market research through outsourcing. And, most im- portantly, it keeps your internal team focused on daily man- agement of marketing and business development efforts. ❚ ❚ Expansion opportunities. Whether you are considering expanding your services, geographical reach, or contemplat- ing an acquisition, market research minimizes risk and helps determine the viability of expansion. Market research focused on expansion carefully analyzes key factors including market saturation, distribution channels (are their adequate “buyers” to support your market entry), and service/consumer trends. ❚ ❚ Your brand needs an update. Contrary to what you may think, you cannot determine brand perception; rather, it is determined by external audiences who experience your brand. Conducting research enables you to ensure you have established and are adapting and evolving your brand to meet the needs of your audiences. Market research is paramount to managing an effective brand and often includes periodic perception studies – internally with your team, and externally with clients and prospects. External studies also play a crucial role for firms by demonstrating active engagement with cli- ents – who doesn’t like being asked by a service provider “how am I doing” and “can we do better?” Client feedback, if col- lected correctly throughout a project, addresses issues before they become problems. Furthermore, a well-executed client perception study not only uncovers potential problems, but also key differentiators as seen by your clients. While a client perception study can be conducted in-house, outsourcing to a third-party consistently provides honest, di- rect feedback to help your firm develop your authentic brand along with strategies for identifying opportunities for growth and expansion. “Savvy AEC firms rely on market research to provide fact-based data to proactively identify prospective clients, projects, services, and markets.” It may seem daunting to consider market research as a key strategy for your firm, but the information you’ll receive takes the guesswork out of marketing and gives you data and intel that you need to drive your strategy and accomplish your objectives and goals. This systematic approach, while an investment, can make your efforts not only easier but more effective. And, of course, you don’t have to choose between an entirely internal or external solution – hybrid strategies can be extremely effective. To best position your firm for success, invest in market research before every major initiative. Your leaders and your firm deserve to be well informed. Zweig Group is proud to offer market research services. Contact Jen Newman for more information jnewman@ zweiggroup.com. As managing director at Zweig Group, JEN NEWMAN, CPSM, utilizes her 20 years of AEC experience to help firms grow their people and profits while Elevating the Industry. Contact her at jnewman@ zweiggroup.com. DOUG PARKER, FSMPS, CPSM, brings a unique combination of operations and marketing experience specializing in professional services firm management to his role as managing principal and COMO at Zweig Group. He has developed award-winning brand strategies to position firms and key stakeholders to gain market share and increase revenue. Contact him at dparker@zweiggroup.com.

outweigh the costs of outsourcing? Firms that outsource research gain the benefits of employing research experts who have depth of experience, knowledge, and resources; obtain an objective third-party view; minimize costs while maximizing value (experienced researches are typically more effective and efficient than in-house personnel); and keep their in-house team members focused on existing initiatives. “It may seem daunting to consider market research as a key strategy for your firm, but the information you’ll receive takes the guesswork out of marketing and gives you data and intel that you need to drive your strategy and accomplish your objectives and goals.” Key reasons to outsource market research: ❚ ❚ Revenue slow down. Is revenue generation at your firm meeting financial performance goals? Is revenue growing slower than you’d like or planned? Do you have internal resources to effectively analyze and evaluate financial per- formance and build a strategy to effect the change needed to turn this around? Analysis takes time and is often overlooked. Marketing research can help you quantify opportunities and prioritize those with the highest revenue potential for your organization. An external market research partner gives you the informa- tion you need to reinforce or realign your strategy and execu- tion based on market conditions, competition in the market, and client. Data can help confirm if your objectives are valid and supports short-, mid-, and long-term goals. ❚ ❚ Poorly performing marketing strategies. How often do you find yourself able to step back from your daily task list and contemplate the ways you can improve your organiza- tion’s direction? Effective marketing takes time and thought. Busy marketers are often asked to rush strategy due to work- load and deadlines. Do you find yourself skipping steps? Are you disappointed with the marketing results? Do you lack time to test concepts and key messages to evaluate which ones resonate with your clients? What’s the cost to develop and execute marketing campaigns and materials that are not based on current and accurate facts and opinions? You likely are not getting the most out of your budget. Using an outside market research firm can help you rediscover your greater vi- sion and give you the time to properly develop and execute marketing strategies that result in more opportunities and an increased bottom line. ❚ ❚ Overloaded marketing staff. The AEC talent war is not just a battle for technical professionals. In today’s climate, experi- enced marketing talent is tough to find and the ever-elusive marketing coordinator with experience to conduct market research effectively is like an industry unicorn. With typical marketing workloads – proposals, campaigns, social media, opportunity pursuits, CRM maintenance, PR, corporate mar- keting tasks, and so much more – can your team stay ahead of demands and add another market research component to their responsibilities? Enlisting a market research partner reduces the workload of your existing staff, nullifies the need

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

COOL GREY 1

COOL GR 10

539

158

109

diversify

celebrate change promote educate

formerly the Hot Firm and A/E Industry Awards Conference

BUILD YOUR BUSINESS. BUILD YOUR BRAND. BUILD YOUR BRAIN. October 02–04, 2019 Las Vegas • The Green Valley Ranch Resort and Spa

ENTS

JOIN ZWEIG GROUP FOR THE ELEVATE AEC CONFERENCE The Elevate AEC Conference is the AEC industry’s premiere experience to connect global leaders, solve industry issues, present next practices, and celebrate the most successful firms in the built environment. Zweig Group’s annual conference is the largest gathering of award-winning AEC firms, making it the industry’s most comprehensive business conference for leaders and aspiring leaders of AEC firms in the US. EXPANDED EDUCATIONAL OFFERINGS This year, the Elevate AEC Conference marks another leap in the evolution of Zweig Group’s annual event with expanded educational offerings focused on firm management, senior marketers and HR professionals covering the latest strategies and emerging trends critical to grow your business.

M&A Next is a full-day symposium (pre- Elevate AEC Conference event) designed to provide M&A education. The conference-within-a-conference will provide practical application through interactive roundtable discussions, expert panel conversations, and focused networking to connect leaders from across the country.

SAVE $200 ON REGISTRATION THROUGH JULY 15 using PROMO CODE: CSElevate zweiggroup.com/elevate-aec-conference

Zweig Group exists to advance the AEC profession. Our Mission is to Elevate the Industry. We believe in a world that celebrates the built environment and recognizes its impact on individuals, communities, and commerce. Empowering organizations with the resources they need – to perform better, grow and add jobs, pay better wages and to expand their impact on the community – is always at the forefront of our action.

QUESTIONS? For group rates, or if you have any questions, contact Melissa Swann at 479-305-3357, mswann@zweiggroup.com or visit zweiggroup.com.

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

P R O F I L E

Leading with integrity: Paul DiDonato CEO of ATI (Hot Firm #43 for 2018), a California firm rooted in philanthropy, and with a bright future on the horizon.

By LIISA ANDREASSEN Correspondent

“O ne of the greatest programs that we have put in place for our most senior leaders that are nearing retire- ment is a program to work on an ever-decreasing schedule until a comfortable point is reached for them to retire,” Di- Donato says. A CONVERSATION WITH PAUL DIDONATO. The Zweig Letter: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around? Paul DiDonato: There’s always an exciting hum of activity here as we strive to maintain the best environment for our employees to create and work in. We are dedicated to life- long learning, work-life balance, and building a strong team. Last year, we doubled our Sacramento office space to accom- modate our expanding staff. We also recently expanded our leadership team with the promotion of three principals and three associates. Additionally, we offer benefits such as professional mem- bership reimbursement, tuition reimbursement, various development programs, community and charitable out-

reach opportunities, and more. Finally, we embrace a com- plete transparent work environment. We regularly update our staff on company progress, risks, opportunities, financ- es, and more. We believe that this promotes trust which is paramount to success. “With an eye toward the future, we are constantly evaluating practices, hiring trends, and the latest technology to determine if they are a good fit for ATI.” TZL: Internal transition is expensive. How do you “sell” this investment opportunity to your next generation of principals? How do you prepare them for the next step? PD: Preparing the next generation of leaders has been a key element of ATI’s ongoing succession planning initiatives. Through this process, we developed a direct line of succes- sion for all of the senior leadership nearing retirement age and established a springboard for younger staff to reach more senior positions within ATI.

THE ZWEIG LETTER Ma

Our leadership team includes managing principals, senior principals, principals, senior associates, and associates. Each year, the leadership team goes through a nomination process to add additional eli- gible employees who are evaluated against a highly defined criterion to determine who is eligible to become a company as- sociate. Nominees are then voted upon and final determination is made by ATI’s senior leadership team. Once an employ- ee becomes an associate, they are placed on a Leadership Board with collateral re- sponsibilities for various strategic action plans and other company-wide improve- ment initiatives. Regular reports are first presented to the senior leadership team and then to the entire company. This has been a great way to challenge junior staff to reach new goals for themselves through professional and personal growth. “We offer benefits such as professional membership reimbursement, tuition reimbursement, various development programs, community and charitable outreach opportunities, and more.” TZL: Do you tie compensation to perfor- mance for your top leaders? PD: Yes. We have multiple business units with profit and loss responsibility. Each unit is operated by a managing princi- pal with subordinate principals, associ- ates, and project managers. Each manag- ing principal is accountable for the suc- cess of their unit and is compensated ac- cordingly. They’re also responsible for the management of their team’s compensa- tion, including salaries, bonuses, and oth- er perks that are directly tied to the suc- cess of those units. TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your profes- sional life? PD: Nearly 30 years ago, I was a founding principal of ATI. I will carry those mem- ories with me forever. The best of those memories are commemorated and shared with the ATI’s team as folklore. I’ve also experienced the survival of two major re- cessions: 2001 and 2008. Recovery from the Great Recession has been the most remarkable and has resulted in the most

memorable. That recovery resulted in a tipping point for us by creating space to recruit the greatest team of individuals in the history of ATI, across all three Califor- nia offices, and has allowed me to shift my energies to the fun part or our business – spending more time with clients, pursuing strategic opportunities, and mentoring. There have been many hallmarks in my ca- reer, but the most rewarding was the suc- cessful acquisition of ATI by AC Martin Group , a 113-year-old, renowned Los An- geles firm. The honor of being valued by such a prestigious firm and team of people simply reinforces the incredible success we had in building a multi-discipline, multi- office enterprise. With the acquisition, we now have the capability of leveraging a staff of more than 200 employees with expertise in multiple markets. Most im- portantly, the acquisition has further en- ergized the entire ATI team with the pros- pects of securing larger, more pre-eminent projects. TZL: Describe the challenges you en- countered in building your management team over the lifetime of your leader- ship? Have you ever terminated or de- moted long-time leaders as the firm grew? How did you handle it? PD: A truism for the AEC industry is that not all great practitioners have the full breadth of skills needed to successfully run portions of the enterprise. Our profes- sion has a natural progression to a point where each teammate is faced with the de- cision to become the ultimate practitio- ner or move into management. Over the years, we’ve seen many of our staff choose one path only to find they would have been happier with an alternate route. When that happens, we’ve helped some move from management into their areas of ex- pertise where they can be most fulfilled and, in other cases, we helped some exit gracefully. Those who haven’t recognized their mistake in choice and continued to underperform have been exited. Leaders of companies must know when a management level employee is contrib- uting in all aspects of their job responsi- bilities and be able to make the right and sometimes difficult decisions to make changes as needed. One of the greatest programs that we have put in place for our most senior leaders that are nearing re- tirement is a program to work on an ev- er-decreasing schedule until a comfortable point is reached for them to retire. See LEADING WITH INTEGRITY, page 8

YEAR FOUNDED: 1989 HEADQUARTERS: Pleasanton, CA OFFICE LOCATIONS: Pleasanton, CA, Roseville, CA, and Costa Mesa, CA NO. OF EMPLOYEES: 75 PAUL DIDONATO: He is an entrepreneur with a passion for building highly technical, multi- discipline, problem-solving teams. PRACTICE EXPERTISE: Institutional, industrial, government PROJECT TYPES: ❚ ❚ Commercial office buildings ❚ ❚ Advanced technology facilities ❚ ❚ Government facilities ❚ ❚ Industrial and manufacturing facilities ❚ ❚ Institutional facilities ❚ ❚ Retail ❚ ❚ Mixed-use projects RANGE: ❚ ❚ Full service architecture, planning and interior design ❚ ❚ Master planning and facility assessments ❚ ❚ Construction and project management ❚ ❚ Entitlements ❚ ❚ Plan expediting PHILANTHROPIC ROOTS: Since the beginning, each year, ATI supports local organizations such as Relay for Life, Blue Star Moms, Shepherd’s Gate, and local food banks. While the company makes monetary contributions, it also provides opportunities for employees to shine a light on causes that are important to them by integrating a community outreach and charitable donations program sponsorship.

ay 13, 2019, ISSUE 1296

LEADING WITH INTEGRITY, from page 7

To ensure a proper fit for the company, we engage a large number of participants in interviewing candidates and use personality profiles to assist in the decision-making pro- cess. This provides certain assurances that the new hire is in alignment with ATI’s culture and expectations. In ad- dition, in times of short-term support needs, we use our wide range of part-time consultants and staffing agencies for outsourced services. This has been an effective way for our team to monitor short- and long-term backlog against company-wide staff capacity, so that we can assess what our staffing needs will be months in advance and assure that our recruitment is in alignment with the timing of hires. With an eye toward the future, we are constantly evaluating practices, hiring trends, and the latest technology to deter- mine if they are a good fit for ATI. TZL: There is no substitute for experience, but there is pressure to give responsibility to younger staff. What are you doing to address the risk while pursuing the oppor- tunity to develop your team? PD: In short, baby steps. We mentor our younger staff by providing them an opportunity to get experience, develop their client management and presentation skills, and take calculated risks. Each step of the way, our supervisors and their colleagues are there to provide support and mentor along the way. “We embrace a complete transparent work environment. We regularly update our staff on company progress, risks, opportunities, finances, and more. We believe that this promotes trust which is paramount to success.” TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program? PD: We follow the seller-doer model because it’s proven to be effective in our firm. We’ve learned this the hard way over the years. We grew from a business-oriented practice and then transitioned to a practice-oriented business. Success in this delivery has been the development of a project manage- ment model that overlays the seller-doer team. When de- ployed effectively, our seller-doers have full accountability to meet the commitments made to clients during the sell- ing process. We also employ a disciplined approach of PEER review, cross discipline review, and Principal level Technical Quality Review. Providing an unmatched client experience requires that we deliver what we promise – and do it well. This model becomes even more important as we grow and expand our staff. Involving everyone in the company to become “part- ners” with our clients is not just lip service. Each person plays a vital role in developing a strong, long lasting rela- tionship, even if that interaction is minimal.

TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO? PD: Leading with integrity, trust, and confidence. “There’s always an exciting hum of activity here as we strive to maintain the best environment for our employees to create and work in. We are dedicated to life-long learning, work-life balance, and building a strong team.” TZL: What happens to the firm if you leave tomorrow? PD: It has taken me decades of trial-and-error to create a company that is self-sufficient. This is partially due to the amazing transformation of ATI’s leadership structure since May 2013. The beginning of ATI’s senior leadership transi- tion began when I became the single majority shareholder and its new CEO. Since then, the company has repositioned itself to achieve greater market share growth with improved profitability. We have worked tremendously on the leadership and execu- tion team, strengthening it with a broader level of ownership by minority shareholders. Additionally, an extraordinary in- vestment took place in retaining key employees, recruiting and developing a stronger execution team, strengthening ATI’s brand in its primary business and geographic sectors, and continuing development of ATI’s superior reputation. Without me, I’m confident in our team’s ability to continue its strategic pursuits and long-term viability. TZL: If the worker shortage continues, do you see wag- es increasing to encourage more talent to enter the AEC space, or will technology be used to counter the reduced workforce? PD: We do see pressures on salary increases. We also see technology as a key to higher productivity which has result- ed in higher revenue per employee. Revenue per employee has doubled in the last 15 years, in fact, more than doubled while working relatively normal working hours. We believe that compensation, while important, is not as important as retaining the best and most talented. At ATI, we work on team quality, work and challenges provided, weekly ongo- ing mentoring and training, and quality staff supervision. These are all hallmarks of retention. With regard to compensation, the market is very competi- tive, but we are not of the mindset that more money results in better candidates. We use several salary guides, including Zweig Group’s salary and compensation surveys, to deter- mine the market rate and also take into account standard of living cost increases in our office regions.

WRITE FOR THE ZWEIG LETTER Have some advice for your peers in the AEC industry? Contact Sara Parkman at sparkman@zweiggroup.com for the chance to be featured in The Zweig Letter .

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

O P I N I O N

Key factors

F indings of a new survey of 18 leading insurance companies providing professional liability insurance to architects and engineers in the U.S. may prove instructive for design firms as they examine or review their 2019 risk management and insurance renewal strategies. For AEC firms, findings of latest annual professional liability insurer survey may help guide 2019 risk management and renewal strategies.

this year cite claim severity as their biggest concern. In comparing 2018 claims patterns with those of prior years, 33 percent saw higher claim severity last year. This underscores the need for design firms to practice sound risk management. That includes pro- actively addressing circumstances that could become risk projects, disciplines or those operating in regions with greater claims activity.” “This year, rather than aiming for across-the-board rate hikes, insurers planning to raise rates are targeting AEC firms with large claims, higher

Joan DeLorey

For starters, competition and generally favorable claims experience are helping most insurers hold the line on rates. The majority of the insurers – 67 percent – participating in the annual survey by Ames & Gough plan to leave rates unchanged this year. Yet, among the remaining six insurers, four will seek rate hikes of up to 5 percent and two, from 6 to 10 percent. This year, rather than aiming for across-the-board rate hikes, insurers planning to raise rates are targeting AEC firms with large claims, higher risk projects, disciplines or those operating in regions with greater claims activity. Here are specific details along with applicable risk management measures: ❚ ❚ Claim severity, a key underwriting factor. Al- though insurers weigh several factors in underwrit- ing a particular risk, 83 percent of insurers surveyed

Jared Maxwell

See JOAN DELOREY & JARED MAXWELL, page 10

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

ON THE MOVE KEVIN RYAN JOINS WGI IN THE WEST PALM BEACH OFFICE WGI is pleased to announce that Kevin Ryan joined the firm’s Geospatial Division as a senior survey technician in its West Palm Beach headquarters. Ryan comes to WGI with more than 30 years of land surveying experience, with specific expertise in public utilities, transportation, and commercial land title surveys. Ryan is a formerly registered Professional

Land Surveyor in the State of Maryland. As a multidisciplinary solutions-providing consulting firm, WGI has 18 offices in six states, serving an active client base in over 30 states, specializing in the following disciplines: land development/municipal engineering, traffic and transportation engineering, parking solutions, geospatial services, subsurface utility engineering, structures, landscape architecture, environmental sciences,

architecture, land planning, MEP engineering, and creative services. Zweig Group ranked WGI No. 11 on its 2018 Hot Firms list and No. 23 on the 2018 Best Firms to Work For list. South Florida Business Journal ranked WGI No. 3 (up from No. 5) on its 2019 Top 25 Engineering Firms. In 2018, ENR ranked WGI No. 250 on its list of the Top 500 Design Firms, No. 24 on its Top Southeast Design Firms, and No. 10 in the Florida market.

JOAN DELOREY & JARED MAXWELL, from page 9

new construction materials/methods (61 percent), public-pri- vate partnerships (28 percent), and increase in design-build (22 percent). Besides tracking trends and maintaining underwriting discipline, many professional liability insurers continue to focus on innovation. In preparing for their policy renewals, AEC firms might check their insurance advisors about new coverage solutions to address their specific needs, including: ❚ ❚ M&A policy endorsement. Irrespective of a target firm’s project mix, disciplines or geography, any deal is likely to have an impact on the acquiring AEC firm’s premium. Some profes- sional liability insurers now offer special coverage endorse- ments enabling AEC firms to make an acquisition (subject to a defined percentage of current revenue) with no premium increase until the next policy renewal. ❚ ❚ Multi-year or automatic renewals. Some insurers now offer two- or three-year policies to smaller firms with up to $2 million in annual revenues. While each insurer has differ- ent criteria for qualification, growing firms can lock in their premium rather than potentially experiencing a premium increase due to revenue growth. Additionally, a few insurers now offer automatic annual renewals for small firms whereby the same coverage and premium terms are provided prior to renewal without the need for added underwriting. ❚ ❚ Client- or project-specific additional and/or excess lim- its. The need for AEC firms to obtain additional limits due to client contract requirements is more prevalent now than in prior years. Most insurers now can offer higher overall limits and endorsements to bump up coverage for a given project or client, providing a cost-effective approach to address these requirements. Given the continued soft insurance market conditions, AEC firms with favorable loss experience and/or less risky services may potentially see little to no increase in their premium rates this year. Even so, change in billings, whether through organic growth or acquisition, is likely to have an impact on a design firm’s premium calculations. Meanwhile, individual insurers are continuing to develop new solutions to address AEC firms’ evolving needs for protection. To obtain a complimentary copy of the Ames & Gough Survey, PLI Market 2019: Insurers Achieve Strong Growth Despite Competition and Flat Rates, email info@ amesgough.com. JOAN DELOREY is senior vice president and partner and JARED MAXWELL is vice president and partner at Ames & Gough. They can be reached at jdelorey@amesgough.com and jmaxwell@amesgough.com.

claims and working with their attorneys, insurance advisors and carriers to manage any claims that occur. Further, in ad- vance of their professional liability insurance policy renewals, design firms with large claims should be prepared to explain any losses to their insurers, including steps taken to avoid any recurrence. ❚ ❚ Condos, residential projects may trigger rate hikes. Of the insurers surveyed, 67 percent identified type of project as a top factor for raising a firm’s premium rates. Thus, AEC firms need to be aware of how underwriters view their project mix. Nearly all the insurers surveyed (16 of 18) view condo- miniums as the riskiest projects, followed by other residential projects, bridges and tunnels, large public facilities (such as airports, stadiums, and convention centers), and K-12 schools. Design firms with these projects should examine their risk management and loss experience and work with their insurance advisors to shore up any deficiencies. They should also assess how taking on this kind of work through organic growth or acquisition might affect their insurance programs and costs. ❚ ❚ Higher risk disciplines: Structural engineering and geo- technical. Among insurers surveyed, 39 percent pointed to high-risk disciplines as a reason for raising rates on individual AEC firms. More specifically, 16 of 18 ranked structural engi- neering – and 13 of 18, geotechnical engineering – among the top three disciplines in terms of significant underwriting risk, followed by architectural, process engineering and land sur- veying. Clearly, design firms with large investments in these disciplines, and those acquiring such firms, need to maintain a sharp focus on risk management. Any related claims are likely to be more severe and, consequently, may trigger more substantial premium increases at renewal. ❚ ❚ Insurers flag certain regions for claims volume. Some in- surers cite geography as a key consideration for potential rate increases. Among the 39 percent of insurers surveyed that ex- perienced greater claims activity in specific areas, 71 percent had more claims in the Southeast and 29 percent, each, in the Northeast and West Coast. AEC firms with operations or projects in these areas might double-check their related risk management practices and carefully track their loss trends. ❚ ❚ Insurers monitoring judicial rulings, other issues. In terms of their near- and longer-term risk management, de- sign firms may want to stay on top of emerging developments being watched by their insurers. When asked to rate their level of concern about various risk trends they are monitor- ing from an underwriting perspective, the insurers surveyed appeared most concerned (72 percent) about judicial rulings eroding protections for design firms under state statutes, such as economic loss doctrine. Other key concerns include:

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

O P I N I O N

Too good to stay

O ne of the hidden reasons talented designers leave firms where they seem relatively happy – and where they are doing a great job – is work satisfaction. When you become so good at something that it’s the only thing you do, burnout and lack of advancement could set in. When your best junior associate ‘unexpectedly’ leaves, the decision was probably in the works for a long time, you just never saw it coming.

it takes to create a project. Unfortunately, they are still drifting from project to project, helping their superiors plug in the widgets. They have no commitment, and nothing vested in the Talented people are hard to find. Do your best to keep the talent you have!” “If someone decides to leave, make sure it’s not due to boredom or an insurmountable feeling of stagnation.

Hank Thomas

With the ever-expanding technology sector, senior designers will often lean on the best young talent or technology specialist to help them out with things they don’t have time to learn. These talented women and men are great at it. They take to the ever-changing projects and the adjustments of day-to-day activities as a new adventure. This is exactly what they wanted from their exciting new career. As the relationship between the senior and junior designer grows, the elder knows that they can count on them to do exactly what they need, and at any time they need it. They become the right hand. As the junior designer starts to mature, they gain a deeper appreciation of what

See HANK THOMAS, page 12

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

BUSINESS NEWS JACOBS AND PARTNERS TO SUPPORT WATER RESILIENCE IN INDIA Jacobs has been engaged by Singapore Cooperation Enterprise to deliver engineering consultancy services focused on building sustainable urban water management, recycle, and re-use capabilities in India. As part of the Urban Management Program on Water Recycling and Reuse Phase 2 in India, in collaboration with NITI Aayog, Jacobs will deliver a series of workshops targeting policy leaders and specialists across eight Indian states and union territories. Jacobs will also deliver studies and designs which will examine the feasibility of the program, including potential funding models for recycled water treatment facilities. The program is being jointly funded by NITI Aayog and Temasek Foundation International as part of NITI Aayog’s vision for sustainable urban transformation in India. The workshops will focus on the key areas of non-revenue water management and used water treatment technology; preliminary design development for recycle/reuse facilities; development of project delivery options; and international best practices highlighting lessons from Singapore’s own experience developing a holistic, sustainable and closed loop water management approach. The year-

long program will capitalize on the collective expertise of thought leaders from across the India, Singapore and Asia Pacific region. “The appointment builds on a similar capability development program delivered by Jacobs and partners for NITI Aayog in 2016-17, which we plan to leverage to help develop a sustainable and resilient water management approach in India,” said Jacobs Buildings and Infrastructure Senior Vice President and General Manager Patrick Hill. Water quality and supply are critical issues for India. More than 163 million people live without access to clean water close to home. Climate change-induced rainfall variability, rapid urbanization and increasing industry demand are putting significant pressure on water supply and forcing water providers to look beyond natural rainfall to alternate water sources, including recycled water. “Building social acceptance of recycled water sources is a big challenge,” said Jacobs Director for Asia and India and Council Member of Singapore Water Association Vinod Singh. “India will greatly benefit from the expertise and insight SCE offers because Singapore has undergone a similar transformation in recent years.”

CH2M , which subsequently merged with Jacobs, has been working with PUB Singapore to deliver various water infrastructure resilience programs for more than 20 years, and has acted as the lead technical advisor and consultant to SCE on similar water infrastructure programs in India. “SCE is happy to share Singapore’s development experience inwatermanagement, specifically in the area of treated used water, with India. Treated used water, also commonly term as NEWater, forms part of Singapore’s four national taps strategy to meet the escalating water demands for the nation,” said SCE Director for International Partnerships Eric Lee. “We believe that Singapore’s experience in its water management practices would facilitate NITI Aayog’s objectives towards achieving a successful and sustainable urban water management system.” Jacobs leads the global professional services sector delivering solutions for a more connected, sustainable world. With a talent force of more than 80,000, Jacobs provides a full spectrum of services including scientific, technical, professional and construction- and program-management for business, industrial, commercial, government and infrastructure sectors.

HANK THOMAS, from page 11

So, here’s the big question: How do you prevent this? Well, first off, you can’t prevent all of it. The nature of the design business is that people are going to leave. That’s just the price of doing business. That being said, there are a few things you can do to minimize the rate of turnover: ❚ ❚ Work diversification. To be the best, you have to work with the best. That being said, make sure people are working with everyone in the office. Working with the same person every day, day after day, creates bad habits and limits creativity. ❚ ❚ Make them buy in. It’s harder to leave something that you feel a part of. Whether it’s a small project, or helping as part of a larger project, having ownership of something prevents the “this is just a job” mentality from setting in. ❚ ❚ Keep the conversation open and listen. Talk with your coworkers. Ask if they like what they are doing. If they men- tion the idea of wanting to try something else, let them try it. Offices have to be efficient, but training new personnel takes time, too. Allowing people to explore is easier than finding a new person all together. Plus, you never know, one day you might find the best spec writer you’ve ever known. When a person you have worked with and trusted for a long time decides to leave, it’s hard on everyone involved, and it’s probably a decision that did not come easily – especially if they have spent over three years with the company. If someone does decide to leave, make sure it’s not due to boredom or an insurmountable feeling of stagnation. Talented people are hard to find. Do your best to keep the talent you have! HANK THOMAS is a landscape architect at SWA Group. He can be reached at hthomas@swagroup.com.

programs that come across their desk. They know nothing of the details even if they can tell you the name of every past, present, and future project in the office. Proposals, budgets, and fees are left to the project managers. This is a small thing at first, but as their “lesser” peers start to become vetted in a project, they continue to float around. While respected by most people in the office for their technical prowess, no one, unfortunately, would consider talking to them about project help. No questions about material connections, sizes or shapes crosses their desk. The feeling of disrespect begins to grow until they decide that the only way for them to get ahead and to advance is to leave. Do they have a disagreement with the firm? No, not really, but they do feel it’s time to grow professionally. From their point of view, however, they cannot do it where they are. Shockingly to the senior designer, they give their two or three week notice, pack up their desk, and move on. Another firm picks up all those years of hard work, time, and commitment. “When a person you have worked with and trusted for a long time decides to leave, it’s hard on everyone involved, and it’s probably a decision that did not come easily – especially if they have spent over three years with the company.”

THE ZWEIG LETTER May 13, 2019, ISSUE 1296

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12

Made with FlippingBook Annual report