TZL 1232

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 J a n u a r y 2 2 , 2 0 1 8 , I s s u e 1 2 3 2

EV/BV ratios

Time is NOT on your side

According to Zweig Group’s 2017 Valuation Survey , firms that underwent a valuation to prepare for a potential sale or merger had a median equity value/book value ratio of 3.8. Those done for the requirement of a buy/ sell agreement had a EV/BV ratio of 2.14. Valuations for internal ownership transfers had a EV/BV of 1.99 and those done in order to obtain financing were 1.88, along with those done to meet an ERISA/ESOP/IRS requirement . OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/ F I R M I N D E X BSB Design. ...........................................6 Burns & McDonnell Engineering Co.......12 CH2M.....................................................2 FOX Architects........................................4 Ghafari Associates..................................4 LMN Architects.......................................8 Marks Thomas......................................10 Moseley Architects................................10

T he last few weeks have been pretty rough. A nice young fellow who cleaned my antique cars was killed in a New Year’s Eve altercation with a gun-wielding criminal. Several of my friends and acquaintances, including one former student, are going through cancer treatments. A close friend of mine recently lost his wife to a sudden heart attack. Another friend’s husband – six years younger than me – is on life support and may well not make it due to the flu and pneumonia. Now that I have you cheered up, let me make my point: A lot of bad stuff happens to good people. I don’t think any of them got up in the morning expecting whatever befell them that day. You have to use your time wisely. Time is one of the (very) few things money can’t buy. When your time is up, it’s done. We all could probably do better living each day as if it were to be our last, although the truth is none of us often do. Here are some things to think about: 1)Spend time with the people you care about. Besides the obvious family members and loved ones, this also includes who you spend time with at the office. Who inspires you? Who are you mentoring? Ditto for clients. Which ones do you really care about as people? Give the people who matter the benefit of your atten- tion. 2)Be willing to take some risk. You don’t have unlimited time to be successful in life or make your life what you want it to be. Calculated risk and the ability to understand risk versus reward is one of the distinguishing

“Time is one of the (very) few things money can’t buy. When your time is up, it’s done. We all could probably do better living each day as if it were to be our last, although the truth is none of us often do.”

Mark Zweig

MORE COLUMNS xz CONTINUING ED: Face-to- face Page 3 xz RECRUITING NOTES: Leadership to-do list Page 9 xz GENERAL COUNSEL: Is there a doctrine in the house? Page 11

Conference call: Dan Swift See MARK ZWEIG, page 2

Page 6

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

BUSINESS NEWS CH2M RATED NO. 1 IN TOP 50 TRENCHLESS DESIGN FIRMS LIST FOR THIRD CONSECUTIVE YEAR For the third consecutive year, CH2M earned the top spot on Trenchless Technology ’s Top 50 Trenchless Engineering Design Firms list. The firm has topped the list in seven of the last eight years. Trenchless Technology ’s list is developed by comparing firms based on their trenchless billings in the North American market, as well as numbers of trenchless professionals, completed trenchless projects and a breakdown of what trenchless components made up the projects reported. CH2M reported approximately $214 million in trenchless projects over the last fiscal year, and more than 1,500 projects during the last five years reflecting components such as auger boring, horizontal directional drilling, microtunneling, pipe bursting, pipeline condition assessment and rehabilitation, utility tunneling, and evaluation studies. “Asan industry leader indevelopinganddeploying trenchless and tunneling technologies, either on their own merit or as part of larger conveyance projects, CH2M brings innovative and cost- effective approaches for buried infrastructure assessment, rehabilitation, replacement, and new installations for our clients’ specific water, wastewater and energy conveyance projects, and concerns and outcomes,” said CH2M Conveyance Practice Director Susan Moisio. The company’s top-of-the-list approach in North America can be seen on the El Paso Water Magnolia Storm Drainage Improvement project, designed to help improve drainage and reduce

Take your advice from Mark Zweig to-go.

flooding on Interstate 10, and the structural rehabilitation of the Taggart Outfall 30 brick sewer in Portland, Oregon. CH2M also designed and built raw water pipelines as part of the larger Davis-Woodland Regional Water Supply Design- Build Project, named Outstanding Water Project of the Year by the American Society of Civil Engineers, Sacramento Section and received a National Award of Merit from the Design-Build Institute of America. This year, CH2M also received an Honorable Mention for the Trenchless Project of the Year award from Trenchless Technology for their Tredyffrin Township Emergency Rehab of the Wilson Road Force Main, which included four miles of 30-inch prestressed concrete cylinder pipe rehabilitation through the historic Valley Forge National Park. “It’s an honor to be recognized Trenchless Technology again this year,” said CH2M Tunnel Practice Director Mark Johnson. “As trenchless technologies continue improving, more of our clients will look to companies like ours to help repair or replace their aging underground infrastructure or install new buried infrastructure, and that’s another honor we’re most excited about – bringing these excellent options to our client partners.” With more than 40 years of tunnel and trenchless project planning, management, design, and construction management experience, CH2M trenchless experts have worked on complex projects around the world to manage and extend the useful service life of existing infrastructure, as well as install new drinking water, wastewater, and energy conveyance systems without disrupting the surrounding communities.

thezweigletter.com/category/podcast/

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

MARK ZWEIG, from page 1

characteristics between real entrepreneurs and everyone else. You cannot keep putting off all risk thinking it makes you smart. Real accomplishment is probably going to take real risks (and sacrifice). 3)Stop wasting so much time. When you are really busy and have a million commit- ments, it’s one thing to take some time to relax and recharge the batteries. This could be called “productive time-wasting” because there is a benefit that comes from it. I contrast this with non-productive time wasting. That includes things such as wasting hours ev- ery day on social media or playing repetitive computer games versus interacting with real people or doing something productive with your time. Too many people waste too much time on Facebook, Twitter, Instagram, and LinkedIn. 4)Increase your time (above ground) as much as you can. Better diet, exercise, not smoking, stress reduction – all of these are important. Go to the doctor for regular checkups. I cannot understand people who go five or 10 years without a checkup. Makes no sense. Get your lab work done and ward off problems. 5)Get on those long-term projects NOW. Time to start making headway on building that vacation house, restoring your dad’s first car, writing your novel, implementing that ownership transition program in your firm, or whatever else it is you have been talking about doing for a long time. Now. Not later. Contrary to what The Rolling Stones said, time is not on your side. Better start acting like you know that before it’s too late! 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 Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399- 1900, ext. 139, or email TheZweigLetter@ TheYGSGroup.com. © Copyright 2018, Zweig Group. All rights reserved.

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

O P I N I O N

Face-to-face

The meet and greet is great, but making long-term friendships is even better. Come to the Hot Firm conference in Dallas this year (Sept. 20-21), and bond with your peers.

T he 2017 Hot Firm and A/E Industry Awards Conference in Seattle set new records for attendance, value of content, and quality of the physical environment. But among all the positive takeaways from Zweig Group’s 18th year of holding the conference, one benefit stands above all others and is captured in a comment from one of the participants in our post-conference survey:

Melissa Swann CONTINUING ED

“The best part of the experience for me is always the chance to meet, interact with, and learn from the other attendees. After all, it’s the people in my industry that make it so great, and this year the meeting was more conducive than ever to making friends – some that I fully expect to have for the rest of my life.” There is just something about face-to-face communication that technology has never overcome. While emails, conference calls, social media, and other digital communication may accomplish a greater number of tasks more quickly, faster isn’t always better! Oftentimes, technology is only feeding us garbage at the speed of light. We underestimate the power of face-to-face communication, the foundation for productive

human relationships which, after all, is at the root of being in a professional services firm. And our studies show that the hottest firms invariably have the most closely-knit relationships among colleagues and clients. “There is just something about face-to-face communication that technology has never overcome.” In context to the 2017 Hot Firm conference, that was surely the case. Consider these statistics for the Seattle event: ❚ ❚ 38 percent increase in attendance over 2016 ❚ ❚ 75 firms participated, compared to 69 in 2016

See MELISSA SWANN, page 4

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

BUSINESS NEWS FOX ARCHITECTS UNVEILS A SLEEK, REDESIGNED WEBSITE FOX Architects , an award-winning architecture and interior design firm is excited to announce the launch of a new, redesigned website, fox-architects.com. The website’s new, sleek, and sophisticated look, combined with enhanced content and dynamic layout provides users with an interactive experience while showcasing the firm’s extensive architecture and interior design portfolio. “FOX Architects’ former website did not adequately reflect the firm’s breadth of experience or level of design expertise,” said Anneli Werner, president and creative director for the Jake Group, the creative agency responsible for the redesign. “We wanted to create a site that not only represented the firm’s clean aesthetic, but one that was simple to use for all users, including site visitors and back-end website administrators alike.” Created with the user experience in mind, the website includes many new features to help visitors quickly and easily navigate the site and find information about FOX Architects and its portfolio of architecture and interiors projects. Key features of the new site include: ❚ ❚ Simplified navigation to reduce the number of user clicks to navigate the site ❚ ❚ Filters to help users easily narrow down project searches based upon discipline, including, architecture or interior design, project type, and location

❚ ❚ Updated project pages that display large photographs of the project, along with content that is concise and focused on the challenge, impact, and solution of each project. These pages also include other related information, such as square footage of the project, its completion date, awards it has won, and client testimonials ❚ ❚ An interactive map that visually displays each project ❚ ❚ A refreshed blog that features rich content focused on topics including design, industry trends, company culture, technology innovation, and sustainability, among others ❚ ❚ An entire section dedicated to the people of the firm and its company culture ❚ ❚ Opportunities to share content, specifically blogs and news across various social media channels “We are very excited about the new website. It offers visitors a much more engaging experience and truly reflects who we are as a firm because it focuses on our project portfolio, thought leadership, and most importantly, our people,” said Melissa Epstein, FOX Architects marketing director. “It’s a beautiful site and we couldn’t be more pleased with the result.” GHAFARI OPENS ITS NEWEST OFFICE IN FORT WORTH, TEXAS Ghafari Associates , an award- winning architecture, engineering, process design, and construction services firm, announced the opening of its newest office

in Fort Worth, Texas. James Jobes, AIA has been promoted to vice president and will lead the new office. The new office puts Ghafari at the heart of the region’s growth, and will serve as the southwest hub for the firm’s regional automotive, aviation, and commercial sectors. “Ghafari has experienced steady growth over the past several years, especially in markets specific to the southwest. This represents an important milestone in our strategic business plan,” says President and CEO Kouhaila Hammer. “This new office will allow Ghafari to focus on providing innovative solutions and outstanding service for our clients, and Jim offers the strategic vision to grow our brand.” Jobes holds a master of architecture degree from the University of Oregon and a bachelor of arts degree in economics from Indiana University. He has led several of the firm’s most complex domestic and international projects, and is a longstanding member of the American Institute of Architects. Jobes’ more than 25 years of experience includes a diverse project portfolio, including aviation, industrial/manufacturing, and commercial projects. “We are excited to contribute to the development of such an iconic place,” says Jobes. “Our office in Texas will put us in immediate proximity to many of our existing clients and allow us to expand our services to themwhile positioning us to foster relationships with new opportunities and industries.”

MELISSA SWANN, from page 3

Face-to-face interaction at the most fundamental level is the recognition of our self in the other and the other in our self. Experiencing this gives our lives and our work meaning. At the most practical level, relationships are the basis of cooperation, the foundation for collaborative action. But the work doesn’t stop there. We must continue to nurture our relationships. Stepping back and reviewing our Hot Firm event while it is fresh in the mind is a great way to ensure a better event next year. An attendee feedback survey is imperative, as are thank you cards for all who were there. A culmination of testimonials, sharing pictures, takeaways, and “a-ha” moments from everyone in attendance is key. At Zweig Group, our obligation is to identify our weaknesses and improve. It is essential to the success of our future events. To do better, we must know better. And I’m telling you, the 2018 Hot Firm Conference in Dallas, September 20-21, will not disappoint. I’m looking forward to seeing familiar faces and meeting new ones as well! MELISSA SWANN is Zweig Group’s events manager. She can be reached at mswann@zweiggroup.com.

❚ ❚ 185 bottles of wine (500 lbs. worth of grapes) ❚ ❚ 763 cocktails (1,700 lbs. of ice) ❚ ❚ 78 gallons of coffee and tea (50 percent more than average for a large group) ❚ ❚ 52 pounds of bacon (average weight of an 8-year-old boy)

❚ ❚ All 50 states were represented, as was Canada ❚ ❚ $54 million, the average revenue for a Hot Firm

❚ ❚ 80 percent average revenue growth over a three-year period ❚ ❚ Pacific region was the fastest growing region at 95 percent revenue growth over the past three years. ❚ ❚ 69 percent of attendees were C-suite/principals, e.g. the deci- sion makers ❚ ❚ 13 percent of attendees worked in marketing ❚ ❚ The three most common words attendees used to describe their firms were: Clients, success, and growth. However, along with all the fun that comes from the social activities – good food and drink, and the pride in being recognized for excellent work – there is something serious and profoundly important about the relationships we form.

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

The Industry’s #1 Choice for Principal Training EXPERIENCE A DIFFERENT KIND OF SEMINAR FOR AEC PROFESSIONALS // 2018 SCHEDULE 5

Attendees of The Principals Academy earn 12 PDH / 12 CEUs. Zweig Group seminars are eligible for Professional Development Hours credits and Continuing Education Units. All attendees receive a certicate of completion indicating the number of hours earned during each seminar. • Financial Management • Project Management • Leadership • Mergers & Acquisitions • Ownership Transition Planning • Recruitment and Retention environmental consulting rms, and is presented in tutorial and case study workshop sessions. • Business Planning • Marketing/Business Development • Accounting The Principals Academy is Zweig Group’s agship training program encompassing all aspects of managing a professional AEC service rm. It’s the most impactful two days you can spend learning about principal leadership, nancial management, recruiting, marketing, business development, and project management. The two-day agenda covers several critical areas of business management from the unique perspective of architecture, engineering, and

SONOMA, CA April 26-27

ASPEN, CO June 7-8

MONTREAL, QC July 19-20

Zweig Group is a registered provider with the American Institute of Architects.

zweiggroup.com/tpa 800.466.6275 events@zweiggroup.com

CHARLESTON, SC October 25-26

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

Dan

P R O F I L E

Conference call: Dan Swift President and CEO of BSB Design (#87 Hot Firm for 2017), a 180-person architectural design and development firm based in Des Moines, Iowa.

By LIISA ANDREASSEN Correspondent

“M y advice is to get on it!” says Swift, refer- ring to ownership transition. “Most firms run out of time and don’t spend enough of it on transition. It cannot be rushed because when that gets rushed, it can get ugly fast.” A CONVERSATION WITH DAN SWIFT. The Zweig Letter: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm? Dan Swift: In our firm we believe that business de- velopment is about relationship building and pro- tecting those relationships. All staff has a role to play when you are trying to create a firm that is a

sales machine. As stated above we have a BD opera- tions team that leads the charge and trains all staff including technical, design, and marketing staff in the soft skills needed for becoming a future BD tal- ent. You cannot have too many salespeople. “In our firm we believe that business development is about relationship building and protecting those relationships.” TZL: The list of responsibilities for project man- agers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?

Dan Swift, President & CEO, BSB Design

THE ZWEIG LETTER Janu

n Swi f t

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

facebook.com/ ZweigGroup

twitter.com/ ZweigGroup

linkedin.com/company/ ZweigWhite

blog. ZweigGroup .com vimeo.com/ ZweigGroup

DS: Burnout is the result of losing focus on your goals. It’s important to re-ignite the “why we do what we do” by creat- ing diversity in product types and challenges so that there’s always a new “why.” We also have flex hours and generous vacation benefits for rejuvenating. “Burnout is the result of losing focus on your goals. It’s important to re-ignite the ‘why we do what we do’ by creating diversity in product types and challenges so that there’s always a new ‘why.’” TZL: What is the role of entrepreneurship in your firm? DS: If you do become a leader at BSB, it’s largely due to pos- sessing a strong entrepreneurial spirit. We encourage and expect our leaders to adapt and pivot to the changing de- mands of the market and act like founders. In our leader- ship guidelines, which define a clear path to ownership, it’s clear and often stated that thinking like and acting like an entrepreneur is critical. TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down? DS: I think housing will heat up and retail will suffer. TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline need- ed to retain your top people and not lose them to other firms? DS: At BSB we have two groups that run the company day to day: Our operations committee is responsible for running the “the back of the house;” and the BD team runs sales. Both of these groups mentor the rest of our teams. We’re also launching a brand new Emerging Leadership Program where all employees participate in tier one training and then have to be selected for tier two and tier three training. Lastly we have a full-time trainer in corporate that manages virtual training using Red-Vector. TZL: As you look for talent, what position do you most need to fill in the coming year and why? DS: We need business developers who are also “hot pen- cils” to support our seller-doer model. We’re also looking for BDers and “front of the house” lead designers who can work as teams. TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners? DS: My advice is to get on it! Most firms run out of time and don’t spend enough of it on transition. It cannot be rushed because when that gets rushed it can get ugly fast. We plan

three years for each candidate to have one year shadowing, one year working as equals, and the last taking over using their mentor as a sounding board. TZL: Monthly happy hours and dog-friendly offices. What do today’s CEOs need to know about today’s workforce? DS: All companies need to adapt and pivot as our workforce demands different environments that will excite them and would most attract them to come and work in your com- pany. That said, protecting your culture can never be com- promised for a fad. At BSB we have a Culture Club, Fun Squads, and design competitions that work in parallel to promote culture, teamwork, and a family atmosphere. We all got involved in the A/E industry because we wanted to express our creativity and our design completions include all employees from accounting and legal to marketing and design. TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams? DS: We have acquired two firms and several strategic hires have expanded our reach in student housing, multi-family, office buildings, major league baseball, commercial interi- ors, and hospitality. In housing, we’ve lost the last decade and, as a result, have an aggressive acquisition strategy to make up for lost time. TZL: With overhead rates declining over the last five years and utilization rates slowly climbing back up to pre-recession levels, how do you deal with time manage- ment policies for your project teams? Is it different for different clients? DS: For us, it’s not just about time management. It’s about working a proven process with focus. To have real focus you have to create urgency and set targets for tasks that are very specific to avoid what I call “time warps” where folks have no idea how long something did or should take. Back when I drafted I used to use a stopwatch to track my speed so that I knew to the minute how long each task would take and then I worked on process to improve speed. In the BSB In- novation Lab we use Elite Action Teams to work on improv- See CONFERENCE CALL, page 8 “We encourage and expect our leaders to adapt and pivot to the changing demands of the market and act like founders. In our leadership guidelines, which define a clear path to ownership, it’s clear and often stated that thinking like and acting like an entrepreneur is critical.”

uary 22, 2018, ISSUE 1232

BUSINESS NEWS LMN ARCHITECTS ANNOUNCE GROUNDBREAK- ING OF THE NEW CLEMSON UNIVERSITY COLLEGE OF BUSINESS LMN Architects announced the groundbreaking of Clemson University’s $87 million, 170,000-square-foot College of Business, which ushers in a new era for one of the fastest-growing disciplines on campus. The facility will replace Sirrine Hall with a state- of-the-art building that will promote collabora- tion, research, interaction with industry, and the flexibility to adapt to advances in technol- ogy. LMN designed the project in partnership with LS3P, the local architect of record. “Clemson has taken a huge step as a world- class institution by growing its business edu- cation capabilities,” says Business School Dean Bobby McCormick. “This new facility will shine an even brighter light on our ability to promote leadership, innovation, and entre- preneurial skills.” The five-story College of Business creates a gateway for Clemson that sets a precedent for social and intellectual interaction. The first new academic building on historic Bowman Field in

100 years, it establishes a 24/7 hub for student activities and anchors Clemson’s historic heart as the centerpiece for a new North Academic Precinct. The building is conceived as a think- tank environment with a variety of spaces for active learning, including technology-equipped classrooms, learning labs, study lounges, and a café, as well as faculty and departmental of- fices. Additionally, a 220-seat, flat-floor audi- torium, business center, and incubator space encourage entrepreneurial pursuits that attract business partners. “This new home for our outstanding College of Business is a key component of the univer- sity’s ongoing efforts to keep Clemson among the very best public universities in the coun- try,” says Clemson President James Clements. “We look forward to breaking ground on what will become one of the finest business educa- tion facilities in the country.” Composed of two glass and brick towers nestled into a hillside, the complex features a five-story atrium providing daylight, views, and connections to a vibrant network of learning

opportunities, inside and outside the class- room. The towers are linked by a grand public stair that engages students at multiple levels and culminates at a new plaza in the campus core. The lower two levels connect beneath the grand stair, creating a cohesive instruc- tional zone. “Dean McCormick challenged the design team to create a ‘magnetic home’ for all students,” says LMN Partner Rafael Vinoly-Menendez. “By cultivating the overlap of learning, re- search and service, the new College of Busi- ness will inspire students to linger and interact in un-programmed ways, enriching Clemson’s commitment to economic and social advance- ment.” The building’s exterior expression both hon- ors the past and looks to the future, its brick façade respecting the larger historic context, while the expansive glazing reflects the col- lege’s contemporary function and program- ming. Modern construction technology allows for maximizing transparency without compro- mising energy efficiency.

CONFERENCE CALL, from page 7

TZL: The last few years have been good for the A/E indus- try. Is there a downturn in the forecast, and if so, when and to what severity? DS: In housing we are still in recovery and expect the next dip in two to three years out, but it won’t be a big dip – but more like a correction back to normal. TZL: They say failure is a great teacher. What’s the big- gest lesson you’ve had to learn the hard way? DS: With the housing downturn and financial collapse of 2008, we learned that having 15 offices that offered every- thing was hard to pivot on. We learned to make ourselves lean and nimble. TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm? DS: We think you have to do both. The talent pool is shal- low and time-to-ROI has to be considered when determin- ing which strategy makes the most sense. TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget? DS: We track all job performances and use that data to de- termine what worked and what didn’t to learn for the next time. Our process requires us to establish prototype docu- ments to ensure that we have a clear picture of what the endgame on deliverables will look like with a supporting budget. This takes the guess work out of budgeting which, too often, is conceptual in nature. TZL: What’s your prediction for 2018? DS: Growth.

ing cycle times by reinventing our processes and eliminat- ing what we call “white space.” All jobs are different in terms of fees and scopes, but the constant has to be executing within a disciplined process that you know works. When it doesn’t work, one of two things is happening: You skipped process steps, or the pro- cess needs to change. “When we create a marketing strategy, before it is ever launched, we determine what the ROI will be within a set timeframe. You cannot leave that up to chance so we create the focus and the urgency in each plan or we don’t do it.” TZL: Measuring the effectiveness of marketing is diffi- cult to do using hard metrics for ROI. How do you evalu- ate the success/failure of your firm’s marketing efforts when results could take months, or even years, to mate- rialize? Do you track any metrics to guide your market- ing plan? DS: When we create a marketing strategy, before it is ever launched, we determine what the ROI will be within a set timeframe. You cannot leave that up to chance so we cre- ate the focus and the urgency in each plan or we don’t do it. For example, even when folks attend a conference or indus- try function they have to produce an ROI statement about how their attendance will move the needle for BSB on rev- enue, relationship building, or new knowledge that we can leverage.

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

O P I N I O N

Leadership to-do list

T here is a difference between being a manager versus being a leader. Managers manage the process and ensure that budgets and systems are followed so that the operation of the business flows smoothly. Managers are the people who dot the I’s and cross the T’s. Listen, read between the lines, communicate, understand your style, and don’t forget to set the tone, solve the crisis, and do the right thing.

was documented during the war that even with everything going on around him, Churchill prob- ably spent more time taking meetings and listen- ing to people in his cabinet, and ordinary citizens, rather than speaking. This could be one reason why Churchill was so convincing both for the public and the U.K. government. they talk. And, in a crisis, they are always looked to for solutions and guidance.” “Leaders rise above the fray and set the tone for the organization. They listen twice as much as

Randy Wilburn

Leaders, on the other hand, rise above the fray and set the tone for the organization. They listen twice as much as they talk. And, in a crisis, they are always looked to for solutions and guidance. Leaders have followers and managers have employees. The great Peter Drucker, considered by many to be the father of modern management, said that “Management is doing things right; leadership is doing the right things.” Here are four steps that can help to solidify your position as a strong leader. 1)Great leaders are listeners. One of the best de- scriptions of Winston Churchill was that he was probably as good a listener as he was a speaker. It

See RANDY WILBURN, page 10

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

TRANSACT IONS

MOSELEY ARCHITECTS AND MARKS THOMAS ANNOUNCE PLANNED MERGER Moseley Architects announced plans to merge with Marks Thomas , a woman-owned architecture firm based in Baltimore. Marks Thomas is recognized for providing planning, architecture, interior design, and sustainability services to clients along the East Coast. Focusing on senior living, multi-family housing, education, and historic preservation, the firm was ranked 11th among the top 25 architecture firms by the Baltimore Business Journal . “Our two organizations have recently collaborated, so I know that this merger affords us an even greater depth of resources to serve our clients,” said Moseley Architects’ President Stewart Roberson. “Furthermore, this merger is consistent with the strategy we have successfully used throughout our firm’s

evolution: Enter new markets while expanding our geographic footprint.” The merger not only provides a Maryland location for Moseley Architects, which will significantly bolster the firm’s ability to serve clients in the region, but allows the firm to become active in the multi-family housing marketplace. The move also strengthens the firms presence in the senior living market. “Marks Thomas has focused on building our business through long-term relationships with our clients andMoseley Architects has done the same. We are energized about the possibilities of bringing our two like-minded organizations together,” said Magda Westerhout, Marks Thomas’s multi-family housing principal. Ranked among the top architecture firms in the nation by Architectural Record , Building

Design & Construction , and Engineering News- Record , Moseley Architects currently offers design expertise focused on public schools, colleges and universities, local government facilities, correctional institutions, and senior living housing. Mark Heckman, Marks Thomas’s senior housing principal, said, “Both of our firms have an outstanding team with experience in delivering high quality design services across a variety of markets. We are excited to offer this experience to our clients while also providing our staff with additional opportunities for growth.” “We are looking forward to joining forces with Moseley Architects,” Faith Nevins Hawks, principal, Marks Thomas said. “This merger will result in amazing outcomes for our clients.”

RANDY WILBURN, from page 9

Here are eight identifiable leadership styles and the pros and cons of each: 1)Autocratic. Benefits those that require close supervision. Not good for creatives. 2)Task-oriented. Put strong structures in place. Tends to be autocratic. 3)Transformational. Inspiring. Less de- tailed. 4)Charismatic. Communicates well with strong emotional ties. Too much reliance on the leader. 5)Bureaucratic. By the book. Usually not good for flexibility, creativity, or innovation. 6)Democratic. Everyone has a voice. Can be difficult to make a decision. 7)Servant leader. Lead from behind. This type of leader doesn’t mix well with other leadership styles. 8)Laissez-faire. Works well in the highly creative environment. No real leadership or supervision efforts. See if any of them apply to you. Listen, you don’t have to be Winston Churchill, Nelson Mandela, or Richard Branson to be a great leader, but you should consider working on these four steps to ensure that the foundation of your leadership capabilities is solid. We recently rolled out a new training program on Leadership Skills for AEC Professionals where we go into great depth on these topics and more. If you have any questions, you can contact me anytime. RANDY WILBURN is director of recruiting strategy at Zweig Group. Contact him at rwilburn@ zweiggroup.com.

2)Great leaders read between the lines. Sometimes the unspoken word is just as loud as the spoken word. Body language, facial expressions, voice and tone, and micro-expressions all play into this process. A good leader can process this information and respond appropriately. “You don’t have to be Winston Churchill, Nelson Mandela, or Richard Branson to be a great leader, but you should consider working on these four steps to ensure that the foundation of your leadership capabilities is solid.” 3)Great leaders are good communicators. It’s not just the ability to get up in front of a crowd of people and say great things in a clear and eloquent nature. A great leader has to communicate clearly and effectively to one person just as well as they do to a group of people. Former President Bill Clin- ton, love him or hate him, had that ability. He could speak to large audiences and zero in on one person in the room and make them feel like he was speaking directly to them. 4)Great leaders understand their leader- ship style. There are many leadership styles out there, and we would quickly run out of room in this article trying to list them all. But it’s important for leaders to under- stand their personality and leadership style because it will play into how they interact with the people they work with.

LEADERSHIP SKILLS FOR AEC PROFESSIONALS is a two-day seminar that was specifically developed to provide design and technical professionals with the skills to become more competent leaders. This course helps attendees develop and reaffirm the leadership skills, strategies, and techniques that will help them grow personally and professionally. Effective leadership skills are vital to the health and success of every company in any industry. Effective leaders motivate their teams to achieve exceptional results, inspire others to be better than they thought possible, and create an environment where everyone is moving in the same, positive direction. This course is taught by expert leaders who are immersed in the AEC industry and have practical experience solving many of the challenges facing AEC firms. This is not a course full of buzzwords or the latest fads. This is a course filled with practical solutions design and technical professionals can use every day to lead their firms to success. To learn more, visit bit.ly/2zXeV4J or call 800.466.6275.

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

O P I N I O N

In states that adhere to the ELD, design professionals have a strong defense against third-party claims for economic damages. Know the law in your project state. Is there a doctrine in the house?

L aw books are full of various “doctrines” that have been created and accepted by the courts over the years. One that applies most often to design professionals is known as the Economic Loss Doctrine, or ELD. In states that have adopted the ELD, it stands generally for the proposition that a party seeking purely “economic damages,” as opposed to personal injury, death or property damages, must seek relief through contract remedies in order to recover, and the injured party cannot sue in “tort.”

William Quatman GENERAL COUNSEL

For example, under the ELD, a contractor who suffers delay costs due to a design error cannot sue the architect directly (because those two have no direct contract). Instead, the contractor must pursue the owner under their contract, and the owner may have a contract claim back against the architect. If there is personal injury or property damage, however – as in an auto accident or slip and fall – there is no need for a contract between the parties. Tort law applies to those “non- economic” claims and allows a suit for damages regardless of any contract. The intent of this rule is to protect the parties’ expectations when they negotiate contracts

in commercial transactions. So, for example, a design professional may negotiate a lower fee in exchange for a limitation of liability with the project owner, or provide some contingency for anticipated design errors or omissions. Lawyers call this the “benefit of the bargain.” It would seem unfair, then, if a contractor could bypass those bargained-for limitations and sue the architect for unlimited liability. Courts talk of people who “are in privity of contract” when referring to parties who have a written contract. The ELD bars those “not in privity” from suing in tort (i.e. negligence) for purely economic losses. But, as with most legal

See WILLIAM QUATMAN, page 12

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

WILLIAM QUATMAN, from page 11

negligent misrepresentation in the architect/contractor scenario.” FIRM RULINGS. By contrast, the Maryland Supreme Court adopted the ELD in 2017 in a case involving a contractor’s suit against an engineering firm. The court said, “The eco- nomic loss doctrine represents a judicial refusal to extend tort liability to negligence that causes purely economic harm in the absence of privity, physical injury, or risk of physical injury.” In a 2017 Florida case, a hospital hired a geotechnical engineer to do a soil study. The construction manager hired a sub to perform cast auger piles. After the building foundation settled, work was stopped. The hospital sued the geotechnical engineer, and the engineer sued the pile sub (no “privity” of contract between them). The sub raised the ELD as its defense and the court agreed, finding the sub owed no duty to the engineering firm for pure economic losses. In a 2017 Oklahoma case, a paint manufacturer was sued by a contractor when the coating system blistered and required repairs. Citing to the 1986 U.S. Supreme Court case of East River S.S. Corp, the court agreed that there was no liability in tort for pure economic losses; however, the court allowed a claim for breach of warranty to remain. In a 2016 Texas case, a contractor sued an architectural firm for negligence, and won at trial. However, the Texas Court of Appeals reversed based on the ELD. In this case, however, there was an actual contract between the contractor and architect, yet the suit was for “negligence,” not breach of contract. The court said, “Texas courts have long adhered to the economic loss doctrine, which precludes the recovery of purely economic damages that are unaccompanied by injury to the plaintiff or its property in actions for negligence.” “Know the law in your project state and, if you have questions, talk to a lawyer before signing up for work there to see if the ELD is upheld, rejected, or has exceptions.” Finally, in a 2015 Texas case, an engineering firm had limited its liability with a design-build contractor through a contractual provision. The court said, “Holding [engineer] liable to [the owner] through a separate tort action would judicially renegotiate the private risk allocations to which the parties contractually bound themselves.” WHAT TO WATCH FOR. In states that adhere to the ELD, design professionals have a strong defense against third-party claims for economic damages. Watch for clauses that make others “third-party beneficiaries” of your contract, as that can void the ELD defense. Also, be aware of those states that do not follow the ELD or which carve out exceptions. Know the law in your project state and, if you have ques- tions, talk to a lawyer before signing up for work there to see if the ELD is upheld, rejected, or has exceptions. G. WILLIAM QUATMAN, ESQ., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com.

doctrines, there are exceptions to the rule, and contractors and subcontractors have found ways to avoid the ELD in some states. EARLY ROOTS. The ELD traces its roots to a 1986 U.S. Supreme Court case, East River S.S. Corp. v. Transamerica Delaval, Inc. This was not a construction case, but a dispute involv- ing charterers of supertankers who sued a turbine manu- facturer for damages resulting from alleged design and manufacturing defects which caused the supertankers to malfunction on the high seas. Nobody was injured, and the turbines did not damage anyone’s property. The only dam- ages sought were “economic,” i.e. the cost of repairing the ships and the income lost while they were out of service. “Law books are full of various ‘doctrines’ that have been created and accepted by the courts over the years. One that applies most often to design professionals is known as the economic loss doctrine, or ELD.” The trial court ruled for the manufacturer, which was affirmed by the U.S. Supreme Court. In that case, the court said, “loss due to repair costs, decreased value, and lost profits is essentially the failure of the purchaser to receive the benefit of its bargain – traditionally the core concern of contract law.” Over time, the ELD was raised as a defense by design professionals, mostly in suits by contractors and subcontractors who claimed they suffered added labor and material costs, overhead expenses or lost profits due to design errors and delays. Courts across the nation have either accepted the ELD whole cloth, without exceptions, or rejected it, or created exceptions. EXCEPTIONS TO THE RULE. The most commonly raised exception is known as “negligent misrepresentation.” Courts cite to the Section 552 of the Restatement (Second) of Tort, which states that when a person (or entity) who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, “supplies false information for the guidance of others in their business transactions,” that person is subject to liabil- ity to those whose “justifiable reliance upon the informa- tion” results in economic loss due to the defendant’s failure to exercise reasonable care or competence in obtaining or communicating the information. This stops short of “fraud” or “fraudulent misrepresentation,” and only requires a showing that the plaintiff “justifiably relied” on the information which was negligently provided. Contractors who bid on plans and specifications argue that they fit into this exception in relying on the information provided to them, albeit indirectly, by the project designer. A Georgia court ruled in 2017 that Section 552 created an exception in the ELD in a case against an environmental consulting firm. A 2016 Kentucky case similarly found that the economic loss doctrine “does not apply to a claim of

THE ZWEIG LETTER January 22, 2018, ISSUE 1232

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