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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 D e c e m b e r 1 0 , 2 0 1 8 , I s s u e 1 2 7 5

Bonus eligibility

Making an effective transition

In Zweig Group’s 2018 survey of Best Firms to Work For, we asked employees whether or not they received bonuses. The 80 percent who said they received a bonus worked an average of almost 45 hours a week. The remaining 20 percent – who said they did not receive a bonus – averaged closer to a 42-hour work week. OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/ F I R M I N D E X Belatchew Arkitekter...............................2 BSA........................................................8 Burns & McDonnell Engineering Co.......12 CALYX Engineers + Consultants..............6 CH2M.....................................................4 Jacobs Engineering Group Inc................4 NV5. .......................................................7 OZ Architecture.......................................8 TPG Architecture.....................................4

S o many firms in the AEC business are making transitions right now. Aging boomers in their 60s and 70s are selling down, and their chosen successors (we hope they are choosing successors!) are taking the reins. Unfortunately, too often, it doesn’t go as smoothly as it should. There are many reasons for this. Maybe the leaders who are stepping down aren’t doing everything they should to optimize the firm’s chances of success? Maybe the successors, too, are partly to blame? Here are my thoughts: 1)Promoting from within is always best! It’s always best if one’s successor comes from inside the organization. He or she knows the cast of characters and the firm’s culture, and is bound to be more easily accepted by the rest of the people in the company. That said, it isn’t always possible. In those cases, the newly hired successor will have to prove him or herself before assuming the leader’s role. Not doing so could greatly increase the chances of a failed transition! 2)Real transition takes time. Especially in cases where an outsider is hired to succeed the outgoing leader, the process cannot hap- pen overnight. There’s no way to shortcut it. In essence, the outsider has to become an insider. Rotation through various roles in the firm or the work group is certainly one of the best ways to familiarize the new leader with everyone/everything, and also to build cred- ibility and prove themselves to everyone else. Skipping this process and rushing transition greatly increases the chances of failure.

“So many firms in the AEC business are making transitions right now. Aging boomers in their 60s and 70s are selling down, and their chosen successors are taking the reins.”

Mark Zweig

MORE COLUMNS xz MARKETING MATTERS: Diversify, soon Page 3 xz GUEST SPEAKER: Greater than project management Page 9 xz GENERAL COUNSEL: Is there a doctrine in the house? Part 5 Page 11

Conference call: Jill Wells Heath 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 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 BELATCHEW ARKITEKTER PARTNERS WITH STHLMNYC As part of Belatchew Arkitekter ’s internationalization strategy, the company now partners with sthlmnyc. sthlmnyc is an initiative that connects architects, urban planners, real estate developers, and academics in Stockholm and New York City, aiming to influence the future of these cities by developing new innovative solutions. sthlmnyc is a non-profit organization founded and led by architects Linda Schuur and Sander Schuur. “We believe in cross-border cooperation, today more than ever. For architects worldwide, we are facing the challenge of creating sustainable cities. A platform like sthlmnyc creates

opportunities for knowledge sharing between cities and is in line with our internationalization strategy,” says Rahel Belatchew, founder and CEO, Belatchew Arkitekter. “We think Belatchew Arkitekter is an ambitious and a visionary company with projects that belong on the international architecture scene. Based on sthlmyc as a platform, we discuss and formulate innovative solutions in urban planning and architecture to influence the cities of the future,” says Sander Schuur, founder of sthlmnyc. Belatchew Arkitekter is an architecture firm working within a wide range of projects, from urban planning and housing to offices and public buildings.

MARK ZWEIG, from page 1

3)The old leader has to let the new leader do his or her job. This can be very difficult (for the old leader) but it’s essential. So many old leaders will not part with any decision- making authority yet want to act as if a transition has been made just by giving a new title to someone. The transition has to be real or everyone will quickly figure out it’s “business as usual” and that nothing has really changed. This quickly cuts the legs out from under the new leader. We’ve seen this situation too many times over the years and it always makes me sad for everyone involved. 4)The old leader has to support the new leader. There will always be critics or those inside the organization who resist change. The old leader could easily adopt that posture himself. But it’s like shooting yourself in the foot if you are the old leader who wanted to have a transition in the first place! Outgoing leaders have to encourage everyone to follow the new leader. That means the old leader isn’t a critic on the sidelines fanning the flames of, “It isn’t like it used to be here.” Of course it isn’t like it used to be. We live in a different age and time and have different people. Everything is in a constant state of change. Old leaders need to get on board with this idea, and while offering counsel to the new leaders, should also support them both publicly and in private. 5)The new leader has to support the old leader. Just as the old leader has to support the new leader, the new leader, too, has an obligation to support the old one. Unfortu- nately, it isn’t human nature. Being too anxious to quickly distance themselves from the practices of the past, or to trash past decisions publicly can create needless friction or ill-will between the outgoing leader and the new one. Many new leaders tend to do this as a way of establishing themselves but it can harm their acceptance, especially if there’s a contingent still there whose loyalties were to the old leader. Everyone needs to realize that their needs are best met by working closely as a team. 6)The old leader has to keep their ego in check. Some old leaders are so used to being the boss and it’s very hard for them to give up anything because of their egos. The com- pany name may change. The reserved parking spot may go away. The old leader’s front office may turn into a back office. Their company car may go away. They may not be the first person who is informed of something unusually good or bad that has happened. That’s the way it is. It’s a price of succession that has to be understood. Old leaders, check your egos at the door! 7)The old leader has to step aside. Ultimately, giving the new leader a real chance to succeed requires the old leader to get out of their way and let them do their jobs. Entre- preneurs get this idea. They are all about investment, growth, and cashing in on their sacrifices at the end – and they know they have to get out for that to happen. Small business people, however – of which the AEC industry has in much larger numbers than entrepreneurial leaders – don’t get this idea. They are control freaks and used to operat- ing their businesses for their own benefit. They have a very hard time letting go. But you have to. Your other choice is to work ‘til you drop and let everyone else pick up the pieces. And that is usually a painful process that results in a lot of lost firm value and too many good people getting hurt. MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

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

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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 2018, Zweig Group. All rights reserved.

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

O P I N I O N

Diversify, soon

Z weig Group’s new mission to Elevate the Industry was unveiled at the 2018 Hot Firm & A/E Industry Awards Conference in Dallas in September. This mission has five focus areas – promote, diversify, educate, change, and celebrate – all of which I’m sure you’ll hear more about in the coming months. We need a comprehensive approach to encourage heterogeneity in our firms. It starts, but certainly does not end, with simple awareness.

are quite homogenous. According to the 2018 Principals, Partners & Owners Survey , 93 percent of this group is Caucasian, 87 percent are male, and just 4 percent are under the age of 40. While 62 percent of respondents feel there is a problem with a lack of diversity amongst principals, the hard part is figuring out what to do about it. Our industry is an ethical one. Ironically, that “Zweig Group’s data shows that the leadership-level demographics are quite homogenous ... 93 percent of this group is Caucasian, 87 percent are male, and just 4 percent are under the age of 40.”

Christina Zweig Niehues

I’m excited to be championing the Diversify task force. Diversity in all its forms – age, experience, gender, race, and ethnicity, among others – represents a clear competitive advantage. It’s time we embrace it, within our firms and in the greater world in which we do business. For pure bottom-line reasons, diversity makes sense. McKinsey research finds companies that have a high level of gender, racial, and ethnic diversity are more likely to have above average financial returns. More diverse companies are more creative, have higher employee satisfaction, and are better able to win top talent – something that is so important right now for AEC firms. Let’s face it, our business is not, and has never been, a diverse one. Or, in the words of one of our clients, it’s “stale, male, and pale.” Zweig Group’s data shows that the leadership-level demographics

See CHRISTINA ZWEIG NIEHUES, page 4

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

BUSINESS NEWS ALEX GETELMAN OF MBI GROUP ANNOUNCES COMPLETION OF LANDMARK RESTORATION AT 670 BROADWAY MBI Group completed work on a landmark restoration project at 670 Broadway, on the corner of Broadway and Bond Street in New York City. Originally designed by renowned architect George E. Harney, the five-story, 75,000-square-foot red-brick loft building was created in the Victorian Gothic style whose unique hallmarks include varying color, texture, and gothic details. MBI Group worked with Paramount Group and TPG Architecture to bring the dilapidated building to its prior grandeur to attract new tenants and be a part of the ongoing revitalization of New York’s vibrant NoHo neighborhood. ”MBI Group is proud to have worked on the restoration of 670 Broadway, an incredible New York City landmark originally built in 1900 and today a modern, world-class commercial space,” stated Alex Getelman, executive managing director of MBI Group. “MBI Group helped to transform the property’s retail spaces, relocated the lobby and provided extensive interior work in keeping with the building’s elegant original design. Current tenants include top brands like Bandier and Equinox Gym. For over 30 years, MBI Group has transformed commercial interiors for building owners in New York and beyond.” The scope of the project included demolition of seven existing storefronts, which were replaced by millwork doors and glass to replicate the building’s original image; extensive replacement of existing cast iron, which was completed by taking molds of historical pieces and meticulously installing each item to match the existing columns and decorative items;

demolition of the fourth and fifth floors to create white-box spaces for future tenants; relocation of the building’s lobby from Broadway to Bond Street with the new address 0 Bond Street; and the build-out of a new elevator lobby with security desk. JACOBS APPOINTED TO LEAD EDINBURGH CITY CENTER TRANSFORMATION Jacobs Engineering Group Inc. has been awarded a contract by the City of Edinburgh Council in Scotland to help develop the strategy, delivery plan, and detailed business case for the transformation of Edinburgh City Center. The City of Edinburgh Transformation Program is a multi-million-dollar investment to improve community, economic and cultural life of one the most iconic cities in the world. Jacobs, supported by its partners, will provide the delivery plan for the historic overhaul of the Scottish capital’s streets, public spaces and amenities to ensure it is future-proofed for generations to come. This will include strategies to make the city more accessible for residents, visitors, and businesses, creating better connectivity with sustainable, smart and cleaner transport options, enhancing civic centers, and improving air quality. “Edinburgh is one of the world’s most archetypal cities and this program enables Jacobs to play a role in helping the council make the city the best place to live, work, and invest,” said Jacobs Buildings and Infrastructure Europe Senior Vice President and General Manager Donald Morrison. “Our understanding of the city through previous iconic projects, global projects expertise and ability to challenge different ways of thinking

will enable us to co-create a plan that ensures a fairer, healthier, and thriving capital city fit for the future.” Transport and Environment Convener, Councilor Lesley Macinnes, said: “This is a deeply ambitious and potentially game- changing opportunity to transform the city center of one of Europe’s leading cities, for the benefit of generations to come. As we move forward with the consultation on how a future Edinburgh should look, we’re pleased to be working with Jacobs, whose previous projects demonstrate the ability to deliver forward- thinking solutions.” Jacobs employs more than 1,100 staff in Scotland and has played a leading role in delivering some of the largest infrastructure programs inScotland including theQueensferry Crossing, which links Edinburgh and Fife, and the A9 Improvements Program. Wide- ranging support of sustainable transformation programs for other U.K. cities include Dundee Rail Station (part of the ongoing transformation of Dundee), Birmingham City Council’s Snow Hill Growth Strategy and development of a Clean Air Zone, and previously the London 2012 Olympic and Paralympic Games. Jacobs leads the global professional services sector delivering solutions for a more connected, sustainable world. With $15 billion in fiscal 2017 revenue when combined with full-year CH2M revenues and a talent force of more than 77,000, Jacobs provides a full spectrum of services including scientific, technical, professional and construction- and program-management for business, industrial, commercial, government, and infrastructure sectors.

CHRISTINA ZWEIG NIEHUES, from page 3

“Offer a range of benefits that appeal to different people;” 40 percent said, “Specifically recruit women;” 36 percent said, “Specifically recruit minorities;” and 10 percent said, “Hold diversity seminars.” While these are good efforts, it’s not enough. We need a more comprehensive approach to encourage diversity in our firms, and it starts with simple awareness of the issue. Other things we need to support are early STEM programs for girls, minorities, and those in under-privileged schools. We need to eliminate implicit bias in hiring practices. We need to create detailed policies and benefits that support and motivate a diverse staff. All of this is just the beginning. In the coming months, I’ll be exploring more of the stories about people and firms that embrace diversity in all its forms, and the positive impacts this can have on an organization and the greater AEC universe. If you have a story you want to share, don’t hesitate to reach out to me. CHRISTINA ZWEIG NIEHUES is Zweig Group’s director of marketing and awards. Contact her at czweig@zweiggroup.com.

makes this battle for diversity much more difficult to win. I don’t think a lot of outward sexism, racism, and other overt discrimination is present in many firms. What does occur is far less blatant, much more difficult to tackle, and starts early in life, even before people have a chance to consider the AEC profession as a career path. “I don’t think a lot of outward sexism, racism, and other overt discrimination is present in many firms. What does occur is far less blatant, much more difficult to tackle, and starts early in life, even before people have a chance to consider the AEC profession as a career path.” In Zweig Group’s 2018 Recruitment & Retention Survey , we asked, “What does your firm do to ensure a diverse, nondiscriminatory culture?” Eighty-seven percent said,

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

ZWEIG GROUP 2019 EVENT SCHEDULE

MAR 13-15 27

Successful Successor Roundtable Excellence in Project Management

New Orleans, LA Kansas City, MO

APR MAY JUN JUL OCT

CEO Roundtable Retreat Race Car Driving Experience The Principals Academy

10-12 24-25

Scottsdale, AZ Dallas, TX

Leadership Skills for AEC Professionals

22-23

San Diego, CA

The Principals Academy Real Marketing & Branding for AEC Firms AEC Business Development Training

5-6 20 21

Seattle, WA Chicago, IL Chicago, IL Minneapolis, MN

The Principals Academy

17-18

Elevate AEC Conference Real Marketing & Branding for AEC Firms AEC Business Development Training The Principals Academy

2-5 10 11 31-Nov. 1

Las Vegas Houston, TX Houston, TX New York, NY

NOV 13-14

Raleigh, NC Leadership Skills for AEC Professionals

For more information

www.zweiggroup.com/seminars/

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

P R O F I L E

Conference call: Jill Wells Heath President and CEO of CALYX Engineers + Consultants (Hot Firm #26 for 2018), a 224-person firm based in Raleigh, North Carolina.

By LIISA ANDREASSEN Correspondent

A s president and CEO of CALYX, recently acquired by NV5, Jill Wells Heath sets the strategic direction for the firm, executes the company’s vision, and cultivates the firm’s business relationships and alliances. In 1993, Heath started with the company as an outside CPA consultant, and then as its contract CFO. In 2003, she became its full- time CFO; in 2006, president; and in 2008, the company’s 15th anniversary, she became CEO. In reaction to CALYX’s $36 million cash and stock acquisi- tion by NV5, Heath says, “This is a wonderful step forward for CALYX. We will provide NV5 a strong and successful presence in the southeast, and NV5 will provide us the op- portunity to build upon our service offerings, project op- portunities, technology, and talent.” A CONVERSATION WITH JILL WELLS HEATH. The Zweig Letter: Have you ever closed an under-per- forming office? If so, tell us about it. Jill Wells Heath: Unfortunately, I have had the terrible ex-

perience of closing an office. When the economy took a turn in 2008, we were forced to downsize and closed our offic- es in Jacksonville, Florida, and Columbia, South Carolina. The economy was the driving factor. Offices are expensive to have and maintain, and closing them was necessary. But the experience left me with internal scars. “Our value is too often dictated by our time spent and hourly rate. Yes, technology is increasing efficiency, but the value is in our deliverable, and demand for our services is high.” TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your profes- sional life? JWH: This is the best time! When your company is doing well, it’s fun to run. Trust me, I’ve run it in the best of times

THE ZWEIG LETTER Decem

YEAR FOUNDED: 1993 HEADQUARTERS: Raleigh, NC OFFICES: 5 in 3 states: ❚ ❚ North Carolina ❚ ❚ South Carolina ❚ ❚ Georgia NO. OF EMPLOYEES: 224 at CALYX, but now that it’s an NV5 company, the total is a combined 2,200 SERVICES: Bridge and structure design, building structures, construction services, cultural resources, environmental services, land development, surveying, traffic services, transportation, transportation planning, utility services, water resources. MISSION: To enhance the quality of life within its communities by providing innovative engineering and environmental solutions. WORK ENVIRONMENT: CALYX is consistently recognized for its work environment as demonstrated below: ❚ ❚ Healthiest Employers – Atlanta, Charlotte, and Triangle Business Journals ❚ ❚ Family Friendly 50 List – Carolina Parenting ❚ ❚ Fit Friendly Workplace, Gold Achievement – American Heart Association ❚ ❚ Employer of the Year – WTS ❚ ❚ Top 500 AEC Firms – Engineering News-Record ❚ ❚ Top Design Firm Nationally – Southeast Construction ❚ ❚ Best Firm to Work For – CE News

and the worst of times. 2018 has been CA- LYX’s best year ever – hands down. And be- cause we’re doing so well, an amazing com- pany, NV5 , has acquired us, which just sets us up to do even more. The future is bright. “You know, engineers can be entrepreneurs. Ours take an interest in the success of the company and feel a responsibility to keep it thriving, and it shows.” TZL: How do you promote young and new leaders as the firm grows? JWH: We often promote from within, and we’ve had much success doing it. Our envi- ronmental group manager in North Caro- lina worked his way up through the group, as did our utility services program man- ager. Our growing GIS team is young and amazing. We always look inward. TZL: In one word or phrase, what do you describe as your number one job respon- sibility as CEO? JWH: To take care of my people. It’s my job to care for, and encourage, everyone here at CALYX. TZL: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours? JWH: We are involved with ACEC, which advocates for the engineering industry on this very topic. To price on value, we must unite as an industry to create a shift in the perspective of our clients. We sell intel- lectual capital and therein lies our value. Yet, our value is too often dictated by our time spent and hourly rate. Yes, technol- ogy is increasing efficiency, but the value is in our deliverable, and demand for our

services is high. I truly believe that togeth- er, we can bring about change. TZL: There is no substitute for experi- ence, but there is pressure to give re- sponsibility to younger staff. What are you doing to address the risk while pur- suing the opportunity to develop your team? JWH: We welcome the drive and inspira- tion that our young employees bring to the table. We maintain a mix of new and estab- lished talent so that we can properly men- tor, teach, and monitor. We have an excel- lent QA/QC process for all services. We consider it our responsibility to help the next generation rise to the top. TZL: Engineers love being engineers, but what are you doing to instill a business culture in your firm? JWH: CALYX is a transparent company. We share our financials and discuss them companywide. You know, engineers can be entrepreneurs. Ours take an interest in the success of the company and feel a respon- sibility to keep it thriving, and it shows. “We’ve created an amazing culture which has landed us on Best Firms to Work For, Family Friendly, and Healthiest Employers lists. We spend as much time on retention as we do on recruitment.” TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue? JWH: At CALYX, half of our leaders are women. That’s not frequently found in civ- il engineering. We believe that diversity See CONFERENCE CALL, page 8

mber 10, 2018, ISSUE 1275

BUSINESS NEWS OZ ARCHITECTURE RECOGNIZED BY FAST COMPANY IN THE MAGAZINE’S 2018 INNOVATION BY DESIGN AWARDS OZ Architecture has been recognized by Fast Company as a finalist in its annual Innovation by Design Awards for 2018 in the “Spaces, Places, and Cities” category for its design and master plan of the new McMurdo Station in Antarctica. Innovation by Design is the only competition to honor creative work at the intersection of design, business, and innovation. The awards, which can be found in the October 2018 issue of Fast Company recognizes people, teams, and companies solving problems through design. Fast Company is honoring an influential and diverse group of leaders in fashion, architecture, graphic design and data visualization, social good, user experience, and more. “McMurdo Station – a 58-year-old research center in Antarctica – is finally receiving a master plan and design facilities that will significantly improve the livability, efficiency and sustainability of this entire Antarctica- based community becoming an icon of American leadership in science, architecture and engineering,” said Rick Petersen, principal at OZ Architecture. Never intended to be a permanent settlement, McMurdo Station has grown into a disparate outpost of more than 100 inefficient structures over 164 acres, with no central planning. Today, the approximate 1,000 summer workers and 250 year-round residents at McMurdo must battle the harsh Antarctic elements for simple tasks such as walking from one building to the next for a meal, visiting a science lab, or transporting goods from a warehouse. This not only leads to difficult and time-consuming

experiences for staff, but also results in heat energy loss and increased carbon emissions. What’s more, the station lacks many features critical to the workers’ ongoing wellness. The new plan will consolidate more than 100 buildings into 18, providing the community with unprecedented efficiencies. A new 300,000-square-foot campus will emphasize a higher quality of life for its residents, promote environmental stewardship, add progressive technology, and dramatically improve logistics and energy efficiency for the important work being done at McMurdo. Fast Company editors and writers spend a year researching and reviewing applicants for the awards. This year, winners and honorees were selected in the following categories: Apps and Games; Experimental; Fashion and Beauty; General Excellence; Graphic Design and Data Visualization; Health; Products; Retail Environments; Social Good; Spaces, Places, and Cities; Students; Timeless Design; User Experience; Web Design; and Workplace. Fast Company is also recognizing Google as the title’s first-ever Design Company of the Year. Headquartered in the vibrant RiNo Arts District of Denver, OZ Architecture has been at the forefront of design since 1964. The OZ team includes over 165 architects, designers, strategists, and artists whose broad range of expertise and passions create a variety of project types on every continent. The firm is recognized for designing award-winning projects that make a positive and lasting contribution to the community. BSA NAMED A CERTIFIED ESOP BSA , a national integrated design firm, has been named a Certified ESOP by Certified EO, a certification program for employee-owned companies.

Founded in 1975, BSA has always been owned by employee shareholders, but it opened ownership to all employees earlier this year when it launched its first-ever employee stock ownership plan. “Becoming an ESOP was a logical step for BSA since the firm has always believed in the power of employee ownership,” said BSA President Melissa Davis. “By empowering all employees as owners, we believe we can even more deeply engage their hearts and minds in the work we do for our clients.” Davis added, “Then, as owners, those employees can more fully participate in the successes they create.” BSA far exceeded the Certified EO’s minimum standards for certification, which require that a firm must be at least 30 percent employee- owned, must provide ownership access to all employees and cannot have highly concentrated ownership. Firms applying for certification must have these standards and other information assessed and confirmed by Certified EO. BSA, a national, integrated design firm, creates inspired solutions that improve lives. BSA provides architecture, engineering, interior design, and planning services for spaces that support and enhance healing, learning, and discovery – facilities known as LifeStructures. Certified EO is a marketing and certification program that helps employee-owned companies capture the potential of EO to increase sales and recruit top talent while spreading awareness of this vital concept. Certified EO helps consumers, businesses, and employees know when they’re dealing with EO companies.

CONFERENCE CALL, from page 7

Best Firms to Work For, Family Friendly, and Healthiest Employers lists. We spend as much time on retention as we do on recruitment. Just last year, we had an independent firm conduct an anonymous employee opinion survey. They were amazed when we had a 91 percent overall satisfaction rating. That rarely happens in our industry. As a result, we have a large core of key staff with 10-25 years at the com- pany. TZL: Benefits are evolving. Are you offering any new ones due to the changing demographic? JWH: Yes. We are always looking for ways to improve our benefits package. In recent years, we have implemented bio- metric screenings, health coaching, a telemedicine program to receive care without physically going to the doctor, nutri- tionist counseling, and more. It’s important to help employ- ees stay healthy and balanced.

makes us better and we strive to instill it when we’re build- ing our company, or putting a team together for a project. We’re committed to creating a diverse environment and are also proud to be an equal opportunity and affirmative ac- tion employer. “At CALYX, half of our leaders are women. That’s not frequently found in civil engineering. We believe that diversity makes us better and we strive to instill it when we’re building our company, or putting a team together for a project.” TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around? JWH: What aren’t we doing? It’s a top priority for CALYX. We’ve created an amazing culture which has landed us on

TZL: Are you currently pursuing the R&D tax credit?

JWH: Yes.

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

O P I N I O N

W hen we think of improving, we often turn to project management. It makes sense. Projects are how money flows into and out of our organizations, and it seems like the natural location to recover lost dollars for our bottom lines. As an industry, we generally leave a lot of money on the table and drive up costs with our lack of effectiveness in management and training. Greater than project management

Without talent, we can’t serve clients, and we have no business. There is no way to separate them, and everything we do needs to support and enhance this relationship. The reality for most organizations, however, is that a much greater effort is spent on client development, engagement, and relationship “We have historically relied on salaries, bonuses, and the prospect of a handful of employees being able to ‘one day rise to the top’ as organizational investments and motivators. These do not have the effect they once did.”

Effective contracting, timely monitoring, reporting, and invoicing, as well as holding the line on scope, schedule, and budget until we receive a change order, is essential. However, this is really only a “fourth quarter” strategy. Focusing solely on these project details is also exhausting, requires almost perfect execution, and leaves too much to chance. If we are looking for greater growth and profits, we need a high-level of project and business acumen for sure, but that alone is not enough. To succeed today and into the future, we also need an equally high-level of acumen when it comes to fulfilling our mission, and in how we treat our people, which is the focus of this piece. OUR FUNDAMENTALS ARE OFF. Most organizations to- day are under-invested on the “talent side.” The “talent-client” relationship is fundamental to business. Without clients, we have no business.

Peter Atherton GUEST SPEAKER

See PETER ATHERTON, page 10

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

PETER ATHERTON, from page 9

effective in training our managers, while at the same time establishing our desired culture and a set of behaviors designed to help us all thrive. Culture, like business strategy, diversity, innovation, and sustainability, needs to be owned and modelled by leadership. It cannot be delegated, ignored, tabled, or left to chance if we want to succeed. Do all your principals model what we desire in terms of culture and behavior? Do they take time each week to connect with direct reports and engage in ways that drive results? If we are not doing these, how can we really be surprised when results fall short? “To realize more success today and to position you and your firm for greater growth and profits in the future, we will need to augment our traditional project management skills with higher levels of ‘people skills’ through well designed employee engagement and talent management practices.” 5 STEPS TO TAKE. To begin to design and implement our best “people strategy,” we can start with these five steps: 1) Become more aware of what’s happening, and why, within our organizations as it relates to talent engagement and manage- ment. 2) Care about culture and performance, desire to be different and better, and realize these are outcomes, not inputs or ac- tivities. 3) Schedule a time this week and meet with each direct report. 4) Learn more about your people. Model what it means to lever- age your skills and position to create organization, client, and talent alignment through a combination of coaching, mentor- ing, and the removal of hurdles outside of their control. Then repeat. 5) Update and amend your strategic plan, training, employee en- gagement, and talent management systems to further expand their reach and your success. Strong markets don’t last forever, and sustainable growth and success don’t happen by accident. To realize more success today and to position you and your firm for greater growth and profits in the future, we will need to augment our traditional project management skills with higher levels of “people skills” through well designed employee engagement and talent management practices. PETER ATHERTON, P.E. is an industry insider having spent more than 20 years as a successful professional, principal, major owner, and member of the board of directors for a high-achieving AEC firm. Pete is now the president and founder of ActionsProve, LLC, author of Reversing Burnout. How to Immediately Engage Top Talent and Grow! A Blueprint for Professionals and Business Owners , and the creator of the I.M.P.A.C.T. process. He can be reached at pete@actionsprove.com.

management than on employee development, engagement, and relationship management. We have historically relied on salaries, bonuses, and the prospect of a handful of employees being able to “one day rise to the top” as organizational investments and motivators. These do not have the effect they once did. EMPLOYEE ENGAGEMENT IS MISUNDERSTOOD AND FRAGMENTED. We all care about ourselves. More than 40 years ago, Zig Ziglar reminded us that we are always dialed into the same radio station, WIIFM, short for “What’s in it for me?” In that re- gard, nothing’s changed from one generation to the next. As leaders, we can’t be frustrated or complain about people who don’t automatically think or act like us. The way we care for and act toward others is what will help change behavior. It is also what will make us different, better, and allow us to have greater influence. Employee engagement today is not about leaders or organizations, and it’s not just about projects, profits, salaries, and input. Employee engagement is about an employee’s state of mind. More specifically, it’s about how a career, an opportunity, a leader, an organization, and a supervisor can help an individual win at both work and life. To improve our success, we need to rethink and redesign our employee engagement strategy. We also need to integrate aspects related to performance, perks, wellness, impact, teamwork, training, and growth. To create a positive and high-performing culture, our best talent needs to want to be on our teams and with their leaders and supervisors. In order to enjoy the bottom-line benefits of lower turnover and reduced absenteeism – and greater productivity and profitability that result from well designed and executed employee engagement – we need a higher degree of top-down awareness and action. OUR MANAGERS ARE NOT EQUIPPED AND DON’T HAVE ROLE MODELS. Whether through our lack of awareness, our busy sched- ules, or both, most managers learn how to manage “on the fly,” through “trial by fire,” or “in the school of hard knocks.” This can sound admirable, even nostalgic, until we take time to see how this less-than-ideal approach hurts our organizations, especially as we take note that: ❚ ❚ Most managers continue to be promoted based on their tech- nical skills. ❚ ❚ Employees most often leave managers, not organizations. ❚ ❚ The relationship with one’s direct supervisor has a 70 percent variance on employee engagement. Why would we as leaders and organizations leave so much to chance? Why would we take the risk inherent with unplanned and costly employee turnover? In addition to new training and redesigned incentive systems, “on-the-job-modeling” can be immediately

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

O P I N I O N

T he Accepted-Work Doctrine – also known as the Acceptance Doctrine, the Completed and Acceptance Rule, or, in Florida, the Slavin Doctrine – deals with the liability of contractors and design professionals for defects after completion of the project. Under the Accepted-Work Doctrine, contractors and designers are relieved of liability to injured third parties after a completed project goes back to the owner. Is there a doctrine in the house? Part 5

William Quatman GENERAL COUNSEL

Under this doctrine, once the owner has accepted the work, a contractor is not liable to third parties who have no contractual relations with it, for damages later suffered by reason of its negligence in the performance of its contract duties. Essentially, a contractor, architect, or engineer is relieved of liability to injured third parties caused by a patent, or obvious, defect after control of the completed premises has been turned over to the owner. Under this doctrine, the work of the contractor must be fully completed and accepted before the owner becomes liable and the contractor is exonerated for injuries to third parties caused by the defective work. WHY ADOPT SUCH A RULE? The rationale for the Accept- ed-Work Doctrine is that by occupying and resum- ing possession of the work, the owner theoreti- cally deprives the contractor of the opportunity to rectify its wrongs. Before accepting the work as

being in full compliance with the terms of the con- tract, the project owner is presumed to have made a reasonably careful inspection thereof, and to know of its defects. Therefore, if the owner takes the project in a defective condition, the owner ac- cepts the defects as their own. The concept is embodied in Par. 12.3 of the AIA A201 General Conditions (2017 ed.), under which the project owner has the right to accept the contractor’s work with defects and to negotiate a reduction in the contract price for that defective condition. Presumably, such an owner would also assume the risk of those known defects. Not only does this doctrine provide an affirmative defense for contractors as to patent construction defects, but it has been applied to design professionals as well for patent defects in their designs.

See WILLIAM QUATMAN, page 12

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

WILLIAM QUATMAN, from page 11

would appear to create an exception in Arizona for design- build or EPC contractors who furnish their own designs and plans. DOCTRINE ABOLISHED IN MANY STATES. More than 30 states have abolished the Accepted-Work Doctrine, including Con- necticut. Texas abandoned the doctrine in 1962, noting that the exceptions “have largely emasculated the rule.” Arkansas adopted the Accepted-Work Doctrine in 1910, but repudiated it in 1999, stating: “[T]he accepted-work rule has been thoroughly criticized as anachronistic and has provided unwarranted exceptions to general negligence principles. It has been said to have provided harsh results and many exceptions have been adopted to ameliorate such harshness. …We believe it would be a mistake to continue to apply a doctrine based upon privity of contract when the third party’s injury is foreseeable.” HOW ABOUT DESIGN PROFESSIONALS? In a 2012 California case, a theater patron sued an architect for personal injury for failure to require contrast marking stripes on stairs. The appellate court held that under the Accepted-Work Doc- trine, “When the owner has accepted a structure from the contractor, the owner’s failure to attempt to remedy an obviously dangerous defect is an intervening cause for which the contractor is not liable.” Here, it was undisputed that the architect’s design called for contrasting stripes to be placed on the stairs and that, “The absence of stripes on the stairs is obvious and apparent to any reasonably obser- vant person.” At the time the project was completed and accepted, there were no stripes on the stairs. Likewise, in a 1997 Oklahoma case, a plaintiff sued the architect of a homeless shelter for injuries sustained when he fell off a retaining wall where he was sleeping. The state supreme court held that the dangerous condition was open and obvious as matter of law and the architect could not be liable for negligent design, as any hazard associated with the wall was open and easily discernible. Evidence showed that the architect had pointed out the condition, and recommended guardrails, but the building’s owner declined to install them. However, in a 1995 Montana case, the court rejected this defense when a store employee was injured after a remodeling project, when he fell through a suspended ceiling. The court held that the architect violated the building code and that the Accepted-Work Doctrine was no longer available as a defense, asking the question: “How then can we logically conclude that simply because the professional has completed his or her services and the contractee has paid for those services, liability for the contractor’s negligence should shift to the innocent and uninformed contractee?” The court said: “We cannot.” TAKEAWAYS? The law varies from state to state, and changes over time. It is important to the defense of third-party claims to retain all documentation showing that the owner accepted the work, such as a sign-off on final plans, or a certificate of substantial and final completion. This may be the key to asserting the Accepted-Work Doctrine as a defense. WILLIAM QUATMAN, FAIA, Esq., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com.

TRACING THE ROOTS OF THE DOCTRINE. In the U.S., some trace the Accepted-Work Doctrine to a 1919 Connecticut construc- tion case in which the building contractor was not liable to a passerby who was killed when struck by a faulty cornice built by the contractor. The court stated that the plaintiff’s injury, which occurred after the contractor had completed the work, was proximately caused solely by the owner’s fail- ure to inspect and guard against the cornice’s deterioration. The court noted that although the contractor remained li- able to the owner after completion and acceptance of the work, the contractor’s liability did not extend to third par- ties. Nearly 100 years later, that logic still prevails in states that adhere to the Accepted-Work Doctrine. However, not all states still subscribe to the doctrine, due to the harsh results it can produce for innocent third parties clonked on the head by a falling cornice! THE MAJORITY RULE (FORESEEABILITY DOCTRINE). As late as the 1950s, the majority of jurisdictions adhered to the Ac- cepted-Work Doctrine but, since then, the rule has been severely criticized and is now deemed the minority rule. Today, a majority of states have instead adopted the so- called “Foreseeability Doctrine,” which provides that a con- struction contractor is liable for injury or damage to a third party as a result of defective work – even after completion of the work and acceptance by the owner – where it was reasonably foreseeable that a third person would be injured by such work due to the contractor’s negligence, or its failure to disclose a dangerous condition that was known to the contractor. The Foreseeability Doctrine, or Rule of Foreseeability, is expressed in Restatement (Second) of Torts § 385, which states: “One who on behalf of the possessor of land erects a structure or creates any other condition thereon is subject to liability to others upon or outside of the land for physical harm caused to them by the dangerous character of the structure or condition after his work has been accepted by the possessor, under the same rules as those determining the liability of one who as manufacturer or independent contractor makes a chattel for the use of others.” EXCEPTIONS TO THE RULE. One court refused to apply the Accepted-Work Doctrine, pointing out that the “rule of non-liability with its many exceptions is more cumbersome than traditional negligence analysis,” as the exceptions to the rule nearly swallow up the rule. One primary exception is known as the “imminently dangerous exception,” which imposes liability on the contractor after acceptance where: 1)The defect is imminently dangerous to others. 2)The defect is so hidden that a reasonably careful inspection would not reveal it. 3)The contractor knows of the defect, but the owner does not. Essentially, under this exception, a hidden, or “latent” defect, is not covered by the doctrine. Under another limitation, a 1991 Arizona case held that the doctrine applies only when the contractor has no discretion and merely follows the plans and specifications provided by the owner. The court noted that, “If the contractor is hired to exercise its discretion, special skills, and knowledge to prepare a design, and the owner does not control the design details, the contractor cannot invoke the rule.” This

THE ZWEIG LETTER December 10, 2018, ISSUE 1275

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