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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 J u l y 2 3 , 2 0 1 8 , I s s u e 1 2 5 7

Profit sharing

The things that can hurt your business

Zweig Group’s 2018 Incentive Compensation Survey yields a data point that speaks volumes about the upswing in the AEC market. Firm- wide profit sharing as a percentage of net service revenue has grown by an impressive 200 percent, from 1.6 percent in 2013 to 4.8 percent this year.

A /E firms are fragile things. When things are going well, they grow and make decent profits. The people who work there generally feel good and the future seems bright. When things aren’t going well, morale stinks. Money is being lost, not made. The firm is getting smaller instead of growing. And the future seems cloudy at best, doubtful at worst. What are some of the factors that lead to that unhealthy condition – the things that really hurt your business – and darken your prospects – and how can you avoid them? Here are my thoughts: 1)Dangerous employees who do stupid things. I’m talking about the employee who risks the entire firm’s reputation to steal $1,500 worth of concrete from a client’s job. Or one who charges a pizza from Domino’s, eaten at home, to a client job just because they felt they deserved it. Or the one who is a hot head and writes hostile emails to your best client over the slightest little disagreement. These people cannot be tolerated and you’ll never have enough time to effectively police them. They need to go! 2)No attention paid to marketing, so when work is needed, the pipeline has lost its “prime.” It’s so easy to delude yourself that this easy-to-get work situation will continue forever. While I am generally bullish on the business and the prospects for virtually any firm to differentiate itself and do better than its competitors, I know for a fact you cannot

“When things aren’t going well, morale stinks. Money is being lost, not made. The firm is getting smaller instead of growing. And the future seems cloudy at best, doubtful at worst.”

Mark Zweig

OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/

F I R M I N D E X Ames & Gough. .................................... 12

MORE COLUMNS xz GUEST SPEAKER: Positive trends Page 3 xz GUEST SPEAKER: Office bullies Page 9 xz GUEST SPEAKER: Heightened growth, heightened risk Page 11

Brudis & Associates, Inc. . ....................... 6

Burns & McDonnell . .......................... 4, 10

Harley Ellis Devereaux.............................2 Conference call: Tony Brudis 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

ON THE MOVE ENRIQUE CENICEROS JOINS HARLEY ELLIS DEVEREAUX AS ASSOCIATE AND STUDIO LEADER IN SAN DIEGO AND LOS ANGELES OFFICES Enrique Ceniceros, RA, LEED AP BD+C, has been hired by national architecture firm Harley Ellis Devereaux to oversee science and technology and higher education projects in the firm’s Southern California offices. Ceniceros joins HED with 27 years of experience in architecture, laboratory planning and design. He is widely respected for his pragmatic approach to design and his ability to lead multiple user groups, consultants, and construction professionals. His extensive portfolio includes higher education research and learning environments, bio- pharmaceutical facilities, biomedical R&D laboratories, commercial R&D facilities, manufacturing facilities, and aerospace and engineering laboratories for clients that include the University of Southern California, California Institute of Technology, Jet Propulsion Laboratory, City of Hope, University of California Irvine, Henkel Industries, Pfizer, Edwards Life Science, Pepsi Cola, and Karma Fisker Automotive. “We are very excited to have Enrique join our Southern California team,” says Neville Willsmore, managing principal of the San Diego office of HED. Brent Miller, AIA, LEED AP, Managing Principal of the Los Angeles office concurs. “Enrique’s experience and perspective are strengthening our science and technology

sector capabilities for both corporate and higher education labspace.” Prior to joining HED, Ceniceros established himself as an expert in the adaptive reuse of commercial and historic structures into state- of-the-art research and manufacturing facilities. He understands that a successful project should inspire innovation and collaboration for its occupants while embracing its location and context. “I’m thrilled to join the HED team and collaborate in the growth of the life sciences and manufacturing sectors,” Ceniceros says. “HED’s commitment to improving the communities they serve is especially relevant in these fields. Supporting research institutions and assisting in the advancement of science and manufacturing are pursuits that both HED and I feel strongly about.” Founded in 1908, Harley Ellis Devereaux seeks creative solutions that have a positive impact for its clients, the community, and the world. HED has earned a reputation for excellence in all facets of architecture, including design, consulting, engineering and planning services. The firm serves clients in a broad range of market sectors including workplace, housing, mixed use, science and technology, healthcare, higher education and pre-K-12 and community education. HED has offices in six locations around the United States.

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

stop marketing. And by “stop” I mean you can’t stop spending money on marketing. If you do, you’ll have a hard time getting it going quickly enough to make things work when you need them to. Consistent marketing efforts (i.e., expenditures), are essential to your survival. 3)Unhealthy partner relationships at the top. When the top people don’t get along well – or worse, are openly fighting with each other – irreparable harm to the firm can be caused. It makes everyone uncomfortable and on edge. These relationship problems crop up for any number of reasons – jealousy, perceived slights, favoritism from the se- nior partner, and on and on. But no matter. They must be solved or someone has to go. 4)A lackadaisical attitude toward the numbers. This is always a cancer. Maybe every- one has it too good. Maybe people are getting lazy. Maybe success has come easily so no one worries about it. Maybe people don’t know the numbers to track. Whatever the rea- son, a rigorous discipline to track/report/analyze the numbers on how the business as a whole is performing is essential to continued success. Not having this discipline almost always precedes big financial problems. 5)A lack of interest in, and attention paid to, the business by the people at the top. Sometimes the owners get burnt out. They lose their enthusiasm for the business. Some even lose their enthusiasm for life. That results in inattention. They work less. They think less. It hurts the business. Growth stops. Profits evaporate. Energy dissipates. Problems ensue! There are other things that can hurt your business but these are the “biggies.” Any of them sound familiar to you? 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 July 23, 2018, ISSUE 1257

O P I N I O N

Positive trends

T his year’s Zweig Group award winners – Best Firms to Work For and Hot Firms – have been announced. As the awards manager, I’m on the front lines, so I see a lot of the things these successful firms are doing. Having gone through the grading process this year, I can say without a doubt that the trend lines are impressive. This year’s group of Best and Hot Firms provides a treasure trove of information across thousands of data points, from employees up to the C-suite.

a select group of professionals who have been told they are being groomed for future leadership positions. Seventy-two percent of firms said they share their working strategic business plan with “The Best Firm survey is our largest source of data that we collect about the industry. This year, we received more than 13,000 responses totaling more than 1.6 million data points from employees and the C-suite. The results are telling.”

Kyle Ahern GUEST SPEAKER

The Best Firm survey is our largest source of data that we collect about the industry. This year, we received more than 13,000 responses totaling more than 1.6 million data points from employees and the C-suite. The results are telling. S-corps continue to lead the way for ownership type, with just over 50 percent of responding firms identifying as an S-corp. That is followed by C-corps and LLCs at 22 percent and 15 percent, respectively. Ownership transition has been a hot topic across the industry, and to an extent, the Best Firm survey bears that out. Sixty-five percent of firms said they have a select group of professionals who receive leadership training, and 61 percent have

See KYLE AHERN, page 4

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

BUSINESS NEWS JENNIFER TAYLOR OF BURNS & MCDONNELL NAMED ENGINEER OF THE YEAR BY ASCE KANSAS CITY Jennifer Taylor, PE, a senior civil engineer at Burns & McDonnell , is being honored as Engineer of the Year by the American Society of Civil Engineers Kansas City Section. Taylor received the honor for her commitment to serving her profession and leadership in ASCE at the national and section levels. “Jennifer has a very diverse background and proven track record of stepping up and meeting challenges,” says Kenda Caskey, vice president, Oil, Gas, and Chemical Group, Burns & McDonnell. “She leads by example, immersing herself in delivering solutions for clients and empowering others to do the

same. She also inspires others to volunteer their time and resources by demonstrating contagious passion and enthusiasm.” As part of the Oil, Gas, and Chemical Group at Burns & McDonnell, Taylor provides civil engineering services for projects ranging from railroads to ponds, keeping waterways safe for clients. Taylor also specializes in stormwater management and highway engineering, providing a unique perspective when combined with her dual bachelor’s degrees in business and civil engineering. Taylor has been an active ASCE member since college, serving as a past Kansas City Section president and member of the national

organization’s Sustainability Committee. In addition to her work with ASCE, Taylor is a Girl Scouts Daisy Troop co-leader and Blue River Watershed Association Board president. Burns & McDonnell is a family of companies made up of more than 6,000 engineers, architects, construction professionals, scientists, consultants, and entrepreneurs with offices across the country and throughout the world. Burns & McDonnell strives to create amazing success for our clients and amazing careers for our employee-owners. Burns & McDonnell is 100 percent employee-owned and is proud to be on Fortune ’s 2018 list of 100 Best Companies to Work For.

KYLE AHERN, from page 3

a professional development curriculum that will lead to career advancement, and 82 percent of employees can use work time for professional development/continuing education. “Best Firms and Hot Firms continue to distinguish themselves in a highly competitive industry by taking care of their employees and improving their operations.” Our Hot Firm list also provides us with great information about the top growing firms in the industry. Firms on this year’s list saw an average of 76 percent growth over the last three years, and grew by an average of $25.2 million over the same time frame. Firms that placed in the top 10 averaged 133 percent growth and grew by an average of $96.8 million over the last three years. While the percentage growth has continued to slow down over the last few years, dollar revenue growth is up. Efficiency for Hot Firms also continues to improve. Net service revenue per employee for the top 100 reached $187,664, and for the top 10, it was $252,442. M&A activity remains strong, too, with 40 percent of the top 100 firms buying or merging with another firm, and with the average number of transactions being 3.3 over the last three years. M&A is a great way for firms to continue to grow and add talent at a time when organic growth can be difficult, and the survey tells us Hot Firms are finding ways to execute their growth strategies. I could go on and on about the treasure trove of information mined from our Best Firm and Hot Firm surveys, but with what I’ve shared, I think you get the point. Best Firms and Hot Firms continue to distinguish themselves in a highly competitive industry by taking care of their employees and improving their operations. To show appreciation for all their hard work, Zweig Group is celebrating their achievements at the annual Hot Firm & A/E Industry Awards Conference on September 20-21 at the Fairmont in Dallas. Grab your cowboy hat and boots and join us! KYLE AHERN is awards manager at Zweig Group. Contact him at kahern@zweiggroup.com .

all staff, up from 69 percent in 2016. However, less than 50 percent of firms said they have a formal ownership transition plan in place. At Zweig Group, we have an open-book management philosophy. Revenue data is shared firm-wide on a monthly basis. We believe this is very important to the positive culture of our firm. Twenty percent of survey respondents said they share revenue data firm-wide on a monthly basis, while 23 percent share it annually, 7 percent semi- annually, and 17 percent quarterly. On the other hand, 17 percent don’t share revenue data firm-wide at all. With the labor shortage in the industry, firms are coming up with creative ideas to attract top talent. Different options for employees such as flexible starting times, condensed work weeks, and other perks continue to rise. Seventy-one percent of firms say they offer these options and 60 percent offer telecommuting for select staff. Referral bonuses and performance bonuses were the most common types given in 2017, at 72 percent for both of them. “With the labor shortage in the industry, firms are coming up with creative ideas to attract top talent. Different options for employees such as flexible starting times, condensed work weeks, and other perks continue to rise.” The big headliner was the sheer amount of bonuses handed out to employees. According to our survey data, a collective $224.3 million was paid out to Best Firm employees in 2017, an obvious indicator that the AEC industry is healthy. The average number of all paid time off offered by our Best Firms in 2017 was 18 days, with eight more days given for holidays. Scores were up across the board for how employees felt about different aspects of their compensation, signaling strong compensation growth and meaningful benefits. For example, 57 percent of employees say their firms offer

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

VENUE: Hotel Monteleone It’s been said that the French Quarter begins in the lobby of Hotel Monteleone. This venerable New Orleans hotel sits majestically at the foot of Royal Street and oers valet parking with two garages. Our guests have the best point of departure for all things New Orleans. NEWORLEANS AUG 15-17 AEC rm. This two-day event includes educational and networking sessions in an upscale setting and is part of Zweig Group’s new Experience Education series. The program is led by industry experts with extensive experience working with and leading AEC rms. The two-day agenda covers areas of discussion determined by those in attendance. It’s presented in a guided discussion format to encourage discussion among all attendees. The Successful Successor roundtable is an exclusive event for income strategic leaders of rms and newly-minted strategic leaders of these rms. The purpose of this seminar is to discuss the highest-level issues facing newcomers to the c-suite and to individuals who are preparing to take on a CEO role in today’s

zweiggroup.com/successful-successor-seminar/

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

P R O F I L E

The 15th Street roadway improvement project in Washington, D.C., that won an award from the ACEC.

Conference call: Tony Brudis President and founder of Brudis & Associates, Inc. (Hot Firm #36 and Best Firm Multi- discipline # 51 for 2016), a 90-person firm based in Baltimore.

By LIISA ANDREASSEN Correspondent

“W hile I like to say we’re like the Marine Corps and are ‘always looking for a few good men,’ finding talented employees is difficult,” Brudis says. “We actively seek individuals who can help us grow, sometimes even when an in-house position is not available.” A CONVERSATION WITH TONY BRUDIS. The Zweig Letter: There are A/E leaders who say profit centers create corrosive internal competi- tion for firm resources. What’s your opinion on profit centers? TB: The term corrosive seems excessive, but profit centers can create a very competitive atmosphere, especially when they’re tied to profit margins, growth, and individual performance evaluations. Management and profit centers must target re- sponsible goals and expectations. These areas must

include opportunities for the overall growth of the company and commitment from the profit center resources. TZL: What’s your policy on sharing the firm’s fi- nancials with your staff? Weekly, monthly, quar- terly, annually? And how far down into the org chart is financial information shared? TB: Financial information is shared with senior management staff on a monthly basis. Overall, general company statements are provided to the entire office during our annual staff meeting TZL: The design-build delivery model appears to be trending upward. What are the keys to a suc- cessful design-build project? What are the risks? TB: At present, BAI is only involved in preparing RFP documents for design-build projects.

Tony Brudis, President & Founder, Brudis & Asso- ciates, Inc.

THE ZWEIG LETTER Ju

TZL: The talent war in the A/E indus- try 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? TB: We try to keep our leadership in- formed on the overall company sta- tus and mission, and letting manage- ment take the lead role in developing the growth of the company – either organically or through acquisition. By growing and expanding, additional management and technical opportu- nities are provided for leadership. We try to appeal to everyone in the firm for these new endeavors. “We encourage [entrepreneurship]. If staff has a good idea or suggestion, we listen. As senior management, we are open to different ideas/ changes.” TZL: As you look for talent, what po- sition do you most need to fill in the coming year and why? TB: While I like to say we’re like the Marine Corps and are “always looking for a few good men,” finding talent- ed employees is difficult. We actively seek individuals who can help us grow, sometimes even when an in-house po- sition is not available. We believe most of our needs in the upcoming year will include project engineer level person- nel with an experience range of four to eight years in the transportation engi- neering-related fields. 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 gen- eration of owners? TB: I am in somewhat of a unique po- sition. I have three children who have actively taken positions within the company. Each of them has worked for the firm, at various positions, for sev- eral years. The experience they have learned will lead to the next genera- tion of ownership. TZL: 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? TB: In general, our marketing depart- ment typically contracts with procure- ment officials. Our senior and proj- ect management staff work directly with technical personnel. It would be rare for someone from the market- ing department to attend a technical meeting. The marketing department also develops written RFPs or compa- ny presentations, but anything that would involve technical engineering applications would be prepared by the management engineering staff. TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams? TB: A few years ago, we decided to get into construction management and construction inspection. We have al- ways provided these services, but on a small, part-time and as-needed basis. We were able to build upon those qual- ifications, and with help from a small inspection staff, we began to pursue those types of contracts, either on a prime or joint-venture basis. After nu- merous procurement failures, we fi- nally got a break for full-time inspec- tion services. Using that contract, we were able to build on other CM/CMI avenues. Today, we have nearly 20 full- time on-site inspection personnel. We’re also developing and implement- ing capture plans and strategies as we take on new locales and disciplines. TZL: The list of responsibilities for project managers is seemingly end- less. 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? to make sure they have the right tools to do it. If a PM gets overloaded, we discuss options for workload sharing, available staff, etc.” “Let the project managers do their job. We are there

YEAR FOUNDED: 1992 HEADQUARTERS: Baltimore, MD OFFICES: 7 offices in 4 states NO. OF EMPLOYEES: 90 SERVICES OFFERED:

❚ ❚ Traffic engineering and signal design ❚ ❚ Bridge and structural engineering ❚ ❚ Hydraulic/hydrology ❚ ❚ Highway/roadway ❚ ❚ Asset management ❚ ❚ Water resources ❚ ❚ Land use and site development ❚ ❚ Traffic counts ❚ ❚ Transportation planning and modeling ❚ ❚ CI/CM and claims analysis Their values: ❚ ❚ Quality ❚ ❚ Growth ❚ ❚ Professionalism COOL TOOL: Most experienced traffic engineers agree that establishing consistent advisory speeds can reduce unexpectedly dangerous situations. To assist in determining uniform advisory speeds for horizontal curves, BAI Instruments, a division of Brudis & Associates, Inc. developed the CurveRite 1200 Advisory Speed Meter, a product that is the result of significant research on employing modern instrumentation, microprocessor, and custom software technology.

See CONFERENCE CALL, page 8

uly 23, 2018, ISSUE 1257

UPCOMING EVENT

THE 2018 ZWEIG GROUP HOT FIRM + A/E INDUSTRY AWARDS CONFERENCE The 2018 Zweig Group Hot Firm + A/E Industry Awards Conference, in Dallas September 20-21, is the AEC industry’s largest and most comprehensive business conference for leaders and aspiring leaders of AEC firms in the U.S. Come network, gain knowledge, and celebrate with the top firms in the industry. The conference agenda includes topics on technology, leadership challenges, business planning, marketing methods, recruiting and retention, and growth strategies. The success stories of Zweig Group award winners will be shared at the event, along with a variety of speakers from a range of industries, all guaranteed to challenge and inspire you to achieve even greater success. The Hot Firm Conference will culminate with a black-tie awards banquet and ceremony where awards will be presented to firms on the 2018 Hot Firm List, the 2018 Best Firms To Work For, 2018 Marketing Excellence

Awards, and the Jerry Allen Courage in Leadership Award winner. For more information, visit hotfirm.com or call 800.466.6275.

CONFERENCE CALL , from page 7

when results could take months, or even years, to mate- rialize? Do you track any metrics to guide your market- ing plan? TB: Every year our staff develops a business plan for their division. We try to evaluate it every six months, but always at year-end. We monitor and track each marketing effort and discuss major failures and winners. For long-term mar- keting endeavors, we rely on the actual progress being made and our realistic instincts of performance. 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? TB: We have tried both techniques. Each has certain posi- tive/negative benefits. I prefer organic growth, simply be- cause it’s a slower process in terms of cash outlay. Howev- er, organic growth can be a painful and costly experience, which never flourishes. After a certain period, you must ac- cept it as a loss, learn from it and move forward. Acquisition is a quicker route to growth, but also higher risk factor in terms of purchase and transition. 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? TB: While historical data and information may be reviewed, it’s not directly used in determining project budgets. Each of our projects is unique, as processes, reviews, and permit- ting change. “We monitor and track each marketing effort and discuss major failures and winners. For long-term marketing endeavors, we rely on the actual progress being made and our realistic instincts of performance.” TZL: What’s your prediction for 2018? TB: Based on a revised Federal Highway budget, we had an- ticipated significant growth, but as the funding lingers, so do the projects. We expect a continued focus on environ- mental sustainability projects, such as best management practices and storm water management, as they relate to the U.S. Clean Water Act.

TB: We try not to inundate them with excessive adminis- trative functions which sometimes can include meetings, invoicing, and personnel issues. Let the project managers do their job. We are there to make sure they have the right tools to do it. If a PM gets overloaded, we discuss options for workload sharing, available staff, etc. We also provide of- fice activities to keep moods at ease. Typically, these include lunchtime movies, basketball shoots, office cookouts, and internal office events. “Driverless technology seems to be rapidly advancing. Roadways will eventually need to accommodate these applications. In the next few years, there will be a mix of human drivers/driverless lanes and techniques being used for transportation design purposes.” TZL: What is the role of entrepreneurship in your firm? TB: We encourage it. If staff has a good idea or suggestion, we listen. As senior management, we are open to different ideas/changes. TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down? TB: Lately, we’ve been seeing more water resources-related projects, which involve best management practices, storm water management, and total maximum daily loads. These projects, related to the US Clean Water Act, focus on reha- bilitation and maintenance. Driverless technology also seems to be rapidly advancing. Roadways will eventually need to accommodate these ap- plications. In the next few years, there will be a mix of hu- man drivers/driverless lanes and techniques being used for transportation design purposes. Some of which will include: roadway materials and sensors, pavement markings and signage, communications, speed limits, lane width, etc. In addition, there is going to be a transition period for human drivers to adapt to and accommodate these new vehicles. 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

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

O P I N I O N

Office bullies

R egrettably, we have all been there, regardless of the profession. Whether it’s real estate, marketing, or architecture and engineering, it’s never too difficult to find a bully in the office. So let me tell you this story and see if you can relate. They are everywhere, but they don’t have to win. Identify their behavior and rectify it, or risk losing your staff.

On several occasions, a young real estate company asset manager witnessed building tenants smoking on the premises in violation of building policy. While she did not work in property management, as an up-and-coming company leader, she was concerned about the building’s reputation. She brought the matter to the property management director. The director did not respond appreciatively. Instead, she sat back in her chair, rolled her shoulders, and responded icily, “Oh, really?” She then leaned forward and started making rapid notes. The young manager waited for her to ask questions. Instead, the director continued to write. Finally, she waved away the young manager without lifting her head or uttering another word. The manager fled out the door. It had taken a lot of courage to approach the director. Now she

felt stupid and humiliated, mumbling, “What happened there?” “A bully uses superior strength or influence to intimidate others to force them to do what he or she wants. They succeed in dominating others by using a variety of behaviors.”

Julie Benezet GUEST SPEAKER

What happened there was she had run into an office bully.

What is a bully?

A bully uses superior strength or influence to intimidate others to force them to do what he or

See JULIE BENEZET, page 10

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

BUSINESS NEWS BURNS & MCDONNELL RETAINS NO. 1 SPOT ON 2018 ENGINEERING NEWS-RECORD RANKING OF TOP DESIGN FIRMS IN TEXAS REGION Continued strength in the Power and Oil and Gas sectors allowed Burns & McDonnell to maintain its No. 1 position on the ENR ranking of Top Design firms in a region encompassing Texas, Oklahoma, Louisiana, Mississippi and Arkansas. Burns & McDonnell reported $501.8 million in project revenue for 2017, the time period for compiling the 2018 rankings of engineering design firms. The results were approximately equal to the prior year, when

Burns & McDonnell also earned the No. 1 ranking for the ENR -Texas region. “There are a lot of great firms in our region so it’s always gratifying to see our success recognized,” says Leslie Duke, Burns & McDonnell president and general manager of the Houston regional office. “Our formula is the same as it’s always been – to focus on client service and offer a full range of project delivery models providing risk-sharing, cost certainty and schedule control.” Since opening its doors in 1994, the

Houston office has grown to become Burns & McDonnell’s largest, outside of the firm’s headquarters office in Kansas City. Burns & McDonnell is on track toward adding 1,000 employees in 2018, with many of them located in one of Burns & McDonnell’s six Texas locations. Burns & McDonnell is a family of companies made up of more than 6,000 engineers, architects, construction professionals, scientists, consultants and entrepreneurs with offices across the country and throughout the world.

JULIE BENEZET , from page 9

their achievements unrecognized, and careers stunted by the bullying manager’s self-absorption. More significantly, the company suffers a cultural impact. When people perceive it tolerates bullies, the message gets out that it has a toxic work culture. That hurts the attraction and retention of talent, as people will leave, or avoid joining in the first place. Therefore, it behooves organizations to confront their bullies. Bully Intervention 101: 1)The big reveal. Somebody has to tell them. An intrepid employee might challenge a bully by asking them to stop a behavior. Sometimes that works. More likely, senior manage- ment has to act. 2)Messaging. “Presume the bullies are blind,” advises Pam Re- chel, an executive coach who has worked with many bullies. Messaging to bullies should be clear and fact based. ❚ ❚ Name and describe the behaviors. For example, “Stop raising your voice, pointing your finger, and pounding on the table.” ❚ ❚ Describe the consequences. “Nobody wants to work for you. If you do not change your abrasive behaviors (don’t say “bully”), it could cost you your _____ (bonus, promo- tion, job, etc.).” ❚ ❚ Propose a plan. Tell them that you value them enough to offer coaching. It is optional, but behavioral change is not. 3)Collect feedback. An interview-based 360 will provide spe- cific feedback on the bullying behavior and its impact on oth- ers. 4)Implement a plan. The plan should include an agreement to target behaviors identified by feedback, a coach to promote learning, and regular progress reports to senior management. Success depends on leadership enforcing the plan. This includes carrying out the consequences of failure to cease bullying behaviors. It’s not easy, but the reward for bully intervention is decreased bad behavior, increased productivity, and a much-improved work environment. JULIE BENEZET spent 25 years in law and business, and for the past 16 years has coached and consulted with executives from virtually every industry. She earned her stripes for leading in the discomfort and excitement of the new as Amazon’s first global real estate executive. She is an award-winning author of The Journey of Not Knowing: How 21st Century Leaders Can Chart a Course Where There Is None . She can be reached at juliebenezet.com .

she wants. They succeed in dominating others by using a variety of behaviors. Five major types are: 1)Overcontrol: “He’s a total micromanager. He treats us like kids instead of adults.” 2)Threats: “She told them if they didn’t like the way she ran things, she’d be happy to write them a reference.” 3)Public humiliation: “He yells at people and belittles them out where everyone can hear.” 4)Condescension: “Her tone conveys ‘I’m bright and right – you’re slow and stupid.’” 5)Overreaction: “He makes snap judgments – makes assump- tions and leaps to conclusions without investigating.” Depressed, yet? As obvious as these unconstructive, obnoxious behaviors are to others, one of the many misconceptions about bullies is that they are aware of their bad behavior and act deliberately. In fact, many do not realize how they come across, much less their destructive impact. “When people perceive [the company] tolerates bullies, the message gets out that it has a toxic work culture. That hurts the attraction and retention of talent, as people will leave, or avoid joining in the first place.” Another misconception is that bullies come from a place of strength. In fact, they tend to be conflict avoidant, often wrestling with insecurity. The property management director in the aforementioned story, for example, may have allowed herself no room for errors and hated hearing that she missed something. Regardless of their underlying issues, the over- compensating behavior of bullies can wreak havoc on their teams and the broader organization. When the company supports them by ignoring the problem, the results are costly. People avoid bullies by finding excuses to exclude them. Ideas don’t flow. Execution suffers. Those who have the misfortune of working with them find their ideas ridiculed,

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

O P I N I O N

As the outlook for AEC firms remains bright and professional liability insurance rates stay competitive, the time is right to make sure your firm has adequate protection. Heightened growth, heightened risk

T hings are looking up for design firms. They are doing far better than they did 10 years ago at the onset of the Great Recession. Today, most construction professional firms are busy and even have work backlogs. Most also experienced steady revenue growth in recent years and expect that trend to continue.

Rob Hughes GUEST SPEAKER

headline-grabbing professional liability claims: multi-million-dollar resolutions of several traffic volume/revenue projection claims in P3 projects; and the devastating pedestrian bridge collapse in south Florida. NAVIGATING A NEW LANDSCAPE. Can design firms draw from these situations and implement an “If your firm is not solely you, but a hard-working group of two to 200 or more, the intermediate and long- term risk of being under-insured is that your firm will not survive.”

Nonetheless, all is not perfect. Qualified professionals are hard to find, as are current/ future leaders and owners in firms. Competition for staff may be driving up salaries and overhead costs are rising. Yet, one cost that has decreased since 2008 is the cost of professional liability insurance. The soft commercial insurance market, flush with numerous competing carriers, began around 2011- 2012 – perhaps earlier given modest rate increases of 2008-2010 – when design firm revenues fell sharply. Today, claim activity seems on the rise, along with the cost of defending professional liability claims. The latter may be a function of lawyers and experts now charging higher hourly rates than in 2008. Meanwhile, there have been too many

See ROB HUGHES, page 12

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

ROB HUGHES , from page 11

annual revenues and carried a “split” limit of $2 million per claim/$4 million aggregate with a premium of about $115,000. At its latest renewal, the firm’s annual revenues had risen to about $23 million and it increased its limits to $5 million per claim/aggregate. The insurance rate for this renewal was about 10 percent less than in 2008-2009. And that’s not even a full measure of the discount; the original rate was for the $2 million/$4 million limits and today’s rate was for the $5 million limits. “Today, claim activity seems on the rise, along with the cost of defending professional liability claims. The latter may be a function of lawyers and experts now charging higher hourly rates than in 2008. Meanwhile, there have been too many headline-grabbing professional liability claims.” The design firm’s decision-makers reasoned that the exposure is there, given the type of projects. The higher limits are not offering that much more coverage, as we are now double the size; so, the limit is spread over that much more revenue. Lastly, the higher limit is essentially a free benefit of the soft market – the rate (unit cost of the coverage or premium divided by averaged, annualized revenues), is actually lower than what we had been paying. While this illustrates one firm’s decision-making process, the approach is transferable: 1) How does your professional liability insurance limit compare to your firm’s current and projected revenues, as well as what they’ve been historically? 2) Talk to your project managers and your specialty broker. What is the worst-case scenario across your typical projects? Insurance and risk management advisors often talk in terms of “reasonable, probable maximum loss.” In engineering terms, this is akin to buying insurance not for the 500-year storm, but the 100-year event. How does this exposure esti- mate compare to your current coverage limits? 3) What is the state of your firm? Is it undergoing internal or external transition? Is it an easy decision to invest a few thou- sand dollars more to increase the coverage limit to address under-insured exposures? 4) Don’t fall trap to the “rumor” that buying higher limits will automatically just attract more claims. That’s simply not true. As the outlook for AEC firms remains bright and professional liability insurance rates stay competitive, the time is right to make sure your firm has adequate protection. A knowledgeable insurance advisor can help assess your insurance needs and design your program, accordingly. ROB HUGHES is a senior vice president and partner at Ames & Gough. He can be reached by email at rhughes@amesgough.com .

“investment” based approach to the limits they carry on their professional liability policy? The vast majority of construction professional firms carry limits of liability ranging from $1 million to $2 million per claim. Granted, most design firms are relatively small with annual revenues in that range or lower. However, even many larger firms (with annual revenues of $10 million to $20 million), carry limits of less than $5 million per claim. As a contra example, a law firm with five or six lawyers and annual revenues of $1.5 million likely has limits of $5 million per claim – that includes law firms defending AEC firms! An “investment” approach considers not just your firm’s day-to-day risk and operations, but your intermediate and long-term plans. The day-to-day reality is that nearly all, if not all, AEC firms are working on jobs where the exposure exceeds $1 million to $2 million. An architect set up as a solo-practitioner was retained as a consultant on the demolition of a four-story, unoccupied building in Center City Philadelphia. The exposure? Seven killed and 12 injured in the neighboring Salvation Army outlet store (that remained opened throughout demolition), when there was a catastrophic collapse of the building undergoing demolition. The resulting civil case settled for $227 million. If your firm is not solely you, but a hard-working group of two to 200 or more, the intermediate and long-term risk of being under-insured is that your firm will not survive. “As the outlook for AEC firms remains bright and professional liability insurance rates stay competitive, the time is right to make sure your firm has adequate protection. A knowledgeable insurance advisor can help assess your insurance needs and design your program, accordingly.” The transition plan, whether internal succession or external sale, that took so much effort to put together will be moot if the firm has to declare bankruptcy. Higher limits, say $5 million per claim/aggregate, may still fall below the full exposure relative to situations such as those mentioned in Philadelphia and south Florida. However, as a former defense attorney and in-house claim executive at a professional liability insurer, I can say that type of limit is much more effective with plaintiff’s counsel and the judge than “minimal” limits of $1 million to $2 million. Higher limits can also be a reinvestment, not an additional cost to your firm. Consider a recent professional liability renewal of a “typical” engineering firm – doing both public and private work with a typical civil/site-related scope of service. In 2009-2010, the firm had about $14 million in

THE ZWEIG LETTER July 23, 2018, ISSUE 1257

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