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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 S e p t emb e r 2 4 , 2 0 1 8 , I s s u e 1 2 6 5

Highway Spending

Finding ideal business partners

$20B

$40B

$60B

$80B

$100B

Total spending

% of total spending for construction

In Zweig Group’s Insider’s Guide to the State DOT Market , the Federal Highway Administration reports that local governments spent $94.2B on highways in 2015. However, of that amount, only 26.1 percent went to construction. Most funding is used for maintenance, traffic services, administration and research, and law enforcement and safety.

P icking the ideal business partner or partners is an inexact science, but a critical one nevertheless. The subject of how people find business partners in the AEC industry is one that is rarely discussed. Usually, two or more people work together in a company – or went to school together – or were in the same fraternity – or grew up together – and they decide to start a business together. Sometimes that works out well – other times not so well. In the New Venture Development classes I teach at the Sam M. Walton College of Business at the University of Arkansas, my students work in teams to develop business plans for a hypothetical new venture. For years, I let them pick their own teams. I eventually realized I could do a better job than they could when a team of five fraternity brothers, all from North Dallas, all majoring in marketing (or a similar situation) would come together. And without exception, these kinds of homogeneous teams performed poorly compared to those with a greater diversity of talent in terms of background and academic majors. I point this out because there’s relevance to our business – the AEC industry. Many people do the same thing as my students when assembling their teams. They look for others just like themselves. People of the same age and education level that they are or think they can be friends with. And these people are usually not the best partners.

“What tends to work best is to find people who are quite a bit different from yourself. This way, the skills of each complement each other versus compete

Mark Zweig

with one another.”

STATE OF THE DOT http://bit.ly/state-of-the-dot

F I R M I N D E X Altevers Associates.................................2 ATC Group Services................................4 DLR Group. ..........................................12 Gensler.................................................12 Gerner Kronick + Valcarcel, Architects. ...4 JFAK Architects. ...................................12 Pennoni. .................................................4 Studio One Eleven. ...............................12 Westwood Professional Services...........10

MORE COLUMNS xz GUEST SPEAKER: Smarter solutions Page 3 xz GUEST SPEAKER: Countdown acquisition Page 9 xz GUEST SPEAKER: (Expensive) shelfware Page 11

Conference call: Keith Kuzio 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 ALTEVERS ASSOCIATES AND ALTEVERS INTERNATIONAL CHOSEN TO DESIGN A NEW HOTEL AND CLUBHOUSE AT GENEVA NATIONAL RESORT & CLUB Altevers Associates announced that construction is scheduled to begin on the new boutique hotel designed for Geneva National Resort, uniquely situated on the wooded slopes and shores of Lake Como in Lake Geneva, Wisconsin. As part of the master plan, the construction of a new clubhouse and remodel of the existing resort clubhouse will begin after the hotel has been completed. Just a one hour drive from Milwaukee, and 90 minutes from Chicago, the resort boasts three picturesque and challenging golf courses designed by legendary Arnold Palmer, Gary Player, and Lee Trevino. “The new design direction for the club takes its cue from its lakeside setting, with a timeless, beachy, Hamptons-style nautical theme,” states architect Robert Altevers, AIA, NCARB, founder and managing principal, Altevers Associates. “The upscale cottage-style boutique hotel and clubhouse will overlook the new resort pool, two event lawns, the Gary Player golf course, and a nature preserve, and are all within a convenient walking distance of the club’s many amenities.” The 74,000-square-foot luxury boutique hotel will include an additional 3,500 square feet of patios and decks, with 90 new suites in two and three- story cottages. Each suite includes separate living and sleeping areas, oversized bathrooms, and plenty of closet space. The cottages include 12 family suites and 22 loft suites, each with a separate bedroom and family living and dining room. The interior design follows the overall direction and feel of the project. In harmony with its idyllic lakeside location, the finishes, furniture and fabric direction follow the Hamptons- inspired architecture in style and color palette. “We have reimagined the ‘beachy’ design direction in a fresh, transitional style,” adds Aimee Altevers, director of interior design, Altevers International. “Think of your favorite weekend lake house with a palette of smoky blues, soft grays, buttery yellows, and cool

ivory tones, conceptualized in cozy, textural fabrics and leathers. The welcoming feel of the spacious and inspirational guest rooms will draw clients back season after season.” Also planned is a new 19,000-square-foot two- story clubhouse with a high energy bar and grill, a billiards/game room, a state-of-the-art fitness center, a full-service spa, a pool-side snack bar, and a multi-function event room for crafts, meetings and fitness classes. Seamlessly connected to the clubhouse is 8,000 square- feet of covered terraces, providing lounge and dining areas with an outdoor fireplace, soft seating and fire tables on the upper level, and snack bar seating and exterior fitness areas on the lower level. Common area amenities include a 5,000 square foot party garden with bocce ball courts, fireside lounge seating areas, family game areas and picnic tables; a 12,000-square- foot resort-style pool and deck with cabanas, a kiddie pool, a whirlpool spa, and fire pits; a 6,500-square-foot garden; two pickle ball courts; a 10,000-square-foot event lawn and wedding gazebo, and a 2,200-square-foot lawn for smaller events. The ambience is complete with numerous outdoor fireplaces and fire rings to make use of outdoor spaces and the sport courts for a greater portion of the year. The new clubhouse has been designed with large windows and folding glass doors to maximize sunlight, breezes, and access to terraces and unobstructed views of the fairways, lake and surrounding hills. “By eliminating unnecessary walls and doors, we create a natural, uninhibited flow,” continues Altevers. “The outdoor trellises and raised terraces provide shade in the summertime and heating elements in the wintertime to afford greater access and usability.” The first phase of the resort project consists of 32 guest suites, the resort pool and exterior site amenities. The next phase of the project will include the clubhouse, the balance of guest suites, and a redesign of the existing clubhouse for resort conference use.

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

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

MARK ZWEIG, from page 1

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.

Just like in a marriage, what tends to work best is to find people who are quite a bit different from yourself. This way, the skills of each complement each other versus compete with one another. This way, who fills what role will be a natural situation. The firm will be stronger. The combined skillsets and personality attributes will be a better situation than a firm run by two or more people who are the same. I just wish more people realized this. Our management consulting assignments in firms of all sizes and types within the AEC industry often evidence problems with the roles and relationships of the business’s partners or principals. I think a lot of problems that partners have working together in AEC firms would be eliminated if these decisions were given greater consideration. Picking a business partner in some ways is as critical of a decision as that of a life partner. You may spend more time with this person than you do those in your real family. It should be a decision that isn’t made quickly or without significant due diligence, study, and time. MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

O P I N I O N

Smarter solutions

W hen we moved into the 21 st century just a short 18 years ago, surveyors were using the same techniques that our forefathers used to map and set boundaries in the newly found United States: mechanical instruments, reading vernier angles, measuring with a tape, and handwriting all results in a field book. Designing for the future will require intense research, following tech trends, and thinking beyond conventional boundaries.

Joseph Viscuso GUEST SPEAKER

Today, surveys are performed with satellites, robotic instruments, drones, PCs, and sophisticated software. We have always designed for the future; designing extra capacity in areas like our sewer and transportation systems. However, with population growth, climate change, and limited renewable resources, we need to take this thinking one step further. By 2050, due to worldwide population growth, we will see an increased need for 55 percent more water, 40 percent more food, and 80 percent more energy. How will our industry change our design thought process to provide for these needs? As an example, consider the energy sector. Technological advancements have allowed energy experts to extract trapped natural gas from geological formations. How has that affected our energy capabilities and capacity? We are designing

ways to produce energy from things we are currently throwing away, including food waste and old tires, keeping these items from landfills. “To stay ahead of the curve, we must continue to educate ourselves and think about how climate change, population growth, and technology advancements fit into our design considerations.” We must continue to challenge each other to be innovative and environmentally conscious. As another example, consider the transportation

See JOSEPH VISCUSO, page 4

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

BUSINESS NEWS LIGHTSTONE’S ARC RECEIVES THE AIA 2018 BQDA PEOPLE’S CHOICE DESIGN AWARD The American Institute of Architects Brooklyn, Queens, and Bronx Chapters have named ARC, a luxury rental property in Long Island City, as the 2018 Brooklyn + Queens Design Award’s People’s Choice Award for Queens. ARC is a luxury rental property located at 30- 02 39th Avenue in the Dutch Kills section of Long Island City, developed by Lightstone and designed by Gerner Kronick + Valcarcel, Architects . ARC opened in October 2017 and has been greeted with enthusiasm since opening its doors to renters, with more than 95 percent of its 428 units filled in its first nine months. Drawing inspiration from the industrial factories that once occupied Long Island City, GKV Architects focused on designing a building that was true to the historic essence of the neighborhood while also offering tenants a building purposefully designed for modern urban living. “Born and raised in Queens, I was happy to see the developmental renaissance of Long Island City,” said Randolph Gerner, principal at Gerner Kronick + Valcarcel, Architects. “In designing ARC, I didn’t want the nature of this neighborhood to be consumed by mirrored glass buildings, rather ARC was designed to celebrate and complement the area’s architectural fabric.” ARC’s innovative design and creativity allow for the largest and most diverse lifestyle-driven amenity program in New York City, sprawling more than 50,000 square feet of indoor and outdoor amenities. The property includes a 70-foot long environmentally efficient salt water pool, complete with rooftop cabanas, and stunning poolside views of the Manhattan skyline in the distance. ARC also offers residents a private courtyard

park with a greenhouse for year-round gardening and private events, as well as a residential lounge, library, club room, game room, private and collaborative workspaces, entertainment areas, and a gourmet catering kitchen with private dining. “When developing this building we focused largely on honoring Long Island City’s heritage while designing residences and amenities fit for urban living,” said Mitchell Hochberg, president at Lightstone. “We’re proud of ARC’s success and thrilled that AIA’s local chapters and the LIC community share our excitement for the project.” The BQDA Awards were announced in May and winners were honored at the BQDA Gala in June. The awards encourage excellence in design in Brooklyn, Queens, and The Bronx. Gerner Kronick + Valcarcel, Architects is one of New York’s most highly regarded full-service architecture and interior design firms. They approach every project with a spirit of shared ideas and free-flowing collaboration among all sectors to achieve the best design possible on any scale. The firm is internationally recognized for its residential, hospitality, and commercial work and has garnered multiple industry awards for outstanding residential and hospitality design. ATC GROUP SERVICES ON ENR’S TOP 200 ENVIRONMENTAL FIRMS FOR 2018 ATC Group Services , headquartered in Lafayette, Louisiana, has been named to Engineering News-Record ’s list of the Top 200 Environmental Firms. Published annually in August, the list ranks the top environmental services companies worldwide based on the previous year’s percentage of gross revenue for environmental services. ATC is ranked No. 62 on this year’s list. In addition, the company earned a No. 9 ranking in the Environmental Management sector. The

Top 10 Environmental Management sector includes companies that earn top revenue amounts from compliance, due diligence, audits, and environmental information technology services. “We are very proud to once again be included on this prestigious list,” says ATC CEO and President Bobby Toups. “We’re especially proud of ranking No. 9 in the Environmental Management sector. We’ve grown and expanded tremendously in the last year and we continue to look for opportunities to better serve our clients.” ATC provides integrated services in environmental consulting, industrial hygiene, geotechnical engineering, construction materials testing and special inspection, air quality consulting and engineering, petroleum, environmental health and safety training. The company serves clientele in both public and private sectors, including petroleum, real estate, retail, manufacturing, financial services, insurance, construction, transportation, education, government, and hospitality. ATC’s professional staff includes environmental, industrial hygiene and engineering experts in 115 offices across the country. The company currently has more than 1,900 employees nationwide. Established in 1982, ATC Group Services provides integrated environmental consulting and engineering services from more than 100 U.S. locations with more than 1,900 employees. Our comprehensive expertise in air, land, and water combined with full design, project management, and implementation services allows us to handle any challenge from consulting to completion. As a single source for a wide range of solutions, we help our clients reduce complexity, innovate solutions, and get their projects done safely and quickly.

projects designed to include the Envision or other sustainability processes, GIS mapping, data production, predictive analytics, and other creative ideas. Indulge in research. Harness and develop technology as we design for the future! JOSEPH VISCUSO is Pennoni’s senior vice president and director of strategic growth. He can be reached at jviscuso@pennoni.com. “We have always designed for the future; designing extra capacity in areas like our sewer and transportation systems. However, with population growth, climate change, and limited renewable resources, we need to take this thinking one step further.”

JOSEPH VISCUSO, from page 3

sector. Will autonomous vehicles be designed to fit our current highway and intersection systems, or do we need to think ahead to change the way we design transportation systems to accommodate AV? Will AVs be single occupancy, or will we incentivize for multi-occupancy due to population growth and traffic congestion? I suggest it is the latter in both cases! How will that change your design thought process? We can’t build our way out of traffic congestion by building more highways, and we can’t source the energy we need with depleting fossil fuel sources. To stay ahead of the curve, we must continue to educate ourselves and think about how climate change, population growth, and technology advancements fit into our design considerations. I suggest having your firm learn about smarter solutions,

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

This is an exclusive event for top leaders to discuss the highest level issues facing CEOs and the C-suite of today’s 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 November 7-9 event will explore the roots of Kentucky bourbon and how these family owned distilleries have grown to serve a worldwide boom while maintaining the culture and character of their businesses. Bourbon lovers or just lovers of the outdoors will enjoy the trip as we travel the Kentucky countryside to some of the most well known distilleries. During our tour of these historic and architectural sites, we will learn the roots of businesses, how these organizations have scaled operations to meet worldwide demand, and how their marketing, sales, and management strategies have built strong brands and rich cultures. We will couple this experience and knowledge with the most pressing issues and ideas in AEC rms today. With attendees in control of the subject matter, we will conduct roundtable discussions on a variety of topics that will hit right at the heart of what is needed to eect change in your organization. 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. CEO ROUNDTABLE BOURBON EXPERIENCE November 7-9 Louisville, KY

Follow the link for more details, the agenda, information on the presenters, and venue. zweiggroup.com/seminars/ceo-roundtable/

P R O F I L E

Conference call: Keith Kuzio President and CEO of Larson Design Group (Best Firm #5 Geotechnical and Best Firm # 29 Multi-discipline for 2017), a 300-person firm based in Williamsport, PA.

By LIISA ANDREASSEN Correspondent

“O ne person alone can’t make significant change happen,” Kuzio says, who joined the firm in 1992 as an engineer with the company’s bridge group. A CONVERSATION WITH KEITH KUZIO. 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? Keith Kuzio: Over the past four years, LDG has shifted from dedicated BD reps to more of a sell- er-doer model, although several business units still maintain dedicated BD staff. We’ve conducted ex- tensive BD and sales training that has helped our technical staff understand where their strengths lie in the spectrum of business development activities that include: ❚ ❚ Frontiersmen/women. Seek to sell new services in new geographies

❚ ❚ Hunters. Sell existing services in new geographies ❚ ❚ Farmers. Sell existing and new services to existing clients We’ve also redesigned incentive programs to better align with our overall goals and offer rewards for achieving benchmarks in all types of sales. 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? KK: Solid business ethics, trust, and candor be- tween the contractor team and design team are a must. The designers working on the project also need to understand contractor motivations and how they differ from what an owner/client might focus on in the development and delivery of proj- ects. Designers need to provide alternative solu- tions that align well with the means and meth- ods that a contractor can deploy efficiently and ef- fectively on each project. That’s how design-build teams can be competitive in pursuing and winning

Keith Kuzio, President & CEO, Larson Design Group

THE ZWEIG LETTER Septe

work. As for risks, there can be many, especially if the design team has lim- ited experience with the contractor. We’ve always seen the biggest risk be- ing responsibility for quantity cost over-runs when we don’t have detailed information prior to bid on-site con- ditions and are asked to make gener- al assumptions to develop quantity calculations for such items as foun- dations and suitable material. We are cautious in contract terms what we will accept or reject in such instances. TZL: There are A/E leaders who say profit centers create corrosive inter- nal competition for firm resources. What’s your opinion on profit cen- ters? KK: I tend to agree – five years ago, LDG shifted its position on profit cen- ters from company-wide to office and region, as we were rapidly expanding geographically, hoping that it would help promote more transparency and accountability for results. However, it created more territorial behaviors and noise in the company than good, so we’ve migrated back to a much more company-wide focus. TZL: What’s your policy on sharing the firm’s financials with your staff? Weekly, monthly, quarterly, annu- ally? And how far down into the org chart is financial information shared? KK: As an ESOP company, for many years we’ve shared the company’s fi- nancials with all employees. Managers have access to real-time dashboards. Project reporting is available to man- agers on a weekly basis, and busi- ness unit and company financials are shared monthly. We encourage em- ployees to ask questions about our fi- nancials at any time, and we typically provide monthly video updates on fi- nancial performance on our company intranet, and twice a year at town hall meetings, we take a deeper dive into financials along with the company’s progress on strategic planning and an- nual business planning goals. 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? KK: I believe that a strong leadership pipeline starts with a strong commit- ment to values that resonate with

people. When this is combined with a compelling vision for growth and de- velopment, this sets the stage for a platform where people can excel and test their skills. Also, current leaders must walk the talk and be all-in on the values and vision/direction for the firm, otherwise you will alienate po- tential leaders. Unfortunately, we’ve learned some of this the hard way over the years. We’ve tried to improve our leadership development efforts by be- ing better listeners and channeling the energy of our high potential staff in change management activities that help the company achieve its goals while allowing these people to satisfy a desire to contribute significantly to our transformation into a nationally- focused firm. We’re also working with consultants to develop a multi-tiered leadership development program that addresses leadership development through the various stages of their ca- reers. TZL: As you look for talent, what po- sition do you most need to fill in the coming year and why? KK: Given the tight talent market, we are more focused on succession plan- ning and internal development of technical staff and managers. Experi- enced technical leaders and seasoned project managers top our list. We’re also focused on a larger, more diverse internship and co-op programs that bring additional entry level talent into the company. 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? KK: Start conversations as soon as possible to gauge both leadership and ownership interest of top company performers. At LDG, we have a hy- brid ownership model consisting of individual shareholders and an ESOP. This gives us options on how to tran- sition our ownership over time. I be- lieve that potential future leaders should be educated on the various ap- proaches to transitioning ownership, including potentially selling the firm, so that they can understand the pros and cons of each approach at a com- pany and personal level. I also believe that the board should provide insight See CONFERENCE CALL, page 8

YEAR FOUNDED: 1986 HEADQUARTERS: Williamsport, PA OFFICES: 10 offices in 4 states NO. OF EMPLOYEES: 300 MARKETS SERVED:

❚ ❚ Alternative energy ❚ ❚ Civil and cultural ❚ ❚ Commercial building ❚ ❚ Higher education ❚ ❚ Industrial ❚ ❚ Municipal ❚ ❚ Oil and gas upstream ❚ ❚ Retail design ❚ ❚ Athletics ❚ ❚ Energy

❚ ❚ Healthcare ❚ ❚ Hospitality ❚ ❚ Mine subsidence investigation ❚ ❚ Oil and gas midstream ❚ ❚ Recreational ❚ ❚ Residential ❚ ❚ Transportation THEIR HISTORY: LDG began with an

architect, engineer, and surveyor – each with a dream to create a firm that focused on solutions that could sustain and benefit the communities it served. A COLLABORATIVE MINDSET: LDG builds and maintains trust and collaborative relationships across the company. They embrace “we” before “me” so that personal and professional knowledge will be expanded and leveraged for greater results.

ember 24, 2018, ISSUE 1265

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? KK: It’s challenging to come up with hard metrics. We’ve settled on a couple. Proposal spend effectiveness is a mea- sure of the costs put into proposals as a percentage of total sales won (2.5 percent). We also track total BD effectiveness as total marketing and BD spend as a percentage of total sales won (5.5 percent). We have numerous metrics around hit rates based on numbers and dollar value, but one spe- cific area that we’ve focused on is content. In an age of dif- ferentiation through thought leadership, we’re challenging all employees to be more involved in generating marketing content – so we track the backlog of content pieces that our marketing department has in the queue for development, the number of pieces published, and the number of media channels published in. We also see the number of “shares” and reposts of our content as important indicators of mar- keting effectiveness. TZL: They say failure is a great teacher. What’s the big- gest lesson you’ve had to learn the hard way? KK: I’ve created a leadership presentation for emerging community leaders around many lessons learned through mistakes made over the course of my career. One that sticks out in my mind has to do with leading a transformational change effort in a public service setting. I thought I had a team of supporters with me, but when put on the spot, I was wrong. You need to be sure that you have a strong com- mitted team that supports the vision for change with shared values and motivations. One person alone can’t make sig- nificant change happen. 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? KK: A past executive coach of mine, Bob Rogers, described growth as a means of maintaining or enhancing a business’s degrees of freedom – growth allows for the continued in- flow of resources that enable strategic options to be execut- ed as markets evolve or change. I have come to learn over my career and through several M&As that to extract mean- ingful value out of a deal, the acquirer should be confident that they’ll be able to organically grow what it has acquired after the ink dries. If the post-acquisition plan isn’t clear and easily understood and compelling enough for staff of the acquiring and acquired firms to get passionate about continuing with organic growth, it’s likely to result in poor outcomes and loss of talent. 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? KK: We use both historical performance data and certain rules of thumb in developing fee proposals that are com- petitive and meet our profit objectives. The type of contract does play a part in determining a project’s budget, but it can vary based on the project type and client. TZL: What’s your prediction for 2018? KK: A year of growth (double digit) and higher profitability for LDG and for the industry.

and guidance on succession planning and ownership transi- tion planning at routine intervals, at least annually, to as- sure that shareholder interests are adequately addressed through ownership and leadership transition events. TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams? KK: We’re currently investing time and resources into en- tering the federal, civil, and building market. We’ve also invested significantly in CNG fueling and other alterna- tive energy/renewal fueling technology capabilities such as RNG, H2, and EV charging. TZL: The list of responsibilities for project managers 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? KK: Our leadership team is more focused on being better listeners and trying to eliminate hassles, obstacles, and noise that distract our PMs and staff from an outward fo- cus on clients and projects. We’ve assessed whether our processes are working, and more importantly, whether they add value in selling work or delivering client value on proj- ects. In many cases, we’re simplifying and/or eliminating some processes altogether. We encourage all leaders to be on the watch for burnout, to understand their managers’ coping mechanisms for stress and to encourage them to ap- ply those mechanisms when they’re approaching burn-out. I’ve also asked leaders to be good examples themselves in disconnecting from the business when they take time off and to delegate responsibilities, so that their team feels comfortable doing the same. TZL: What is the role of entrepreneurship in your firm? KK: Historically, LDG has been a very entrepreneurial firm, growing from six people in 1986 to nearly 300 today. How- ever, as we made a big geographic push and opened four new offices in four new states about five years ago, we be- came quite inwardly focused, and lost our external focus on emerging market opportunities. We recognized that about 18 months ago and have made major changes to simplify our business approach, remove barriers, and bring in new talent to help rekindle that spirit. TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down? KK: With the economy continuing to do very well in the U.S. through an unprecedented period of expansion, I believe that federal investments in core infrastructure programs will continue to improve. We’ll also see more opportunities in alternative energy and renewable fuels. I’d say those that will cool down will most likely be tied to uncertainty associ- ated with rising interest rates and those sensitive to inter- national trade and tariffs that are currently being imposed here and abroad. Potential for technology disruptions also add complexity to predictions and future forecasting. 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 September 24, 2018, ISSUE 1265

O P I N I O N

Countdown acquisition

If you want your closing to go smoothly – before, during, and after the deal – make sure you take these six critical steps.

T here is a lot of acquisition activity in the AEC industry these days, and with each deal, several obstacles need to be overcome before closing. These typically include: conducting preliminary research and narrowing in on potential firms; making introductions and preliminary discussions; getting the acquisition closed; and integrating the teams once the deal is done.

Bryan Powell GUEST SPEAKER

All aspects of an acquisition are equally important, though in my experience, success comes down to the due diligence and details involved in closing the deal. After a firm has been identified, introductions have been made, and the ball is rolling, having the right people involved and aligned to specific goals will make for a successful acquisition. It all begins by assembling the right team: ❚ ❚ Create a core team of consultants. We pull in experts from outside of the company, which include attorneys, accountants, and professional M&A con- sultants. It is important to include professionals who have previous M&A experience and know what to expect. The right consultants will understand how to protect the interests of both firms throughout the process.

In addition to gathering a team experienced in M&A, make sure that their expertise is AEC in- dustry-specific. When dealing with architecture or engineering firms, the process for valuation, deal structure, etc., varies widely from other industries, so having an understanding of those nuances will be important to the success of the deal. ❚ ❚ Involve your corporate service leaders. At West- wood, “corporate service leaders” are our team mem- bers in charge of HR, finance, IT, brand and com- munications, legal, and other corporate functions. Each plays a critical role in the negotiating process. Getting them on board early is important. Their specific fields of expertise are invaluable, not only in getting the acquisition closed, but in the post- closing integration. The more they understand, the

See BRYAN POWELL, page 10

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

BRYAN POWELL, from page 9

process and don’t ignore issues or warning signs that come up. Waiting until a deal is closed or hoping issues simply go away can be catastrophic to building trust and lead to major complications later on. Westwood actually stopped a deal on closing day, which was very hard to do. However, it was ulti- mately the right decision because the firm we were acquiring was not truthful. Trust was lost. Don’t be afraid to state any concerns and be truthful about your organization’s values and approach to operations and culture. It’s necessary to be aligned in those things in order to be successful. 5)Develop an integration strategy before you close. Don’t put aside talks about integration until after you close. Having a mutually defined and accepted integration plan will make the post-integration process more successful. The leadership teams from both firms need to be in agreement on how to integrate for it to be done successfully. Vet out and negotiate differences before you close the deal. Integration is a moving target because of the complexities involved when dealing with people, processes, and culture. Most of that doesn’t expose it- self until post-closing. There is value in establishing a baseline plan, prior to closing the deal, that you can refer back to when things get off course. 6)Evaluate the roles of your new team. It’s easy to allow ne- gotiations and preparation of the agreements to distract from taking time to discuss how each new employee will fit into the organization, but it is crucial to do so before you close the deal. Be proactive and set aside time during the scheduling process to make talking about employees a priority. Doing so demonstrates to the acquired leadership team that their employees are important to you. The process will help you understand expectations around salaries, bonuses, benefits, positions, titles, roles, and responsibilities. Finally, take good care of your people! Throughout the process, remember that acquisitions are about the people – they are your greatest asset and value gain for your organization. As such, employees should know how important they are to you by your actions and attention to their needs. Prepare your leadership team by providing them with a consistent and accurate message, and then create communication channels for all employees to get the answers they need once they learn about the acquisition. “Acquisitions mean change, and change can be difficult. Before and after the deal is done, retaining acquired staff and engaging existing staff should be a top priority in maintaining value and protecting your investment.” Acquisitions mean change, and change can be difficult. Before and after the deal is done, retaining acquired staff and engaging existing staff should be a top priority in maintaining value and protecting your investment. If you master this, you make the challenges that arise in due diligence and closing activities all worthwhile. BRYAN POWELL, PE, senior vice president, Land Division, Westwood Professional Services. He can be reached at bryan.powell@ westwoodps.com.

more likely we are to avoid unexpected issues on both sides along the way. ❚ ❚ Identify an acquisition leader. With all the different players involved, it cannot be stressed enough how important it is to have one person leading the acquisition process for your or- ganization. This leader keeps the process moving forward and limits miscommunication. At Westwood, we require a senior leader who has experience in acquisitions and can lead a team through a complex process of negotiations with multiple moving parts. They must fully understand the acquisition business objectives and be able to effectively assign roles and responsibilities. Timing of all activities is critical as well, so an experienced leader will be able to envision all involved in the process and plan for a successful closing. “Prepare your leadership team by providing them with a consistent and accurate message, and then create communication channels for all employees to get the answers they need once they learn about the acquisition.” Once the team is assembled, get focused on these six critical closing activities: 1)Create the letter of intent. An entire article could be writ- ten on the strategy behind the preparation of this document. The LOI is the foundation of any deal and can set an acquisi- tion up for success or failure. The LOI should be as specific as possible regarding the structure of the deal, financial compen- sation, employee agreements, and any other items that are foundational to the deal that were discussed and agreed upon during preliminary discussions. The LOI will be the basis for preparation of all the final agreements. By assembling the right team before preparing the LOI document, you will have the resources you need to ensure the document is compre- hensive in defining all of the elements listed here. 2)Set a closing date. Seems obvious, but set a closing date and stick to it. Make sure you allow adequate time to prepare agreements and schedules and to compile the proper due dili- gence items. Your experienced core team should know what it takes. The date should be tight enough to push the team. The acquisition leader will feel the pressure to move the date, but stick to it. Work to keep the team focused and encouraged to reach the end date. It is in the best interest of both firms to avoid delaying a closing because the process will distract all involved and require an occasional shift in their focus from day-to-day business to getting the deal done. Especially as the closing date draws near. 3)Establish documentation deadlines. There are several docu- ments that are part of the final agreement, such as the final purchase agreement, schedules, employment agreements, and other miscellaneous agreements. Each document has to be negotiated and often goes back and forth between each orga- nization. Setting deadlines for each document, and holding team members to the schedule, will get the deal closed. 4)Be direct and truthful in negotiations. The specific firm you are acquiring likely has similar operations and cultures. However, there will always be differences. Negotiating is a natural form of conflict because two sides will advocate for what they want. Be direct and truthful during the negotiation

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

S P O N S O R S H I P

(Expensive) shelfware

S helfware, or unused software, is said to cost companies roughly $30 billion per year in the U.S. alone, according to a 2016 study. The average desktop computer contains roughly $259 per year in wasted software. In a time of shrinking margins and increased competition, every dollar counts. Do you have a gazillion underused software programs languishing on computers across your firm? If you do, you’re certainly not alone.

Mark Little GUEST SPEAKER

manage their day-to-day businesses. Most of them were using five to 10 different programs – some purchased, some custom developed – simply to do things such as track projects, fill out timesheets, generate reports, manage documents, and more. For instance, our first client (and the inspiration behind ProjectBoss), BDG Architects of Tampa, “Most software contracts are easy to sign but difficult to get out of. Is your firm paying for unused seats, licenses, overages, upgrades, and unused features? You’re not alone.”

Most software contracts are easy to sign but difficult to get out of. Is your firm paying for unused seats, licenses, overages, upgrades, and unused features? You’re not alone. According to the study, companies with fewer than 2,000 employees were the most wasteful, clocking in at a waste rate of 41 percent. A big reason why companies purchase software they don’t need is that the company’s leadership is not on the same page. There’s no communication at the top. One of our primary goals when creating ProjectBoss was to eliminate the need for firms to use, and pay a lot of money for, multiple software programs to solve their project and business management needs. We took a hard look at what software programs were being used by firms to

See MARK LITTLE, page 12

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

BUSINESS NEWS RECOMMENDATIONS ON MITIGATING HOMELESSNESS IN LOS ANGELES BEING IMPLEMENTED BY ULI LOS ANGELES ULI Los Angeles, a District Council of the Urban Land Institute, is coordinating with Mayor Eric Garcetti’s office to help implement key recommendations from its recent report on homelessness. ULI has gathered top-level architecture, landscape architecture, and commercial real-estate leaders to assist in the city of Los Angeles’ “A Bridge Home” program, which is building safe and clean shelters to help homeless people transition to long-term housing. ULI Los Angeles’ leadership met with the mayor and staff to present report findings prior to his State of the City Address in April. The provision of a transitional housing plan, including increased access to shelters as well as transitional and permanent housing, is a key recommendation in the report. ULI’s recommendations informed provisions for homeless shelters that were included in the annual budget presented by the Mayor Garcetti of Los Angeles, including a commitment to provide temporary housing structures in every council district. The city’s annual budget now includes $30 million for the construction program. The city’s supportive housing will be furnished with on-site mental health, employment, addiction, housing placement services, and wellness resources. ULI will soon assist the mayor’s office and some of the city council members with housing design and development of the siting criteria. “With Mayor Garcetti’s acceptance of our

help and key report recommendations, we convened high-level architecture and real- estate leaders,” said ULI Los Angeles Chair and Founder of C+C Ventures Clare DeBriere. “The results of our design charrettes and outreach will help secure greater neighborhood support for the Bridge Home program by identifying site criteria and design solutions. We will soon formally submit them to the Mayor and his senior staff with the goal of building safe, clean, sanitary, and visually attractive bridge housing that will transition people to permanent shelters.” “The work of our leaders in Los Angeles demonstrates the strong commitment of ULI’s members to bring about meaningful, lasting change in our communities,” said ULI Global Chairman Thomas W. Toomey, chairman, chief executive officer, and president of UDR, Inc. “They are setting an example with practical solutions to address one of our cities’ toughest challenges. What we are learning from this experience can benefit every city dealing with homelessness. That is a powerful impact.” ULI held intensive charrettes with three architecture firms – including DLR Group , Studio One Eleven , and JFAK Architects – and with three landscape architecture firms. The teams focused on solving three site challenges: a 50-bed site; a 100-bed site; and a 150-bed site. In addition, ULI Los Angeles is collaborating with CBRE and Gensler to identify sites for the 50-, 100-, and 150-bed needs and a list of all sites in each city council district which are owned by the federal, state, county, or city governments. ULI will then work with the city

council members to determine the best sites in their districts. Homelessness: Recommendations for Local Action is based on a thorough evaluation of Los Angeles’ homelessness problem conducted through ULI’s Advisory Services Program this past December. The report builds on existing efforts to combat homelessness by providing short- and long-term housing solutions and offering guidance on deploying and leveraging the billions in bond proceeds being generated by Measure H and Proposition HHH for homelessness assistance. While ULI’s recommendations focus primarily on the city of Los Angeles, they are applicable to Los Angeles County and can be adapted for other metropolitan regions. The recommendations were made by a panel of housing, architecture, public policy, and housing finance experts convened by the institute through the Advisory Services Program. With rising housing costs and insufficient housing supply as overriding factors, thepanel’swork includedconsideration of how developers and neighborhood leaders could find common ground on land use plans that allow housing to be built in areas where it has typically been blocked; how and where supportive housing and affordable housing can be built at a large scale; the assessment of optimal housing uses tailored to specific needs of different neighborhoods; and ways to avoid concentrating the homeless in specific neighborhoods.

MARK LITTLE, from page 11

the lost productivity and efficiency from using so many different tools to operate their business. “Increasing the margins and profitability of your firm could be as easy as eliminating wasteful software spending and replacing your current band-aid software approach with a cloud-based, easy to use end-to- end solution such as ProjectBoss.” Increasing the margins and profitability of your firm could be as easy as eliminating wasteful software spending and replacing your current band-aid software approach with a cloud-based, easy to use end-to-end solution such as ProjectBoss. MARK LITTLE has nearly 20 years of experience in the technology arena, primarily as a software engineer. He is a co-founder and the chief technology officer at ProjectBoss, a sponsor of the 2018 Hot Firm + A/E Industry Awards Conference. He can be reached at mark@projectboss. net or at 302.521.8065.

Florida, was using at least seven different software programs to manage their projects and their business: ❚ ❚ Sharepoint for sharing and storing drawings and client docu- ments ❚ ❚ Shared hard drive for storing internal company documents and templates ❚ ❚ Dropbox to share contract related documents with clients ❚ ❚ An inflexible custom-built web application to track projects ❚ ❚ A custom-built employee status web application to track the location of employees ❚ ❚ Microsoft Project was used by some project managers to track projects ❚ ❚ Microsoft Excel was used by other managers to track projects ❚ ❚ Excel to manage and forecast resource allocation ❚ ❚ Excel to generate project reports The cost of these programs was in the tens of thousands of dollars per year. Not to mention the costs associated with

THE ZWEIG LETTER September 24, 2018, ISSUE 1265

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