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ON THE MOVE PENNONI’S NEWARK, NJ OFFICE WELCOMES NEW OFFICE DIRECTOR John Colagrande, PE, has been promoted to Pennoni ’s Newark, New Jersey, office director. Colagrande previously served as a senior engineer/project manager in the site/design division of Pennoni’s Newark office. He has almost 30 years of experience with expertise in geotechnical engineering and land development. Todd Hay, PE, CME, will continue to serve as regional vice president of New York, Northern New Jersey, and New England. Colagrande looks forward to collaborating with offices throughout the firm to improve the surrounding community, to better understand their client base, and stay engaged in the area’s unique opportunities. Colagrande says, “As office director, I intend to continue to promote Pennoni values, and grow the office staff, while enhancing our capabilities, maintaining a positive image to the community, and working closely with Pennoni’s other offices to provide a seamless resource for all our client needs.” Colagrande and his Newark team currently serve a diverse group of clients and markets including: municipal, commercial development, education, industrial, energy, mixed-use residential, parks, utilities, and federal. Starting his career as a field engineer overseeing earthwork projects, Colagrande worked his

way up into a project management position overseeing the design of telecommunication facilities in the New York Metro region. During this assignment, Colagrande developed land development skills, including grading plans and site plan preparation, in addition to providing testimony before local planning and zoning boards. Due to the multidisciplinary elements of the projects, Colagrande developed his skills managing multiple engineers of varying disciplines. Amongst other opportunities, this one skill set will be paramount to the Newark office. Pennoni looks forward to Colagrande’s leadership because he will utilize his broad career to manage complex engineering design projects and foster a sustainable and smart engineering future in the area. Hay says, “John’s role will be to strengthen our presence in North Jersey with our existing client base, as well as develop a new client base that has emerged in the past few months. We believe John’s penchant for honesty, service, value, and responsibility will solidify Pennoni’s brand name in the competitive Greater New York market.” Pennoni provides engineering and design consulting services to local, state, and federal government clients, as well as private, commercial, industrial, construction, and other professional firms in the United States.

MARK ZWEIG, from page 1

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

firms 102.6 percent! And this is after paying out salaries and benefits and other good things to the owners. What other investment does so well? Not many I can think of! Compare this to real es- tate appreciation. The AEC firm looks pretty darned good! This is important for people to understand. I think if they DID understand it, they’d be a lot more willing to invest in their firms versus stripping out all the profits every year as many small companies tend to do. They do so on the advice of their accountants to avoid paying taxes and in the process ensure their companies can’t grow and maximize their real returns to owners. 2)Average collection period. We were at a client’s office a few months ago when one of the principals questioned why having a 100-plus day average collection period was a bad thing. He said the clients would eventually pay and they have been able to stay in business in spite of it, so “what’s the big deal?” The big deal – and it is big – is when the receivables get that old, the risk of ever collecting them increases dramatically. Not to mention another super critical idea – that being the amount of capital that is needed in the firm to cover that ridiculously slow collection of money owed them. If they were doing $20 million a year in net service revenue, they would need to have 100/365 worth of their annual operating expenses in cash and credit just to pay their bills. Assuming a 10 percent profit, that would be $4,931,507 in cash and credit needed to cover their expenses for 100 days. That’s insane! It also drives down your return on equity because equity has to be higher to finance the businesses of your clients who don’t pay their bills. For every day they can reduce that average collection period, our example firm could extract more than $49K from their firm – or pay off more than $49K of their debt. That’s significant!! Understanding these two financial concepts could potentially change everything that an AEC firm does. The entire strategy of investment versus harvest, ownership transition, and even what types of clients and work a firm undertakes, may need to change. MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

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THE ZWEIG LETTER July 30, 2018, ISSUE 1258

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