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Starting without a signed contract 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 A p r i l 9 , 2 0 1 8 , I s s u e 1 2 4 3

What doesn’t kill you makes you stronger

According to Zweig Group’s 2017 Fee & Billing Survey , fast-growth firms take more risk than firms in other growth categories. Fast-growth firms start almost half of their jobs without a signed contract in place, whereas other firms are starting around 20 to 25 percent of their jobs without a signed contract. OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/

“You choose how you respond. Every time I make the choice to be a learner and not be defeated, new things suddenly become possible. How about you?”

A nyone who knows me knows how much I don’t like trendy business books, self-appointed life coaches, or motivational experts – for many reasons that I won’t got into here. That said, I must say I was truly inspired by watching a documentary this weekend – I Am Not Your Guru – on Tony Robbins and his “Date with Destiny” seminar. The guy is amazing. He’s worth more than half a billion dollars because he may be the best group therapist who ever lived. Watch the film and I guarantee you that you’ll be inspired. The best takeaway for me was that it reminded me of the old adage, “What doesn’t kill you makes you stronger.” Those aren’t the exact words Robbins uses, but that is the message. And it is so true – in life and in business. Anyone who is an owner or manager of an A/E business will have setbacks. People quit. Clients fire you. People let you down. Clients don’t pay. You don’t get jobs you go after. There are plenty of opportunities to “get stronger” every day. You can either let these things ruin your day/week/year/ life, or you can learn from them and use the lessons to help you do even better in the future. I think we can all benefit from this thinking. Life should be a learning experience. Keep learning, and you’ll keep

Mark Zweig

F I R M I N D E X Bechtel. ................................................12

MORE COLUMNS xz GUEST SPEAKER: You never know Page 3 xz GENERAL COUNSEL: Is there a doctrine in the house? (Part 2) Page 9 xz GUEST SPEAKER: Crucial compatibility Page 11

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

HED, Inc.. ...............................................6

Maser Consulting PA.............................10

Michael Baker International. ....................2

Shive-Hattery........................................12

Conference call: Mike Cooper 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 MICHAEL BAKER INTERNATIONAL APPOINTS MALCOLM DOUGHERTY, P.E., AS NATIONAL TRANSPORTATION PRACTICE LEAD Michael Baker International , a global leader in engineering, planning, and consulting services, announced that Malcolm Dougherty, P.E., has joined the firm as senior vice president and national transportation practice lead. In this role, Dougherty will drive the strategic direction, growth, and performance of the practice and will lead an integrated team of regional transportation and management professionals in all aspects of transportation, including: Highways (State Departments of Transportation), intelligent transportation systems, and smart transportation. He will have direct oversight of the firm’s national practice leaders for aviation and railroad/transit and will facilitate the ongoing growth of the transportation business. Dougherty will be based in the firm’s Santa Ana, California, office, and will report to Bonnie Shepherd, executive vice president and chief practice officer. “Michael Baker International is renowned for addressing our clients’ toughest transportation challenges with innovative solutions that sustain and improve our nation’s infrastructure,” said Shepherd. “Malcolm’s broad hands-on experience working with governments and municipalities, directing large infrastructure projects and his national leadership in emerging technology-driven trends such as connected and autonomous vehicles, make him a strong addition to our practice leadership team and will further position Michael Baker as a transportation industry leader.” Dougherty brings more than 25 years of transportation industry experience to Michael Baker. For the California Department of Transportation, he held roles of increasing responsibility that culminated in his most recent position as director. In this role, he was responsible for the maintenance and operations of more than 50,000 lane miles of roadway in the State Highway System and the delivery of an $11.4 billion construction portfolio. He also had overall fiscal responsibility for the department’s budget of more than $10 billion and 20,000 employees. Prior to his appointment to director, Dougherty served as chief deputy director and chief

Take your advice from Mark Zweig to-go.

engineer at Caltrans, where he honed his leadership skills by advising the department director on all aspects of policy and operations. He represented the department at meetings and hearings and with the executive team on administrative priorities related to the state transportation system. “With many cities and states across the nation facing unprecedented challenges that are the direct result of failing transportation infrastructures, the need for innovative solutions has never been greater,” said Dougherty. “I look forward to working with my colleagues across Michael Baker to devise strategies that address our clients’ challenges with innovative and emerging technologies at the forefront of our solutions.” Dougherty holds numerous affiliations and certifications, including: Past chair of the Transportation Research Board’s executive committee, chair of the American Association of State Highway and Transportation Officials Committee on Construction, chair of the Toll Bridge Program Oversight Committee. He also is a member of the board of directors for the Intelligent Transportation Society of America, AASHTO, and the California Public Works. Additionally, he is a member of the American Society of Civil Engineers and the past president of the Western Association of State Highway and Transportation Officials. He earned a bachelor’s degree in civil engineering from Rutgers University in New Brunswick, New Jersey, and is a licensed professional engineer in California. Michael Baker International is a leading provider of engineering and consulting services, including design, planning, architectural, environmental, construction, and program management. The company provides its comprehensive range of services and solutions to support U.S. federal, state, and municipal governments, foreign allied governments, and a wide range of commercial clients. Michael Baker’s more than 3,000 employees across nearly 100 locations are committed to a culture of innovation, collaboration, and technological advancement to help solve challenges for clients and communities throughout the country.

thezweigletter.com/category/podcast/

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

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.

MARK ZWEIG, from page 1

growing and winning. Decide you won’t learn – withdraw from the game, get mad, be defeated – and you are the loser. Which do you want to be? You choose how you respond. Every time I make the choice to be a learner and not be defeated, new things suddenly become possible. How about you? MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

O P I N I O N

You never know

Get out of your comfort zone, take a risk, and jump at opportunities even if you don’t know where they will lead.

A s I approached my three-year anniversary at Zweig Group, I sat and reflected on my time here. I started fresh out of the University of Arkansas, and I wasn’t sure what to expect. I had an idea of what Zweig Group did, and I knew what I was going to be doing when I started. But I didn’t know the industry and had never worked in a corporate environment. One thing was for certain, though. I wanted employment in a place where I could learn and grow. So I got out of my comfort zone and into a business I’d never imagined myself getting into. Three years in, I can say it paid off.

Kyle Ahern GUEST SPEAKER

professional level. None of this would have been possible without taking a shot at it, even though I wasn’t sure what the outcome would be. I worked in our executive search department in either a part-time or full-time role for about a “I got out of my comfort zone and into a business I’d never imagined myself getting into. Three years in, I can say it paid off.”

I started out working in our research and marketing database, helping to maintain and add to it. I also helped on projects for different consulting areas. An opening arose when a member of the executive search team left. I had never done that type of work, or any kind of recruiting for that matter, but I asked about joining the team. I got the position, splitting duties with my database work. I learned more about the A/E industry, different positions and their responsibilities, and worked with a team within our company that I didn’t know much about. It was also a time when I got to know some of our clients on a more personal and

See KYLE AHERN, page 4

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

ON THE MOVE BURNS & MCDONNELL ANNOUNCES PROMOTIONS FOR BOARD OF DIRECTORS, OFFICER GROUP Ray Kowalik, chairman and CEO of Burns & McDonnell , announced promotions of two employee-owners onto the board of directors and six into and within the firm’s Officer Group. “Advancing in leadership at Burns & McDonnell comes with great responsibility not only to our 120-year-old firm, but our clients and our communities,” Kowalik said. “These employee-owners share two important traits – they are incredibly entrepreneurial and are laser focused on being the very best in providing unmatched service to our clients.” Joining Kowalik and the current four others on the board of directors are leaders of two major business groups: ❚ ❚ Randy Griffin is president and general manager of the Construction/Design-Build Group to deliver Burns & McDonnell projects from concept through commissioning. He joined Burns & McDonnell in 2001 as procurement manager, and became an associate vice president and manager of construction operations in 2004. He has led CDB since 2016. He earned a bachelor’s degree in industrial safety from the University of Central Missouri. ❚ ❚ Bob Reymond is president and general manager of the Oil, Gas & Chemical Group, which includes projects for the refining, midstream, chemicals, and terminals and pipelines industries. A former officer in the U.S. Navy’s nuclear power program, he joined Burns & McDonnell in 2001 as a project engineer before moving into leading some of the largest energy projects in the firm’s history and successfully leading engineer-procure-construct projects. He became an associate vice president in 2008 and became leader of the firm’s Process &

Industrial Group, now OGC, in 2015. He earned a bachelor’s degree in mechanical engineering from the University of Missouri. Joining the Officer Group are three employee- owners promoted to vice president: ❚ ❚ Oko Buckle is general manager of the firm’s Southeast region, currently leading Burns & McDonnell offices in Atlanta, Georgia, and Orlando, Florida. He joined the firm in 2006 as a senior electrical engineer in Atlanta, where in 2010 he became regional global practice manager for the firm’s Transmission & Distribution Group. He opened the Orlando office in 2015. He earned a bachelor’s degree in electrical engineering from Kwame Nkrumah’ University of Science and Technology in Ghana, a master’s degree in electrical engineering from Texas A&M University, and an executive MBA in global business from the Georgia Institute of Technology. ❚ ❚ Renee Gartelos leads the human resources team. She joined Burns & McDonnell in 1998, taking on increasing responsibilities until becoming director of human resources. She earned a bachelor’s degree in business administration from the University of Iowa. ❚ ❚ Joe Podrebarac is construction director in the Construction/Design-Build Group for oil, gas and chemical projects. He joined Burns & McDonnell in 2001 and spent a decade working in the field on projects for major oil and gas producers before returning to the world headquarters to broaden his work on EPC projects. He earned a bachelor’s degree in construction management from Kansas State University. Three Kansas City-based employee-owners were promoted within the Officer Group:

❚ ❚ Rick Halil became president, continuing as general manager of the Energy Group he has led since 2014 at the firm ranked No. 1 in Power by Engineering News-Record . He joined Burns & McDonnell in 1989 as an assistant mechanical engineer, designing power plant retrofit projects, before moving on to construction, marketing, project development, and division management assignments. He earned a bachelor’s degree in mechanical engineering from the University of Florida, and an MBA from the University of Missouri at Kansas City. ❚ ❚ Joel DeBoer became senior vice president, continuing as a leader in engineering, project management, staff development and project support in the Aviation & Federal Group. He joined the firm in 1991 as an electrical engineer, and spent much of the next two decades focused on Department of Defense, aviation and fueling projects in 15 countries, including work in China, Egypt, Greece, Morocco, Oman, Poland, Pakistan, and Saudi Arabia. He earned a bachelor’s degree in electrical engineering from the University of Nebraska. ❚ ❚ Matt Ralston became senior vice president, continuing to serve as manager of construction operations in the Construction/Design-Build Group. He started at Burns & McDonnell in 1997 as an intern, then joined the firm full-time as an assistant project manager and soon led military and refining projects as a project manager. He returned to the world headquarters in 2007 as the group’s assistant manager of field operations, became a principal in 2009 and became an officer and director of procurement in 2013. He earned a bachelor’s degree in construction engineering from Iowa State University.

KYLE AHERN, from page 3

recognize that this wouldn’t be possible without the help of others, and to some extent, without the luck of having opportunities appear right in front of me. But I still had to take chances early in my career, and I’m glad I did. So get out of your comfort zone and take a risk. You never know what might happen. KYLE AHERN is the awards manager at Zweig Group. Contact him at kahern@zweiggroup.com. some extent, without the luck of having opportunities appear right in front of me. But I still had to take chances early in my career, and I’m glad I did.” “I recognize that this wouldn’t be possible without the help of others, and to

year, having some success and certainly learning a lot. But then came another opportunity to work in our marketing department, directly managing our awards unit for Hot Firm and Best Firms to Work For, cornerstones of Zweig Group’s presence in the A/E industry. I was hesitant about this at first as I was starting to settle into my role in executive search. Though I knew it would be big, I wasn’t sure what the new role would entail. After taking a couple of days to think it over, I decided to give it a go. I saw it as a chance to work with some of our best clients who are having great success, growing rapidly, are great places to work, and who have excellent marketing. It was also a new position and I thought I could help shape and form this unit of the company. Since starting in awards nearly two years ago, I have had more client interaction, more responsibility, and more experience with leadership than I ever thought I would. I

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

ALL 2018 ZWEIG GROUP AWARDS ARE NOWOPEN FOR REGISTRATION

2018

SEE YOU IN DALLAS!

hotrm.com/our-awards/

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

P R O F I L E

Children’s Hospital of Michigan.

Conference call: Mike Cooper Managing principal and president of HED, Inc. (Hot Firm #34 for 2017), a 350-person design firm with offices in Illinois, Michigan, and California.

By LIISA ANDREASSEN Correspondent

“S mall changes often lead to significant results,” says Cooper, who believes in empowering the team and then letting them run. A CONVERSATION WITH MIKE COOPER. The Zweig Letter: Diversifying the portfolio is never a bad thing. What are themost recent steps you’ve taken to broaden your revenue streams? Mike Cooper: We remain committed to leverag- ing all of our skills and capabilities across all of- fice locations. This also serves to broaden our rev- enue stream – in the areas where we are strong as an organization. So, for example, if one of our of- fices has deep expertise in the research lab design, we want to make sure that all of the firm’s clients, across the nation, have access to that expertise. By using available technologies and with a willingness to travel between office locations, we’re able to ef- fectively do this.

TZL: The list of responsibilities for project man- agers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak? MC: The key to project management success often lies in the team dynamic. Project teams should be more than the sum of their parts. When we set up teams that have the necessary leadership and tech- nical capabilities, then the individual team mem- bers take on an appropriate level of project respon- sibility and then lean on their teammates for sup- port. Project managers are a vital part of our proj- ect teams and they need the support of their team (and the organization). They should not have to take on more than they can reasonably handle. TZL: What is the role of entrepreneurship in your firm? MC: Entrepreneurship exists on many levels at

Mike Cooper, Managing Principal & President, HED, Inc.

THE ZWEIG LETTER Ap

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? MC: The first step is to attract the right people. Our interview process is designed to ensure that candidate skill sets align with need, and that candi- dates’ sensibilities are aligned with values and core principles. That sets up a long-term, mutually beneficial re- lationship. Beyond that there is no sil- ver bullet. We actively discuss career objectives with staff, and then employ a combination of mentorship and pro- fessional development. We give proj- ect assignments that push them be- yond their current capabilities. In turn, this creates that strong leader- ship pipeline that we need in an envi- ronment that motivates and helps to achieve career objectives. TZL: As you look for talent, what po- sition do you most need to fill in the coming year and why? MC: There are a few areas. We’re seek- ing strong technical people, project managers, market leaders, and experi- enced business support personnel. As our workload increases, experienced technical professionals and project managers can be difficult to find, so we expect those positions to be among the most pressing. 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? MC: Start now and begin to engage the next generation of owners. Involve them in leadership and develop a rea- sonable timeline for transition. This See CONFERENCE CALL, page 8 “Our commitment to lean operations drives all staff to continually look for ways to improve our processes, analyze the proposed changes, and then assist us with implementation. Nothing we do is off the table.”

our firm. Our core focus is on project teams, as the primary means of deliv- ering value and design solutions to our clients. These teams are empowered to plan their projects, strategize the de- livery, and do what it takes to get the job done. Our market leaders, techni- cal leaders and corporate leaders pro- vide support to those teams. Our com- mitment to lean operations drives all staff to continually look for ways to improve our processes, analyze the proposed changes, and then assist us with implementation. Nothing we do is off the table. Small changes often yield significant results. “Our interview process is designed to ensure that candidate skill sets align with need, and that candidates’ sensibilities are aligned with values and core principles.” TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down? MC: I believe our core markets – healthcare, science and technology, corporate and commercial, and edu- cation – will all remain strong in the near term. The trend toward urbanism and more dense/walkable communi- ties will continue to drive revitaliza- tion projects. The political climate in Washington, D.C., and uncertainty in public project funding will continue to impact the public sector. TZL: With overhead rates declining over the last five years and utiliza- tion rates slowly climbing back up to pre-recession levels, how do you deal with time management policies for your project teams? Is it different for different clients? MC: Control of our overhead costs, proper alignment of staff with work- load, and related time management initiatives are all positive contributors to our operational efficiency. High- er efficiencies allow us to spend more time with clients and on projects, and less time on internally-focused tasks that do not bring value to our clients. This benefits all of our clients. TZL: The talent war in the A/E indus-

YEAR FOUNDED: 1908 HEADQUARTERS: Portland, OR OFFICES: 6 offices in 3 states NO. OF EMPLOYEES: 350

SERVICES: Planning:

❚ ❚ Urban planning ❚ ❚ Master planning Design: ❚ ❚ Architectural ❚ ❚ Interior ❚ ❚ Engineering ❚ ❚ Mechanical-electrical ❚ ❚ Structural ❚ ❚ Landscape ❚ ❚ Graphic Consulting: ❚ ❚ Branded environments ❚ ❚ Strategic consulting ❚ ❚ Sustainable consulting

COMMITMENT: Altering current planning, design, and construction practices to realize significant reductions in the use of natural resources, non-renewable energy sources and waste production, and to promote regeneration of natural resources, will require our ongoing effort in conjunction with industry partners, educational institutions, and concerned organizations. HISTORY: For 100 years, the firm of Harley Ellis Devereaux has grown in form and function, most often in parallel to the historic and economic tides sweeping America, and the continual shifting of society’s wants and needs.

pril 9, 2018, ISSUE 1243

CONFERENCE CALL, from page 7

TZL: The last few years have been good for the A/E indus- try. Is there a downturn in the forecast, and if so, when and to what severity? MC: At present, we do not see a downturn on the horizon. That said, I would acknowledge that for every economist who predicts a strong economy for the foreseeable future, there’s another who predicts a downturn. TZL: They say failure is a great teacher. What’s the big- gest lesson you’ve had to learn the hard way? MC: They say it can take years, sometimes decades, to build a strong relationship, based on trust and mutual respect, and only a single bad experience to tear that all down. Un- fortunately, I know this to be true. On the flip side, I also know that all projects will experience bumps in the road. It’s how we address and resolve those issues that can help strengthen relationships. We don’t run from issues, we solve them and keep moving forward. 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? MC: There’s nothing to be gained by growing for the sake of growth. We look to expand as a way to provide greater value to our clients and at the same time, greater value and benefit to our staff. Organic growth has proven to be an ef- fective means to infuse existing offices with new talent and to strengthen those locations. Mergers have been effective when we’re looking to enter a new geographic market or sector. Merger partners with a presence, name recognition, and local relationships help us to more quickly reach our ob- jectives in these circumstances. “Today’s workforce is committed to great design, and to working in productive, collaborative, flexible, and inspiring environments. They often make decisions on which firm to join, based in part, on the working environment.” 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? MC: We carefully examine each project’s unique require- ments, opportunities and constraints to determine the hours needed to successfully complete the assignment. We maintain a database of historical project performance infor- mation that we use to identify similar projects, confirm the hours required to complete those projects, and validate our assessment of the current opportunity.

should be an ongoing process so that long-term, ownership transition becomes a natural process. Retirements and such should not create undue burden on the organization. “Start now and begin to engage the next generation of owners. Involve them in leadership and develop a reasonable timeline for transition. This should be an ongoing process so that long term, ownership transition becomes a natural process.” TZL: Monthly happy hours and dog friendly offices. What do today’s CEOs need to know about today’s workforce? MC: Today’s workforce is committed to great design, and to working in productive, collaborative, flexible, and inspir- ing environments. They often make decisions on which firm to join, based in part, on the working environment. Our charge, as business leaders, is to provide workplace environ- ments that foster great design, with flexibility that leverag- es technology and collaboration tools, so that our talented staff can do what they do best. Happy hours, pet-friendly of- fices, telecommuting, etc. are all tools at our disposal. 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? MC: We’re also seeing more technical staff involvement in marketing/BD. This is not surprising. More and more of our prospective clients want to engage directly with those working on their project. They know, as we do, the impor- tance of team chemistry. As we continue to initiate con- versations with new clients, maintain strong relationships with current ones, communicate our value proposition to our communities, and respond to project opportunities, we need both our technical and marketing staff to ensure we’re properly attending to all the tasks at hand. TZL: Measuring the effectiveness of marketing is diffi- cult to do using hard metrics for ROI. How do you evalu- ate the success/failure of your firm’s marketing efforts when results could take months, or even years, to mate- rialize? Do you track any metrics to guide your market- ing plan? MC: I agree that longer term marketing efforts can be dif- ficult to assess in terms of ROI. We do place great value on our long-term client relationships, and maintain communi- cations on an ongoing basis, not just when there are proj- ect opportunities in play. This allows us to continue to pro- vide value to clients, and to keep abreast of current industry trends affecting them. At the same time, we track metrics (marketing dollars spent per dollar of net revenue, RFQ re- sponses, RFP responses, short lists, wins, etc.), as a way to help us focus on opportunities that are most closely aligned with our strengths. We then direct marketing dollars where they will be most beneficial.

TZL: What’s your prediction for 2018?

MC: We’re optimistic and anticipate 2018 to be as good, if not better, than 2017.

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

O P I N I O N

The Spearin Doctrine: Public owners do not shed all design risk by contracting for design- build if there are specified criteria upon which the design-builder is to rely. Is there a doctrine in the house? (Part 2)

O n government projects you may sometimes hear a lawyer or contractor talk about implied warranties and “the Spearin Doctrine,” and wonder what the heck they are talking about. The name comes from a contractor named George B. Spearin who, in 1905, contracted with the U.S. government to build a dry dock at the Brooklyn Navy Yard.

William Quatman GENERAL COUNSEL

Unbeknown to Mr. Spearin was a concealed structure on the site which caused internal pressure to build inside a new sewer line, breaking the line and flooding the construction site after a heavy rainstorm. Spearin had visited the site prior to bidding, but was not told by the government that the site was prone to flooding, nor about the hidden structure. Mr. Spearin was upset over the delays and damage, and he wrote a stern letter to the Navy Secretary. “We know now beyond a shadow of a doubt that this sewer is insufficient in size and strength for the work that it must do, and that it will be a constant menace to my plant, to the dry dock itself, and to the government’s surrounding property,” he wrote. “I am therefore unwilling to resume work until this menace has been removed.”

The estimated cost of restoring the sewer was only $3,875, but the government insisted that the responsibility for remedying existing conditions rested solely with the contractor. After 15 months of investigation “and fruitless correspondence,” the Navy Secretary terminated Mr. Spearin’s contract and hired other contractors to finish the work under “radically changed” plans, to remove all risk of the sewer line breaking again. Spearin sued the government for $250,767, which included the unpaid contract balance plus his lost profits. The government rejected the claim and offered just $7,908. The Court of Claims awarded Mr. Spearin $141,181, including lost profits and both parties appealed to the U.S. Supreme Court.

See WILLIAM QUATMAN, page 10

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

ON THE MOVE ALLISON COLANTUONI APPOINTED TO EXECUTIVE COMMITTEE AT MASER CONSULTING Allison Colantuoni, PHR, SHRM-CP has been appointed as a member of the executive committee at Maser Consulting PA (Hot Firm #13 for 2017). Headquartered in Red Bank, New Jersey, Maser Consulting is a multidiscipline consulting and engineering design firm with offices nationwide. Colantuoni is the director of human resources and principal of the firm. Until now, Maser Consulting’s seven-member executive committee consisted of the chairman/CEO, president/ COO, executive vice president/CAO, and five senior principal/division directors. Colantuoni is the first woman committee member in the firm’s history.

“Allison’s long-term leadership and dedication to the company been an asset to every employee in the firm,” stated Richard Maser, chairman/CEO of Maser Consulting. “Her experience and insights will provide an invaluable dimension to our executive team and we are excited she will be joining us in this capacity.” Colantuoni’s dedication to creating and maintaining a positive workplace, is evidenced by the firm’s consistent placement on NJBiz ’s Best Places to Work in New Jersey list and the Zweig Group’s Best Firms to Work For. Most recently, she was recognized as one of the Top 25 Leading Women Intrapreneurs by Leading Women Entrepreneurs.

Colantuoni has been with the firm since 1999 when she initiated the human resources department and has seen the firm grow from less than 100 to nowmore than 700 employees in 23 offices nationwide. During that time, she was instrumental in improving the firm’s cultural experience by developing numerous personal and professional development opportunities for employees including mentorship and coaching programs, educational opportunities, ongoing benefit program improvements, formalized Corporate Health and Safety Program, and co-founded the Maser Women’s Organization that advocates educating, engaging and empowering women throughout the firm.

DUTY TO INQUIRE. Despite the government’s warranty, a bidder with knowledge of design defects cannot remain silent, hoping to make a claim under the Spearin Doctrine. The courts have held that the implied warranty does not elimi- nate the contractor’s duty to investigate or inquire about a “patent” (or obvious) ambiguity, inconsistency, or mistake when the contractor recognized or should have recognized an error in the specifications or drawings. This duty re- quires contractors to clarify patent ambiguities, but does not require them “to ferret out hidden or subtle errors in the specifications,” one court stated. “Contractors are not expected to exercise clairvoyance in spotting hidden ambi- guities in the bid documents, and they are protected if they innocently construe in their own favor an ambiguity equal- ly susceptible to another construction,” that court said. PERFORMANCE SPECIFICATIONS. Courts often distinguish between design specifications and performance specifications. The distinction is important because the Spearin implied war- ranty doctrine does not extend to performance specifica- tions which “merely set forth an objective without speci- fying the method of obtaining the objective.” If the defect is in design specifications, however, the contractor must fully comply with – and follow – the design specifications, although faulty, to receive the protections of the Spearin implied warranty. In today’s era of design-build and government projects where the public owner provides “bridging documents,” consisting of preliminary outline specifications and partial design, the Spearin warranty would still apply to the extent that the design-builder is required to use faulty information, even if only preliminary. For this reason, public owners need to understand that they do not completely shed all design risk by contracting for design- build if there are specified design criteria upon which the design-builder is to rely. So, the next time you hear someone mention the Spearin Doctrine, you can tell them the sad story of George Spearin, and how it took him 12 years of litigation, all the way to the U.S. Supreme Court, to get his money! WILLIAM QUATMAN, Esq., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com.

WILLIAM QUATMAN, from page 9

THE SPEARIN DOCTRINE AND THE IMPLIED WARRANTY. In its landmark decision, the U.S. Supreme Court held in December 1918 (more than 12 years after the sewer line broke) that “if the contractor is bound to build according to plans and speci- fications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications.” Explaining that the government’s actions constituted an implied warranty, the Court continued, “[T]he insertion of the articles prescribing the character, dimensions, and location of the sewer imported a warranty that if the specifications were complied with, the sewer would be adequate. This implied warranty is not overcome by the general clauses requiring the contractor to examine the site, to check up the plans, and to assume responsibility for the work until completion and acceptance.” Today, lawyers call this the Spearin Doctrine which – when a governmental entity includes detailed specifications in a contract, it warrants that: 1) If the contractor follows those specifications, the resultant product will not be defective or unsafe. 2) If the resultant product proves defective or unsafe, the con- tractor will not be liable for the consequences. THE DOCTRINE AND ITS APPLICATION. Despite its age, the doctrine is still quite relevant today. That old 1918 Supreme Court case has been cited more than 2,900 times by federal and state courts in construction cases dealing with defective plans or specifications. In fact, the Spearin Doctrine was adopted as law in Missouri just last year. The government’s implied warranty is that the plans and specifications are “reasonably accurate,” free from significant defects, though not perfect. Plans and specifications are considered “defec- tive” if they are “so faulty as to prevent, or unreasonably delay, completion of the contract performance.” When the implied warranty is breached, the contractor is entitled to recover all of the costs proximately flowing from the breach. Compensable costs may include delays that result from dealing with the defective design.

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

O P I N I O N

Crucial compatibility

An acquired firm can double your size, elevate your design reputation, and give you a foothold in a new market – if the cultures fit.

Editor’s note: Design Organization was acquired by Shive-Hattery in 2012. The firm’s rebranding under the Shive-Hattery umbrella was completed in 2016. A s a 26-person architecture and interior design firm, established in 1971 with two locations in Chicago and Indiana, Design Organization was widely held with five major, and three minor, shareholders. The firm’s finances were in excellent condition. With a steady business and staff growth philosophy, our ongoing ownership/ leadership transition plan was in effect. We had a regional healthcare, higher education, and workplace practice with a very high percentage of repeat clients. It seemed that all was perfect. Not quite.

Spero Valavanis GUEST SPEAKER

At our 2011 strategic planning retreat, we were faced with a rapidly increasing competitive marketplace. Our slow organic growth was an issue for internal staff growth and opportunity, as well as a competitive disadvantage in the marketplace. We were fully engaged in all northwest Indiana markets, but under the radar in Chicagoland. As a small firm with limited resources, we felt a merger or acquisition was an option we needed to consider for sustainable growth. Our M&A consultant walked us through the

process. He spent time working with us on our priorities, strategy, and goals while understanding our organization and culture. He developed our valuation and financial metrics so we would understand how we compared to peers and our value in the marketplace – an important reality check. We resolved that the most important criteria would be cultural compatibility. This is when the courting process began. We reviewed a list of firms from our consultant,

See SPERO VALAVANIS, page 12

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

BUSINESS NEWS BECHTEL RECOGNIZED FOR INNOVATION LEADERSHIP Bechtel , a global leader in engineering, procurement, and construction, announced it has been named a winner in the 2018 BIG Innovation Awards presented by the Business Intelligence Group. The company was recognized for its enterprise- wide approach to innovation. “2018 BIG Innovation Award recognizes Bechtel’s focus on innovation as a key business driver. It is a testament to the dedication of our teams across the globe who explore, develop and implement solutions addressing industry challenges,” said David Wilson, Bechtel’s chief innovation officer. “This year’s winners show the diversity of innovation and its impact on the economy, our cultures and the world,” said Maria Jimenez, chief operating officer of the Business Intelligence Group. “We are thrilled to be honoring Bechtel as they are leading

by example and making real progress on improving the daily lives of so many.” Bechtel is embracing innovation to increase productivity and reduce costs through a focused and fully resourced process. The company established the Future Fund to stimulate development of new, disruptive ideas from employees, suppliers, and customers. The Fund provides the resources to explore ideas, emerging technologies and new approaches with the potential to dramatically improve project design, execution, quality, and safety. To-date, Bechtel employees around the world have submitted more than 2,500 ideas. More than 500 of those ideas have been approved for further development and exploration, and approximately 40 ideas have matured and are now deployed on projects across the globe. The list of implemented ideas includes varied efforts: from use of drones, to

robotics, augmented and virtual reality, new mobile applications, and new physical piping components. The BIG Innovation Awards recognize companies and people who bring new ideas to life, and change the way we experience the world. Organizations from across the globe submitted their recent innovations for consideration in the 2018 BIG Innovation Awards. Nominations were judged by a select group of business leaders and executives who volunteer their time and expertise to score submissions and provide feedback. Bechtel is one of the most respected global engineering, construction, and project management companies. Together with our customers, we deliver landmark projects that foster long-term progress and economic growth. Since 1898, we’ve completed more than 25,000 extraordinary projects across 160 countries on all seven continents.

SPERO VALAVANIS, from page 11

If you are familiar with workplace design, you know it’s all about change management. M&A is, too. We developed a communication plan for our staff that was integrated with messaging from the experienced Shive-Hattery team. No matter how well choreographed, and it was, the process is disruptive. Shive-Hattery human resources, finance, and IT departments were fully engaged and supportive, without being obtrusive. Some things needed to change immediately, but others transitioned over time with the intent not to overwhelm staff. We had seen disaster acquisitions before and were very concerned about our clients’ perception of this change. With support from Shive-Hattery, we assured our clients and communities that our staff and values had not changed. Our brand was maintained for the first three years. When we did change our name two years ago, it was a non-event. Has it been a success? The Chicago-Valparaiso team has doubled in size, more than doubled revenue, and significantly increased brand recognition in the Chicagoland marketplace. The “One Firm” philosophy is elevating design and leveraging multi-disciplinary expertise and resources from within our company’s offices, ultimately delivering the best value to our clients, both regionally and nationally. Finally, it always comes down to people. For the last five years I continue to look forward to meetings with our Operations Team, which consists of corporate officers and office directors, who are people I like and respect. Each office has the autonomy to run their businesses with support from Corporate Shared Services. This is an ideal corporate structure which sets us up for continued growth and future acquisitions. SPERO VALAVANIS is the director of the Chicago and Valparaiso offices for Shive-Hattery. He can be reached at svalavanis@shive-hattery.com or 312-882-0013.

but really only talked with a few. We met with one firm well-known for their excellent design, but leaving the meeting we felt it would have been culturally incompatible. Discussing this aspect at length internally, we agreed that culture would be, far and away, the number one criteria for us and for our staff. Our consultant came to us with another option: Shive- Hattery. Honestly, I looked at their web page and said we’re an “A/I” and they are an “E/A,” but we decided to meet with their president at the time, Tom Hayden. We talked by phone and then spent an afternoon together. It was clear our cultures and values were in alignment regarding some very important aspects: staff engagement and development, unparalleled client service, and financial performance. In addition to growth, a strong focus on elevating their design profile was another reason they were interested in us. To validate discussions and expand our team’s buy-in if we moved forward, several of us did a road trip to Shive- Hattery offices and met with leadership and key staff. Everyone we met was open and engaging. We all got a sense of really good people with a great culture. “When we met Spero Valavanis and his firm’s key leaders, we quickly realized they were ‘just like us,’ which was imperative for a successful integration,” says Jim Lee, president of Shive-Hattery. “With our Corporate Shared Services groups relieving Design Organization’s team from accounting, IT, and human resources, they now had the ability to focus on the ‘fun stuff’ in our business and grow their practice.” Valuation, cash-out, and purchase of Shive-Hattery stock, employment agreement and non-competes were discussed. You might think this was the hard part, but not so. Shive- Hattery had made previous acquisitions and we had done our homework. The financial part of the process went smoothly.

THE ZWEIG LETTER April 9, 2018, ISSUE 1243

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