TZL 1293

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 2 2 , 2 0 1 9 , I s s u e 1 2 9 3

Firm-to-HR staff ratio

Being a better supervisor

W e can talk all we want about leadership and management. But the fact is, a lot of managers in AEC firms – design and technical people who have become managers – need to learn a few supervisory basics. Here are some specifics: 1)Return all emails from people who work for you promptly. Even more fundamental – respond to ALL emails at some point. People could be waiting on your feedback. They need your input, or approval, or ideas. You are hold- ing them up by not responding, and it is very frustrating to those who work for you. 2)Talk to everyone who works for you. Even the lowliest technician or intern – if they work for you – wants to have their existence ac- knowledged by you. Get out from behind your desk and go see them. Walk around the office. Ask questions. Better yet, take some individu- als to lunch whom you wouldn’t normally go out with. Show interest in your people. 3)Check in when you are gone. If you travel, it helps to make a quick five-minute call to those who work for you – particularly your seconds- in-command – daily. Yes, it’s a pain to make these calls when you are traveling and sitting in meetings all day, but they are super-impor- tant to make. 4)Give clear directions. Assume nothing. A quick email or text to instruct people, so that they do what you want them to do on a daily basis, is essential. Expecting people to know what you want without clear direction makes no sense. Punishing or criticizing them after the fact – when you failed to give clear direc- tion – isn’t fair. 5)Some other pointers: Watch your sarcasm. Everyone won’t get it. Give praise publicly and

“A lot of managers in AEC firms – design and technical people who have become managers – need to learn a few supervisory basics.”

Zweig Group’s 2019 Policies, Procedures & Benefits Survey of AEC Firms asked firms to enter the size of their HR department as well as the total firm size. Firms with more than 250 employees had a median ratio of 106 full-time employees for every member of the HR department, which greatly outpaced the smaller and medium-sized firms. This increase in responsibility for HR directors in larger firms rightly corresponds with an average compensation increase of over 25 percent. Participate in a survey and save $320 on any Zweig Group research publication. Visit bit.ly/TZLsp to learn more. F I R M I N D E X Braun Intertec.........................................4

Mark Zweig

Burns & McDonnell Engineering Co.......12

MORE COLUMNS xz TRACEY EAVES: Investment value Page 3 xz DAVID WANTMAN: Embrace change Page 9 xz WILLIAM QUATMAN: Say what!? Page 11

CR architecture + design.........................4

Hitchcock Design Group.........................6

JDavis.....................................................2

KBR......................................................10

WGI. .....................................................10

See MARK ZWEIG, page 2

T H E V O I C E O F R E A S O N F O R A E C F I R M S & M A N A G E M E N T C O N S U L TA N T S Identifying opportunities: Bill Inman Page 6

ON THE MOVE ROBERT NUSSEAR NAMED CHIEF PRACTICE OFFICER JDavis , is a 75-person multi-disciplinary design firm providing architecture, planning, landscape architecture, and interior design services, has named Robert Nussear, AIA, LEED AP as chief practice officer. Additionally, Y.E. Smith, AIA, and Beret Dickson, AIA, have been elevated to the role of partner. Nussear’s role as chief practice officer will expand his position into overseeing the newly created Market Sectors that structure the firm’s studios in both Raleigh and Philadelphia. Nussear will retain his responsibilities as a principal and director of multifamily. Smith and Dickson joined JDavis as partners in efforts to strengthen the firm’s service offerings in mixed-use, retail, and office design. “JDavis’ strategic shift and new additions to our leadership team will well position our firm for many years to come,” says Nussear. “I am extremely excited about the direction our firm is taking and the quality of the design work that we have been providing in recent years across all sectors.” Nussear joined JDavis in 2004 and was named principal in 2006. He brings more than 32 years of experience in the architecture profession. Nussear was drawn to JDavis because of their focus on urban revitalization in complex mixed- use and multifamily infill projects. His strength in organizational and technical skills have helped guide the firm in maintaining the critical balance of design and service through the market sector programming. Smith joined JDavis in late 2018 bringing more than 30 years of experience in the design of retail centric mixed-use, commercial, community, and institutional environments. In addition to being a partner in the firm, his role as director of mixed- use and retail positions JDavis to manage the challenges that mixed-use and retail require when delivering quality design for our clients. Smith specializes in creating destinations that elicit memory, empathy and respect for natural and man-made influences on our built environment including context, history, culture, budgets and market trends. He has worked with clients throughout the U.S. and abroad including China, India, Korea, Mexico, and the Caribbean. Dickson joined JDavis in mid-2018 as design director and has now evolved his role as a partner of the firm. Beret is an award-winning architect with experience in commercial, residential,

mixed-use, planning, and education projects. Beret is motivated by the power of design to shape culture through inspiring, timeless spaces that support social equity, environmental stewardship and personal well-being. Working across all design disciplines and market sectors, his role at JDavis is focused on building an integrated design process fueled by research, analysis, collaboration and experimentation. His primary role is to fulfil the company’s strategic goal to become a regional and national design leader. JDavis’ five year strategic plan, initiated in the Fall of 2017, is focused on the firm’s Mission to Build Value and Pass it On. This idea is reflected in how JDavis works, cultivates the growth of employees and partners, and engages with communities in which it works. One of the key elements of the strategic plan is the reorganization of the design studio into a market sector approach to delivering services. This structure allows JDavis to focus on its core expertise, and provide identifiable value to its clients. JDavis’ clients can be certain that the entire project team, from the principal-in-charge to the project designers have a passion for their work, and are recognized experts in their project type. JDavis’ market sectors include: High-density multifamily; low-density multifamily; senior housing; student housing; commercial architecture; landscape architecture; mixed- use; and interior design. These market sectors are each led by a director, with support from a manager, with teams in two locations: Raleigh, North Carolina, and Philadelphia, Pennsylvania. JDavis connects communities through design by creating places that bring people, neighborhoods, cities and regions together. It is JDavis’ mission to build value and pass it on. JDavis believe that it should build value for clients, itself, and its communities; and that the firm has a responsibility to pass on its knowledge and experience to those who come after them. JDavis’ multi-disciplinary practice brings together professionals in architecture, landscape architecture, planning, interior design, and procurement management serving the Mid- Atlantic and Southeast regions. The firm’s areas of expertise include multifamily housing, urban design and planning, affordable housing, student housing, senior living, commercial office, mixed- use, retail, clubs and resorts, coastal, parks, and master planning.

1200 North College Ave. Fayetteville, AR 72703 Chad Clinehens | Publisher cclinehens@zweiggroup.com Richard Massey | Managing Editor rmassey@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Sara Parkman | Senior 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 © Copyright 2019, Zweig Group. All rights reserved.

criticism privately. Set a good example for hours worked. Do your timesheets and ex- pense reports on time. Don’t cheat your clients by overbilling them. Keep a clean office. Be nice. Treat everyone with respect. All of us can be better supervisors. Maybe a brown-bag lunch to talk about these pointers would be helpful! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com. MARK ZWEIG, from page 1

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

O P I N I O N

Is your firm an investment value candidate? If you’re looking to sell, this is the level of value at which you have the most opportunity to maximize your exit. Investment value

I n the world of business valuation, we throw around a lot of terminology relating to value indications. You are probably most familiar with fair market value, but I would like to discuss a different value level today. The International Glossary of Business Valuation Terms defines investment value as the value to a particular investor based on individual investment requirements and expectations. As a shareholder, this is the level of value at which you have the most opportunity to maximize your business investment.

Tracey Eaves

Investment value involves synergies between firms and the additional value over and above fair market value. Synergies come in various forms including the ability to increase the revenues of the target firm, the reduction of risk when combined with an acquirer, savings through the elimination of duplicated efforts, and other qualitative factors including an increase in depth of management, enhanced financial performance, and diversification. Firm size will also likely drive investment value. Supply and demand can lead to additional price premiums when the number of buyers exceeds the number of good firms for sale.

appealing option to exit a firm. However, not every firm is a candidate. Investment value candidates will likely have a mix of the following characteristics: ❚ ❚ The firm operates in an attractive target market ❚ ❚ The talent of the people on staff must be attractive to a buyer ❚ ❚ Specialties and niche markets are generally sought after by investment buyers ❚ ❚ Financial and organizational performance should be strong

See TRACEY EAVES, page 4

As a seller, investment value is certainly an

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

ON THE MOVE CR ARCHITECTURE + DESIGN PROMOTES VICE PRESIDENT, HOSPITALITY CR architecture + design announced that Kelly Gaddes has been promoted to lead the firm’s hospitality and interior design practices as vice president, hospitality Gaddes played an integral role in CR’s decision to enter the interior design market segment in 2013. She has since gained client leadership responsibilities and broadened her expertise with iconic national brands across various market sectors. Prior to joining CR architecture + design, she served in a lead design role specializing in hospitality and restaurant design for more than eight years at a local design firm. As vice president, hospitality, Gaddes will continue to leverage CR architecture + design’s hospitality expertise through her industry knowledge and eagerness for developing key client and industry partnerships. She will be responsible for driving a standard of design excellence and client service across CR architecture + design’s hospitality teams, while upholding the firm’s mission to create extraordinary places that build enduring value. “Kelly has been integral to the success of our interior design practice and enhanced key client relationships,” said Bill Dandy, president of CR architecture + design. “Her initiative and hard work has broadened our ability to provide our clients with excellent end-to-end service. I’m confident Kelly’s experience and emphasis on building strong client partnerships will provide excellent leadership for our entire hospitality business.” Gaddes’ promotion from within to vice resident marks another in a series of planned moves. CR architecture + design continues to positively reinforce their infrastructure to serve a diverse client base, while showcasing a top- tier leadership structure.

A graduate of the University of Cincinnati’s DAAP program, Gaddes is passionate about helping local students achieve success in the hospitality industry. She is actively involved with Network of Executive Women in Hospitality. After leading the formation of the Cincinnati Regional Chapter in 2013, she now serves as the local chapter’s Steering Chair and sits on the national board of directors as the fundraising director. CR architecture + design creates spaces that authentically reflect its clients and creatively achieve their goals. For 36 years, CR architecture + design has gone where its experience leads them and where they can make an impact. Today, CR architecture + design’s clients engage with architecture, interior design, and MEP professionals across offices in Cincinnati, Dallas, Denver, Minneapolis, Seattle, and Washington, D.C. Staying rooted in its approach to quality design and innovation, CR architecture + design has developed a national portfolio of projects in the retail, hospitality, government, higher education, K-12, commercial, housing and senior living markets. By infusing the innovation and wisdom of its people, CR architecture + design creates extraordinary places that build enduring value for its clients and the communities they serve. KIM MACY, SET, DBIA, JOINS BRAUN INTERTEC IN NORTH TEXAS Braun Intertec , an engineering, consulting, and testing firm with offices throughout the central United States, has announced Kim Macy, SET, DBIA, has joined the firm as a principal and the regional consulting director for North Texas operations. Macy brings nearly 25 years of leadership and project management experience serving clients within the public and private sectors

on environmental consulting, geotechnical engineering and construction materials testing projects in Texas. “I’m incredibly pleased to welcome Kim to our team,” says Braun Intertec CEO, Jon Carlson. “With a strong reputation for being a trusted client advisor and developing collaborative teams, Kim complements our vision of being both the consultant and employer of choice. As we continue to grow our team, her diverse experience will enhance our ability to serve our clients in Northern Texas.” Over the course of her career, Macy has held a variety of leadership positions while maintaining a commitment to technical excellence. She has significant experience providing geotechnical and materials testing services on a wide variety of complex projects, including highway expansions, high- rise buildings, educational facilities, medical facilities, taxiways and runways, and data centers. Macy serves as a board member for the Southwest Region of the Design Build Institute of America. She is also an active member of the American Council of Engineering Companies and currently serves on the local political committee for the Fort Worth area. Based in Minneapolis, employee-owned Braun Intertec is a premier engineering, environmental consulting, and testing firm with nearly 1,000 employees located in Iowa, Kansas, Louisiana, Minnesota, North Dakota, Texas, and Wisconsin. Braun Intertec subsidiaries include Agile Frameworks, LLC, based in Minneapolis, in addition to GME Consulting Services, Inc., based in Dallas.

insight into their company. You can be assured that a buyer is going to know a great deal about you! TRACEY EAVES, MBA, CBA, CVA, BCA, CMEA is a member of the Valuation Consulting team at Zweig Group. She has been valuing privately held company interests for more than 18 years. Contact Tracey at teaves@zweiggroup.com or directly at 505.258.8821. “The International Glossary of Business Valuation Terms defines investment value as the value to a particular investor based on individual investment requirements and expectations. As a shareholder, this is the level of value at which you have the most opportunity to maximize your business investment.”

TRACEY EAVES, from page 3

❚ ❚ Good financial and operational data must be available ❚ ❚ Shareholders must be open-minded to the selling process ❚ ❚ Sellers should have reasonable price expectations Should you decide that an investment buyer is a viable exit option some preparatory work is necessary to effect a positive transaction experience. This entails assessing the value of your firm and ensuring that all shareholders are on the same page if governance documents require a vote for transaction approval. Thereafter, it is critical to understand that this process is time-consuming and will require focus. Good staff to carry on with daily business details is a must. You should also ensure that the cultural fit feels right, as it is a major key to assuring that your firm will continue to thrive after a deal is consummated. Lastly, be bold in getting to know the interested buyers by asking a lot of well crafted questions that will provide you with

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

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THE ZWEIG LETTER April 22, 2019, ISSUE 1293

P R O F I L E

Identifying opportunities: Bill Inman President and CEO of Hitchcock Design Group (Best Firm Architecture #7 for 2018), a 35-person landscape architecture firm headquartered in Naperville, Illinois.

By LIISA ANDREASSEN Correspondent

“W e’ll invest heavily in people who are smart and want to get smarter, who are humble and work well in teams, and who are hungry for success,” Inman says. “I believe culture is what you make of it in the moment, not some nebulous ideal that someone else should provide for you.” A CONVERSATION WITH BILL INMAN. The Zweig Letter: Do you tie compensation to perfor- mance for your top leaders? Bill Inman: Absolutely. Hitchcock is a performance-based organization, defined both by metrics and cultural commit- ments. We are committed to compensating all members of our firm in the top-quartile of the market, as defined by their roles, responsibilities, expectations, and experience level. In our firm, all top leaders are responsible for bringing in work, caring for clients, delivering innovative and profitable solutions, and adding value to our culture. Awesome indi- vidual performances are then rewarded in the moment with firmwide recognition and perks, and annually with cash bo- nus awards.

Our philosophy is that when the firm pays bonuses, every- one gets something for being part of the team, and the high- est performing offices and individuals are awarded higher amounts. And since many of our top-leaders are owners, the firm value created by top-owners is further rewarded through incremental intangible-value awards as part of our deferred compensation program. “In our firm, all top leaders are responsible for bringing in work, caring for clients, delivering innovative and profitable solutions, and adding value to our culture.” TZL: What actions do you take to address a geographic office or specific discipline in the event of non-perfor- mance? BI: This hasn’t been much of an issue for us, but sometimes individual offices don’t have the backlog to support their talent, so our workgroup leaders work with each other to share talent between offices to smooth out utilization. We have five workgroup studios across our four offices, but we

THE ZWEIG LETTER Ap

treat our company as one firm. If a work- group is really struggling, it’s everyone’s re- sponsibility to support them and help out. The same is true when a workgroup has too much backlog or too many consecu- tive deadlines. If we do this right, we con- tinually engage all of the design intelligence across our firm – but it’s a lot of work to do that consistently requires all of us to be pro- active and holster our egos. TZL: Internal transition is expensive. How do you “sell” this investment oppor- tunity to your next generation of princi- pals? How do you prepare them for the next step? BI: Due to the foresight of our founding principal, we’ve been working at this for a couple of decades now. Over that time, we have created two tiers of ownership where our senior principals invest in 50 shares each and our principals invest in 10 shares each. Each share value represents its por- tion of the balance sheet’s book-value of the firm. About half of firm members are cur- rently shareholders. Then, our intangible value is calculated ev- ery year, using three years of normalized earnings and giving the most weight to the current year. The current intangible val- ue, as calculated annually, is owned by the shareholders with annual increments (ei- ther positive or negative) being awarded on a performance basis. Each owner’s shares, and their respective in- tangible value account is paid back at retire- ment in accordance to simple agreements we have with each other. Plus, we’ve invest- ed some money on the side in a corporate owned life-insurance vehicle to help fund a shareholder’s retirement, making our cur- rent and future internal transitions rela- tively easy and pain free. We’ll be putting our efforts to the ultimate test in the next couple of years when our founding principal hangs up his T-square and rides off into the sunset with his equity! TZL: In one word or phrase, what do you describe as your number one job respon- sibility as CEO? BI: One word or phrase? That seems impos- sible, but when I think deeply, it’s this: Keep our company moving fast by choreograph- ing our firm’s collective intelligence-horse- power into a powerful engine of profession- al progress. Okay, that was wordy and my passion for muscle cars clearly influenced this analogy, but I think that pretty much sums it up. It’s

mostly not about me, but rather the total talent we’ve grown organically in the firm. Maybe a simpler way to describe my biggest responsibility is to say “continuously im- prove our culture,” which encompasses ab- solutely everything we do, and that starts with me. Culture is as culture does. I think Forrest Gump may have said that. TZL: What happens to the firm if you leave tomorrow? BI: Jack squat. That means nothing. We keep growing and succeeding. In our 35-per- son company, there are at least three oth- er people who could step into my job right now and probably do it better. “Our betterment comes from our relentless ambition to be a prominent, distinctive, client- centered planning and design practice, but our strength comes from our collective experience, which is extensive.” TZL: There is no substitute for experi- ence, but there is pressure to give respon- sibility to younger staff. What are you do- ing to address the risk while pursuing the opportunity to develop your team? BI: Our betterment comes from our relent- less ambition to be a prominent, distinctive, client-centered planning and design prac- tice, but our strength comes from our col- lective experience, which is extensive. More than half of us at Hitchcock have more than 20 years of professional landscape architec- ture experience, and of those folks, much of that has been invested with our firm. That gives us the opportunity to be one of the best teaching firms in our markets, pro- viding front-line experiences for all of our staff, while mitigating risk through firm- wide collaboration and workgroup-centric quality management procedures. TZL: Landscape architects love being landscape architects, but what are you doing to instill a business culture in your firm? BI: Great question, and since we are all members of a private practice landscape ar- chitectural firm, understanding the busi- ness is inherently a requirement of our cul- ture, so the engagement in the business side of our practice is already pretty high. See CONFERENCE CALL, page 8

YEAR FOUNDED: 1980 HEADQUARTERS: Naperville, Illinois OFFICES: Hitchcock has four offices: ❚ ❚ Austin, Texas ❚ ❚ Chicago, Illinois ❚ ❚ Indianapolis, Indiana

❚ ❚ Naperville, Illinois NO. OF EMPLOYEES: 35 MARKETS: ❚ ❚ Civic ❚ ❚ Education ❚ ❚ Healthcare ❚ ❚ Parks and recreation

❚ ❚ Real estate ❚ ❚ Senior living MISSION: Hitchcock’s mission is to help its clients Create Better Places by maximizing the potential of their valuable outdoor places through smartly planned, thoughtfully executed design solutions. Hitchcock focuses solely on planning and landscape architecture and the firm applies its skills in markets that genuinely interest and inspire its talented, specialized teams. CULTURE: Hitchcock is a “skills and passions” based organization where everyone is encouraged to have fun and pursue their best professional experience. And, even though the firm has four distinct offices in separate cities, Hitchcock rallies around the phrase “better together” and supports each other firmwide and across studio lines as if its offices were simply adjoining rooms.

pril 22, 2019, ISSUE 1293

CONFERENCE CALL, from page 7

BI: I’ve been with this firm for almost 30 years, and I cred- it our founding principal with identifying opportunities where I could be successful, then supporting me with re- sources in a manner proportional to the degree I remained engaged making progress. I intend to uphold that tradition and continue to tweak our structure to create unique envi- ronments where you can show the firm “your stuff.” Beyond that, we want to take care of our people with good policies, top of market compensation and benefits, useful feedback loops, challenging projects, strong teams to work within, and solid examples of leadership to profile. Firms that openly promote respect, recognition, and relationship will get it done. If we promote an environment that respects people, recognizes good work, and fosters positive relation- ships, we’ll get it done, too. But I also won’t kid myself; we can’t be everything to ev- erybody, and I simply refuse to chase every demand. I’m a staunch believer in writing your own ticket, and if you have ambition, the firm will be right there to help you succeed. But if you think you’re a hotshot and need special treat- ment, this firm isn’t for you. We’ll invest heavily in people who are smart and want to get smarter, who are humble and work well in teams, and who are hungry for success. I believe culture is what you make of it in the moment, not some nebulous ideal that someone else should provide for you. TZL: What scares you about the geopolitical environ- ment today? BI: Just the general uncertainty of it all. Personally, I be- lieve we can make our own successes with tactical manage- ment even in the face of headwinds. However, I hear at least once a day that a recession is coming this year and that the economy is strong and has a lot of runway left. So, I do two things: Read everything I can get my hands on to stay cur- rent, then ignore the noise and focus on the next thing that will improve our firm. TZL: Are you currently pursuing the R&D tax credit? BI: We are. This was brought to our attention by our new ac- counting firm and we’re encouraged by the tax credit possi- bilities they’ve discovered so far. Since a large part of what we do is managing multi-disciplinary project delivery teams as the prime consultant, we’ve been told we’ll likely qualify, and they’re figuring out the how-much part right now. Fin- gers crossed! challenging projects, strong teams to work within, and solid examples of leadership to profile. Firms that openly promote respect, recognition, and relationship will get it done.” “We want to take care of our people with good policies, top of market compensation and benefits, useful feedback loops,

We recently completed an energizing five-year strategic planning process that everyone in the firm participated in. It outlines a balanced scorecard of improvement objectives with opportunities to dig in to what interests you the most. We just rolled that out at the beginning of 2019 and it’s my hope that the business practice engagement increases even more as the strategic plan evolves. “We can’t be everything to everybody, and I simply refuse to chase every demand. I’m a staunch believer in writing your own ticket, and if you have ambition, the firm will be right there to help you succeed. But if you think you’re a hotshot and need special treatment, this firm isn’t for you.” There is also broad participation in the assembly of our an- nual business plan, which formulates hiring plans, business development strategies, sales targets, revenue and prof- it metrics, and expense budgets for each of our five work- groups. We report against this plan monthly, sharing finan- cial performance data to everyone, and then quarterly, we review the firm’s overall performance in person with the whole firm, focusing on our culture, design innovation, cli- ent success stories, and our finances. Day to day, we mentor interested staff on a wide variety of business lessons, from how to prepare detailed project bud- gets for a new client to maintaining a profitable client-base over the long-term. We provide live project data on every- one’s desktop to manage against, so there’s little excuse to blindly tank a project. TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program? BI: The seller-doer model has been the foundation for our long-term success and we don’t plan to stray very far from this model. To keep this model effective as we grow, we need to “remain small” at the same time. It’s critical for us to maintain the relationship of our repeat customers, which account for a high percentage of our work. But to grow, we need to pursue clients and projects that pro- file our skill sets and values. To do that, we deploy a broad sales team, and each member contributes in ways that en- gage their best skills and passions. For example, the man- aging principals of our workgroups are, in general, wired to pursue new business, so they lead many of the competitive RFQ/Ps we choose to pursue. They are directly responsible for building and maintaining their workgroup’s backlog, so they tend to manage fewer projects directly. Other mem- bers of our sales team excel at research, publishing articles, or public speaking, but everyone contributes. TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

O P I N I O N

Embrace change

Whether it’s growth, ownership transition, diversity and inclusion, or technology, firms shouldn’t shy away from change if they want to be successful.

C hange is inevitable. The AEC companies that prepare for and encourage change not only have a much better chance of survival – they are much more likely to thrive. The key is to deflect the changes that result in negative consequences while embracing changes that create intelligent disruption and allow companies to become stronger, more robust, and more viable. More importantly, the leadership team must have the vision to anticipate and analyze changes before they materialize.

David Wantman

The playing field constantly changes, so it only makes sense that companies shift accordingly. Companies must proactively initiate internal changes rather than simply react to external changes because, at that point, it may already be too late. ❚ ❚ Mergers and acquisitions produce immediate change. The moment a merger or acquisition is finalized, both companies are forever altered. There- fore, it’s critical that the union is harmonious and advantageous for both entities. Both companies need to thoroughly evaluate one another to ensure cultural compatibility, financial soundness, and the structure of the “new” firm going forward. Remem- ber that, to some degree, both firms will change. When companies combine, it is essential to identify professionals who want to be leaders, not just

passive participants. To make mergers and acquisi- tions work beyond the honeymoon period, leaders at every level must stand up and take responsibil- ity for the integration. Those who lead through the integration process end up as the future leaders of the “new” firm – ushering in change and fresh ideas that invigorate the team, and the resulting growth needed for the firm’s continued success. Through sincere communication and addressing any issues head-on, corporate acquisitions add real excitement and reignite commitment within the par- ent firm and its shareholders. It brings immediate, substantial change that organic growth can’t match. ❚ ❚ Organic growth is also essential. Yet, organic growth has its own important benefits. Many of the

See DAVID WANTMAN, page 10

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

BUSINESS NEWS POINTE LNG SIGNS AGREEMENT FOR ENGINEERING AND TECHNICAL SERVICES WITH KELLOGG BROWN & ROOT FOR PLAQUEMINES PARISH LNG EXPORT FACILITY Pointe LNG, LLC, announced that it has signed an engineering and technical services agreement with KBR to provide Pointe LNG with front end engineering design submittals and services as required to obtain Federal Energy Regulatory Commission approval for Pointe LNG’s proposed LNG liquefaction and export facility to be located in Plaquemines Parish, Louisiana. “We are pleased to have KBR, a global

EPC LNG Contractor, as a partner, and this strategic agreement is an important step in the development of our project. We are thrilled about the opportunity to add KBR’s decades of LNG experience on board as we bring Pointe LNG to market,” said James Lindsay, Pointe’s co-founder. “Selecting KBR to provide the full engineering design on FERC FEED, Full FEED and a lump sum EPC turnkey bid package assures that Pointe LNG will complete the FERC filing process on time and ensures the quality design needed,” said Tom Burgess, the company’s co-founder.

“KBR is pleased to be working with Pointe LNG in this key role and contribute to this important development in Louisiana,” said Farhan Mujib, KBR president, hydrocarbons delivery solutions. “KBR’s selection for this work demonstrates Pointe LNG’s confidence in KBR’s LNG project experience, leverages our U.S. construction capability and provides opportunity for a full service EPC contract at a later date.” Construction is expected to begin in the first quarter of 2021 with initial operations expected in the first quarter of 2025.

DAVID WANTMAN, from page 9

market value, it sends a message that they want the new own- ers and the firm to succeed. To build and grow a legacy firm, ownership must transition, at most, annually; this consistent ownership invigoration communicates the expectation of excellence at every level. Change in your ownership profile is the sign of a healthy firm; embrace it! ❚ ❚ Strive for diversity and inclusion. Diversity at AEC com- panies should dovetail with clients’ ongoing increase in di- versity, strengthening reputation and parity. A homogenous talent pool can only deliver homogenous solutions. While it is possible to reach a certain level of success without great diver- sity and inclusion, companies can never truly rise to their full potential without a broad cross-section of talent. The AEC profession hasn’t kept up with the broader pace of diversity, largely because our colleges also struggle to attract a diverse student population. Fortunately, that is changing. Even so, it will take time for the management-level talent pool to catch up and usher in this much-needed change. Leadership must recognize the benefits of diversity and prioritize it to attract more associates offering different per- spectives. It starts with your brand, not human resources. Build a brand recognized for inclusion if you want to succeed. Of course, when you show up at a college recruiting fair, be represented by a diverse group of professionals. Diversity at- tracts diversity. ❚ ❚ Join the technology revolution. Technology is the fourth industrial revolution, and it is changing at exponential speed. AEC companies that embrace technology will thrive, especial- ly those first adopters. Companies that are slow to adapt will flounder and, even more probably, cease to exist. New technologies have fundamentally changed how we work, live, and relate to each other. That is especially true within the AEC profession as technologies such as artificial intelligence, augmented reality, and autonomy are expanded and fine- tuned. The concept of smart cities is at the forefront, as services that include transportation, waste management, product delivery, and communications are delivered in new, more-efficient ways. There are endless opportunities for companies that ag- gressively leverage new technologies, while those that ignore them are left hopelessly behind. Embrace the change that technology demands! DAVID WANTMAN, P.E., is chief executive officer of WGI. Contact him at david.wantman@wginc.com.

most successful associates are hired straight out of college, then trained on-site to ensure work is accomplished in the company’s preferred and established methods. This home- grown talent doesn’t bring bad habits or previous employers’ methodologies that may not mesh with company culture and standards. However, companies can’t rely entirely on organic growth; it is usually slow – certainly much slower than gaining talent through a merger or acquisition. Let’s say a company has 1,000 associates and through attri- tion, loses 15 percent of its associates each year. To maintain the talent pool, the company needs to hire 150 associates to replace those lost through attrition. In that case, to grow even 10 percent, the company would need to annually hire 250 associates. Achieving that in a strong economy is dif- ficult when considering the small talent pool combined with constant competition, as associates move to other companies. That’s a significant amount of change, one body at a time! “The playing field constantly changes, so it only makes sense that companies shift accordingly. Companies must proactively initiate internal changes rather than simply react to external changes because, at that point, it may already be too late.” ❚ ❚ Even ownership needs to change. When a firm stops grow- ing, profits stagnate, and leadership doesn’t change as fre- quently as the market requires, it’s a warning sign – especially if peer firms are thriving. Chances are, leadership is the issue and change is needed. Difficult though it may be, leaders must be selfless and exit when it’s best for the company, not for them. The same people who started the company may not be the right ones to lead it into the future. Companies should strongly consider shareholder agreements, with triggers for shareholders to sell all or part of their hold- ings when they reach certain ages. No wiggle room, no pref- erential treatment. Shareholders shouldn’t have the option of hanging on solely for their personal gain. When owners are willing to sell shares at the right time for the firm, and at fair

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

O P I N I O N

Say what!?

If you’re a firm owner or design professional, don’t leave contractors guessing. Using plain language, make your intent clear to avoid disputes, change orders, and claims.

T here have been some funny T-shirts that say, “Let’s eat, Grandma!” and “Let’s eat Grandma!” with the caption: “Punctuation Saves Lives!” This shows that the same words can have two meanings, known in legal circles as an ambiguity. When an ambiguity appears in a contract or a set of specifications, courts apply a rule that says the document is “construed against the drafter.” This means that the person who drafts a document (contract or drawing) has to make his or her intent clear, and not leave the reader guessing at the intent. The legal name for this rule is “contra proferentem,” Latin for “against the offeror.”

William Quatman

WHEN TO APPLY THE RULE? Under this rule, ambiguities in a contract, a set of specifications, or a drawing can be interpreted against the author (the “draft- er”) and in favor of the other party’s reasonable interpretation. The concept is that the person or entity drafting the document should not require the other party to speculate as to its meaning. Construction contracts between the government and private contractors are subject to this legal rule to resolve ambiguities. A court’s task in such contract cases is to construe a contract “to effect the parties’ intent” at the time they executed the contract. If, however, the court is unable to in- terpret a contract based on its express terms, an ambiguity may be resolved by looking to – in order of preference – course of performance, course

of dealing, and common trade practices. If all of these approaches fail, the rule of contra proferen- tem is applied as a “rule of last resort” to construe the ambiguity against the drafter. WHEN IS A CONTRACT AMBIGUOUS? When one party ar- gues that the contract is ambiguous, courts apply three primary rules of contract interpretation. First, the court begins with the actual language of the written agreement. In this step, words are given “that meaning that would be derived from the contract by a reasonably intelligent person acquainted with the contemporaneous circum- stances.” This means considering the context and intentions of the parties rather than just a diction-

See WILLIAM QUATMAN, page 12

THE ZWEIG LETTER April 22, 2019, ISSUE 1293

WILLIAM QUATMAN, from page 11

“These obligations are for the purpose of facilitating coordination and construction by the Contractor and are not for the purpose of discovering errors, omissions, or inconsistencies in the Contract Documents; however, the Contractor shall promptly report to the Architect any errors, inconsistencies or omissions discovered by or made known to the Contractor as a request for information in such form as the Architect may require… “If the Contractor fails to perform the obligations of Sections 3.2.2… the Contractor shall pay such costs and damages to the Owner, subject to Section 15.1.7, as would have been avoided if the Contractor had performed such obligations. If the Contractor performs those obligations, the Contractor shall not be liable to the Owner or Architect for damages resulting from errors, inconsistencies or omissions in the Contract Documents, for differences between field measurements or conditions and the Contract Documents, or for nonconformities of the Contract Documents to applicable laws, statutes, ordinances, codes, rules and regulations, and lawful orders of public authorities.” THE RULE OF REASONABLENESS. Even if an ambiguity is found to be hidden and not obvious, i.e. latent, the contractor is not automatically entitled to an extra or a change order from the owner. Courts hold that a contractor’s interpretation of a latent ambiguity will only be adopted if it is found to be reasonable. As one court held, “If the court finds that a patent ambiguity did not exist, then the reasonableness of the contractor’s interpretation becomes crucial in decid- ing whether the normal contra proferentem rule applies.” Interpretation of the contract requires the court to place itself into the shoes of a reasonable and prudent contrac- tor. The contractor does not have to prove that its inter- pretation of the contract is the only reasonable one, but it does bear the burden of showing: a) that its conclusion is at least a reasonable reading; and, b) that it relied on its interpretation of that provision when preparing its bid. WHAT TO DO? If you are an owner or design professional, the takeaway here is to not leave contractors guessing at your intent. Using plain language, make your intent clear to avoid disputes, change orders and claims. If you are a contractor or a subcontractor bidding a job, read the docu- ments carefully and ask for clarification if something is un- clear at the earliest discovery of an ambiguity. Failure to do so may result in the financial risk shifting from the drafter to the reader! WILLIAM QUATMAN, FAIA, Esq., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com. “Under this rule, ambiguities in a contract, a set of specifications, or a drawing can be interpreted against the author and in favor of the other party’s reasonable interpretation.”

ary definition. Second, the court applies the principle that a contract should “be considered as a whole and interpret- ed so as to harmonize and give reasonable meaning to all of its parts.” Third, the mere fact that the parties disagree with regard to the interpretation of a specific provision, does not, standing alone, render that provision ambiguous. A contract provision is ambiguous only if it is susceptible to more than one “reasonable meaning.” In other words, differing interpretations must fall within a “zone of rea- sonableness.” “The person who drafts a document (contract or drawing) has to make his or her intent clear, and not leave the reader guessing at the intent. The legal name for this rule is ‘contra proferentem,’ Latin for ‘against the offeror.’” CONTRACTOR’S DUTY TO INQUIRE. Like every legal rule, there are exceptions. The exception to this rule of contra proferen- tem applies when an ambiguity is obvious on the face of the document, known as a patent ambiguity. This excep- tion applies when the ambiguity is so glaring that it is unreasonable for a contractor not to discover and inquire about it. A patent ambiguity triggers a duty on behalf of a contractor on public projects to ask about the meaning of the ambiguity before it bids on a contract. Absent such an inquiry, a patent ambiguity in the contract will be resolved against the contractor – and not the drafter – for failure to inquire as to the contract’s meaning. Government cases have held that the owner’s so-called Spearin implied war- ranty does not eliminate the “contractor’s duty to inves- tigate or inquire about a patent ambiguity, inconsistency, or mistake when the contractor recognized or should have recognized an error in the specifications or drawings.” Therefore, contractors are given fair warning that, when faced with an obvious ambiguity in the contract, plans, or specifications, they should err on the side of seeking clarification prior to bidding rather than hoping to pursue a change order later. This is tough law, but it makes sense that a contractor should not be able to “sand-bag” on claims, but should come forward at the earliest stage and seek a clarification. This rule has essentially been written into industry contracts. AIA CONTRACT CLAUSES. In the private sector, this concept is found in the standard AIA A201 General Conditions (2017 edition). Failure to promptly report an ambiguity will re- sult in the contractor bearing the financial risk. Section 3.2, Review of Contract Documents and Field Conditions by Contractor, states that: “Because the Contract Documents are complementary, the Contractor shall, before starting each portion of the Work, carefully study and compare the various Contract Documents relative to that portion of the Work…

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THE ZWEIG LETTER April 22, 2019, ISSUE 1293

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