TZL 1300

T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M J u n e 1 0 , 2 0 1 9 , I s s u e 1 3 0 0

Principal compensation

Don’t dump your older employees

“We need everyone’s

M aybe I’m just more aware of it now that I’m over 60, but it seems to me a lot of companies really treat their older folks poorly at the end of their careers. And it’s sad. I was recently talking with a 58-year-old engineer who told me he retired early last year. When I asked him why – when he had been at the same company for 24 years – he said there’d been a management change and he could “see the handwriting on the wall.” Apparently the older employees were all being forced out or let go, one-by-one, only to be replaced with younger, less expensive people. He felt it was inevitable that he, too, would suffer the same fate if he stayed. He wanted to go out on a high note. The sad thing is this fellow was still vital. One of the best sellers of work, even though not a principal, and he was in great shape mentally and physically. All of his talent, and all of his knowledge of the firm and its clients was lost. But maybe even worse, he left with a bad taste in his mouth and bitterness toward the organization he’d loyally served for the better part of his career. And he was willing to tell anyone who’d listen just that. Think about all of the negativity being spread through this guy’s entire network and the reputational damage he could cause the company. The point is – with the tremendous labor shortage we are currently saddled with in the AEC industry – we need everyone’s talents. And we especially need those with

In Zweig Group’s 2019 Principals, Partners & Owners Survey of AEC Firms , principals were asked to provide their current compensation data. By median values, base salaries among engineer and architect principals were higher than those of business management principals. However, business management principals reported bonuses two to three times higher than their technical counterparts, almost leveling the total compensation among the three subgroups. 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 Calibre Engineering.................................6

talents. And we especially need those with a tremendous amount of experience, contacts, and proven skills.”

Mark Zweig

MORE COLUMNS xz NOAH HUNT: M&A best practices Page 3 xz JULIE BENEZET: Who, me? Page 9 xz JUNE JEWELL: Seven secret causes of scope creep Page 11

DBR Engineering Consultants, Inc.........10

JLF Architects.........................................2

Shive-Hattery....................................4, 12

Radical benefits: Greg Murphy 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 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

BUSINESS NEWS JLF ARCHITECTS’ PAUL BERTELLI RECEIVES 2019 LEGACY AWARD FROM MOUNTAIN LIVING MAGAZINE HONORING GROUNDBREAKING 40-YEAR CAREER Paul Bertelli, partner and design principal of JLF Architects , has been honored with the Mountain Living Legacy Award, one of 15 award winners from six Western states. Mountain Living is a magazine that celebrates the high country’s best architecture, home design, interiors, and mountain destinations. The award recognizes top talent in the Rocky Mountain West who have made a significant contribution to mountain home design, with winners announced in the magazine’s 25th- anniversary May/June 2019 issue. Bertelli’s work also earned JLF Architects the cover image of the magazine, featuring a design- build Jackson Hole house the firm created with Big-D Signature. JLF Architects, celebrating its own anniversary – 40 years – this year, is based in Bozeman, Montana; Jackson Hole, Wyoming; and Park City, Utah. “The work of these talented individuals has been showcased in the pages of Mountain Living over the past 25 years,” says Mountain Living Editor in Chief Darla Worden regarding the Legacy Award honorees selected by a panel of distinguished judges. “Now, we’re delighted to provide this special recognition of their long- lasting impact through their ideas, products and innovations.” When Bertelli started designing houses four decades ago, the notion of leaving a legacy was not part of his plan. He dedicated his career to a design-build philosophy that launched a movement using reclaimed materials in new construction. Focused on place-based architecture, Bertelli began disassembling original homestead structures from the first settlers in the Mountain West and reconstructing them with authentic methods that honored the time-worn qualities to form houses that would blend into the dramatic landscape as if they’d stood in the same spot for centuries. Today, with more than 200 projects in his portfolio and celebrating the JLF Architects milestone 40th anniversary, Bertelli recalls his start in architecture, telling Mountain Living , “In my early career we had to convince homeowners

we could make buildings out of things like old cabins that had survived 100 years. They were almost romantic replications.” Pioneering the movement of using reclaimed materials to create stunning new houses that stand the test of time, JLF Architects is constantly evolving with new ways to push the boundaries in beautifully combining antique and contemporary. “We are in the business of building houses for families to pass down from generation to generation,” Bertelli tells Mountain Living , and indeed, the firm is widely recognized in the Rocky Mountain West and beyond for its ability to build “brand-new 100-year-old homes.” This is the inaugural year of Mountain Living ’s Legacy Award. The magazine selected individuals demonstrating at least 15 years of exemplary work in architecture, interior design, landscape architecture, lighting design, and furniture to receive the honor. Winners were judged on their body of work, dedication to mentoring, community involvement, and lasting contribution to the area of mountain residential design. The Legacy Award winners represent businesses in Montana, Wyoming, Colorado, Arizona, Idaho, and Utah. Building timeless structures rooted in integrity and simple elegance, Jackson Hole, Park City, and Bozeman-based JLF Architects applies distinctive solutions and materials to create place-based houses marked by the influences of landscapes from the Pacific coast to the Rocky Mountains to the Eastern Seaboard. JLF Architects’ award-winning perspective is powered by inspired design and an exacting eye for placement, an ethos that stems from a unity of nature, beauty, balance and imagination. JLF Architects has established a genuine alliance with Big-D Signature, built over 19 years of working together, to create a streamlined design- build process that benefits clients. Winners of Mountain Living magazine’s 2016 Home of the Year, the JLF Architects and Big-D Signature design-build team unites passionate architects with dedicated builders to enable the collective imagination of visionary artisans working with visionary clients.

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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

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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.

MARK ZWEIG, from page 1

a tremendous amount of experience, contacts, and proven skills. Maybe we don’t need to keep all these people in management jobs or positions of power, and maybe we need young blood with energy, fresh ideas, and enthusiasm. But they aren’t mutually exclusive. We can and should do both. How is your firm handling this issue? Are you doing what you should to harness and employ the talents of your older employees? Or are you casting them aside like an old car that lacks today’s conveniences and has too many miles? MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

O P I N I O N

M&A best practices

If you’re looking to sell your AEC firm, the sales process you take – either broad or targeted – will have its share of pros and cons.

O nce the decision to sell your firm has been made, hire an M&A advisor. Your sell- side advisor will seek to achieve an optional mix of value maximization, speed of execution, and certainty of execution among other deal-specific objectives.

involves contacting dozens of potential buyers com- prised of both strategic buyers (which could likely include direct competitors and other AEC firms) and financial sponsors (family offices or private equity funds). It can be difficult to maintain confidentiality as this process is susceptible to information leakage which, in turn, could increase the risk of business disruption. “To maximize value and certainty of execution, M&A advisors seek to properly position the business by crafting a compelling story using marketing material and tailoring the sale process accordingly.”

To maximize value and certainty of execution, M&A advisors seek to properly position the business by crafting a compelling story using marketing material and tailoring the sale process accordingly. It’s vital for your advisor to identify the shareholder’s objectives and priorities to determine the appropriate sales process to follow. The traditional sell-side process is structured as a two-round “bidding” process that generally takes three to six months, from the decision to sell until the signing of a purchase agreement. There are two primary types of sale processes: 1)Broad sale approach. As its name implies, a broad sale approach maximizes the universe of prospective buyers contacted. A broad sale approach is designed to maximize competitive advantage to negotiate the best offer. By casting a wide net, this process

Noah Hunt

See NOAH HUNT, page 4

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

ON THE MOVE JEFF LEWIS NAMED SHIVE-HATTERY CHICAGO & NW INDIANA VP & OFFICE DIRECTOR Shive- Hattery announced that Jeff Lewis will succeed Spero Valavanis as vice president and office director of the Chicago and Valparaiso design offices. He will transition from his role as Chicago team leader. Shive-Hattery is a 400-person architecture and engineering firm with offices in Bloomington, Chicago, and Quad Cities, Illinois; Cedar Rapids and Des Moines, Iowa; and Valparaiso, Indiana. Valavanis will remain with the architecture and engineering design firm to focus on master facility planning and design for his long-term relationship clients. “Spero has always been passionate about elevating design and nurturing the development of staff,” said President Jim Lee. “We are supportive and appreciative of his efforts to help us continue our mission of building communities.”

Lewis started with Design Organization in 1998 and continued on with Shive-Hattery in 2012 when Design Organization became a part of the firm. Since becoming a part of Shive-Hattery, Lewis has served as a Chicago Team Leader. “Jeff’s approach is built upon 20 years of design and leadership experience along with a strong sense of community service and partnership,” says Valavanis. “He is focused on creating an environment to support collaborative and creative thinking and providing growth and opportunities for our team. Jeff looks forward to many more years in the both the Illinois and Indiana areas.” “I’m honored to have this opportunity to grow my role while providing continued service for our clients, employees and communities,” said Lewis. “Spero and I are dedicated to a seamless transition.” Lewis is an active member of the community and will continue to be as he transitions into

his new role. Some of his current and past involvement include: ❚ ❚ Project Neighbors Board of Directors, Chairman ❚ ❚ Valparaiso Parks Foundation Board of Directors ❚ ❚ ValpoNEXT Board of Directors ❚ ❚ Concordia College New York Presidential Advisory Council ❚ ❚ Former Taltree ArboretumBoard of Directors ❚ ❚ Former Valparaiso Chamber of Commerce Board of Directors Lewis received his bachelor’s degree in architecture and environmental design from Ball State University. He has been licensed as register architect in Arizona, California, Colorado, Delaware, Florida, Illinois, Iowa, Indiana, Maine, Nebraska, North Carolina, New Jersey, New Mexico, New York, Pennsylvania, Utah, and Washington.

ADVANTAGES AND DISADVANTAGES OF BROAD AND TARGETED SALE APPROACHES

BROAD

TARGETED

❚ ❚ Heightens competitive advantage ❚ ❚ Maximizes probability of achieving maximum sale price ❚ ❚ Helps to ensure that all likely bidders are approached ❚ ❚ Limits potential buyers’ negotiating leverage ❚ ❚ Difficult to preserve confidentiality ❚ ❚ Highest business disruption risk ❚ ❚ Some prospective buyers decline participation in broad auctions ❚ ❚ Unsuccessful outcome can create perception of undesirable asset

❚ ❚ Higher likelihood of preserving confidentiality ❚ ❚ Reduces business disruption ❚ ❚ Reduces the potential of a failed sale ❚ ❚ Maintains perception of competitive dynamics ❚ ❚ Potentially excludes non-obvious, but credible buyers ❚ ❚ Potential to leave “money on the table” if certain buyers excluded ❚ ❚ Lesser degree of competition ❚ ❚ May afford buyers more leverage in negotiations

ADVANTAGES

DISADVANTAGES

targeted sale process. In hiring an advisor to facilitate a sale mandate, it’s important to choose an M&A advisor with a vast network/database of qualified, pre-screened active buyers. NOAH HUNT is director of M&A advisory services at Zweig Group. Contact him at nhunt@zweiggroup.com “Once the decision to sell your firm has been made, hire an M&A advisor. Your sell-side advisor will seek to achieve an optional mix of value maximization, speed of execution, and certainty of execution among other deal-specific objectives.”

NOAH HUNT, from page 3

2)Targeted sale approach. A targeted approach focuses on a few clearly defined pre-screened buyers that have been identi- fied as having a strong strategic fit and/or interest, as well as the financial capacity, to execute an acquisition. This process is more conducive to not only maintaining confidentiality but also minimizing potential business disruption for the selling firm. At the same time, this process runs the risk of “leaving money on the table” by excluding a potential buyer that may be willing to pay a higher purchase price. If you’re mostly indifferent toward confidentiality, timing, and potential business disruption, your advisor may consider running a broad sale process. Alternatively, if speed, confidentiality, a particular transaction structure, and/or cultural fit are a priority, the advisor will run a

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

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THE ZWEIG LETTER June 10, 2019, ISSUE 1300

P R O F I L E

Radical benefits: Greg Murphy President and founder of Calibre Engineering, a national civil engineering firm based in Highlands Ranch, Colorado.

By LIISA ANDREASSEN Correspondent

“A s a Federally-Certified Service Disabled Veteran com- pany we do work on contracts that are specifically set aside for Service Disabled Veteran-owned companies. If I were to leave, Calibre would lose the certification and those contracts,” Murphy says. “In order to transition this work to a new owner I have to find, mentor, and gain trust in anoth- er Service Disabled Veteran and then work on the financial side of ownership transition.” A CONVERSATION WITH GREG MURPHY. The Zweig Letter: Do you tie compensation to perfor- mance for your top leaders? Greg Murphy: No, not directly, but bonuses are larger as profit increases. TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s? GM: I look for four years with the company and $2 million in revenue.

TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your profes- sional life? GM: Now. What makes it fun is the success of the company and the dedication of the younger employees. I enjoy help- ing them with their careers. “I’m a big believer in quality of life and more time off. We have a PTO policy that I like to think is in the top quartile in the industry. The additional time off I’m talking about would be pretty radical.” TZL: How do you promote young and new leaders as the firm grows? GM: We have a personalized program for each person. We have a pretty extensive CAD training regimen, including a

THE ZWEIG LETTER Jun

“CAD Mentor” for younger staff. TZL: In one word or phrase, what do you describe as your number one job responsibility? GM: Planning for diversification and de- veloping business. TZL: What happens to the firm if you leave tomorrow? GM: We would lose all of our govern- ment contracts. As a Federally-Certified Service Disabled Veteran company we do work on contracts that are specifical- ly set aside for Service Disabled Veter- an-owned companies. If I were to leave, Calibre would lose the certification and those contracts. In order to transition this work to a new owner I have to find, mentor, and gain trust in another Ser- vice Disabled Veteran and then work on the financial side of ownership transi- tion. I’m at ground zero right now and looking for someone to bring in who fits that bill. TZL: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours? GM: I don’t know that you can do this. Free market economy dictates that price is a factor. “The myth that things need to go back to ‘when they were great’ is ridiculous. I’m 60 years old and everything is better today than it was in the 1960s. Any effort to resist change scares me.” TZL: If the worker shortage continues, do you see wages increasing to encour- age more talent to enter the AEC space, or will technology be used to counter the reduced work force? GM: I see wages paralleling the overall economy. Technology will eventually re- duce the workforce, but software manu- facturers drive the technology, and they have no interest in robotizing the indus- try by making it too easy to design, so they gate-keep the software to ensure that users need to interact. Eventually, though, 90 percent of civil engineering will be programmable, so there will have

to be a drop-off in labor demand. How- ever, I don’t see there being a drop in de- mand for project management over the next 20 to 30 years. “We are working to make sure that there is a revenue split at the end of the year so that overall compensation makes it in the employees’ best interest to stay. It’s all about addressing their needs and their interests.” TZL: Engineers love being engineers, but what are you doing to instill a busi- ness culture in your firm? GM: We work to engage the mid-level engineers in some of the executive deci- sions and also do coaching. TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around? GM: We are working to make sure that there is a revenue split at the end of the year so that overall compensation makes it in the employees’ best interest to stay. It’s all about addressing their needs and their interests. People will always move in the direction of their best interest. TZL: Benefits are evolving. Are you of- fering any new ones due to the chang- ing demographic? GM: Most of the effort is toward getting staff more time off. I’m a big believer in quality of life and more time off. We have a PTO policy that I like to think is in the top quartile in the industry. The addi- tional time off I’m talking about would be pretty radical. I got this idea when the economy tanked in 2008, and we had to lay people off. Af- ter the lay-offs started impacting really great employees I had enough. I decided that we would do no more lay-offs, but we would split the work hours evenly among everyone. What I found was that when we all worked 20 hours, it was a huge financial burden on everyone, but when we worked say 30 to 36 hours, ev- eryone really appreciated that additional time off, to the point that it was worth

YEAR FOUNDED: 2000 HEADQUARTERS: Denver, CO OFFICE LOCATIONS: 3 NO. OF EMPLOYEES: 35 TYPES OF PROJECTS: ❚ ❚ Military and federal ❚ ❚ Commercial and retail ❚ ❚ Infrastructure ❚ ❚ Healthcare and research

❚ ❚ Mixed-use and TOD ❚ ❚ Schools and training ❚ ❚ Residential ❚ ❚ Public sector (municipal) ❚ ❚ District ❚ ❚ IDIQ and on-call ❚ ❚ Industrial ❚ ❚ Design/build SERVICES: ❚ ❚ Water ❚ ❚ Master/site planning ❚ ❚ Storm ❚ ❚ Sanitary sewer ❚ ❚ Roads ❚ ❚ Parking ❚ ❚ Drives ❚ ❚ Grading and earthwork ❚ ❚ Low impact design ❚ ❚ Costing ❚ ❚ Construction COMPANY CULTURE: The CAT (Calibre Appreciation and Team-Building) program encourages togetherness, engagement, and company morale through monthly company-sponsored events. The goal of the program is to provide diversified events that cater to a variety of interests for individual employees and, often, employee family and friends. Events range from happy hours and go-kart racing to cooking contests and more. GREG MURPHY: Founded Calibre Engineering in 2000. His vision was to provide client-centered, civil engineering services that consistently met budget and schedule. He’s a military veteran with more than 30 years of design and management experience.

See RADICAL BENEFITS, page 8

ne 10, 2019, ISSUE 1300

RADICAL BENEFITS, from page 7

the reduction in income. It occurred to me that going to a 36-hour week would give people an additional 52 days off. When I did some calculations, I found that those four hours that I would be giving up could be offset somewhat by tweaking a few things financially (for example an uptick in rates and a down-tick in “holidays”) and pro- vide far more days off at a fairly small sacrifice in overall revenue. My sense was that the increase in morale/productivity during those 36 hours would probably get us back to even. I’d like to implement the 36-hour week; I haven’t done it yet, but am still contemplating. It’s not something you can step back from once implemented. We also offer perks such as paid gym memberships, tuition re- imbursement, a transit program, snack bar, monthly events, and more. Annually, we request feedback from our staff about ideas for future events and give everyone an opportunity to contribute ideas to the program. TZL: What scares you about the geopolitical environment today?

GM: Isolationism scares me. The desire to halt immigration scares me – civil engineering thrives on population growth, just ask an Italian civil engineer how much work there is in Italy, where population growth has been stagnant for 50 years. We need more immigrants, not fewer. The construction industry has been impeded greatly by political crackdowns and, as a re- sult, has inflated construction costs. The myth that things need to go back to “when they were great” is ridiculous. I’m 60 years old and everything is better today than it was in the 1960s. Any effort to resist change scares me. WRITE FOR THE ZWEIG LETTER Have some advice for your peers in the AEC industry? Contact Sara Parkman at sparkman@zweiggroup.com for the chance to be featured in The Zweig Letter .

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

O P I N I O N

Who, me?

O n my parents’ otherwise unadorned coffee table lay two items: a tasteful, albeit unused, ashtray, and a large, red book. The book contained a cartoon collection from the famous British humor magazine, Punch . We spent hours giggling through its many pages of droll English humor. When working on a project, there are various human roadblocks that consistently clog the path to project execution.

Julie Benezet

They included such gems as the butler standing at his lord’s breakfast table, holding a silver tray and saying, as he served tea, “Sir, the west wing burned down last night.” Or, the image of another breakfast table at which the husband sat at one end with his head buried behind a newspaper and his wife at the other end aiming a toaster at him. One cartoon sticks in my memory because of its enduring relevance. It showed a windowless, doorless house. At the bottom of the center front wall appears a saw protruding from its interior, cutting an opening for the two people stuck inside. The caption reads, “Confound it! I thought YOU were building the door!” To me, the image captures the impact of undefined roles and responsibilities, an affliction in virtually

every organization I’ve encountered. They create good project ideas, but when it comes to who does what, the initiative founders. “Every project needs a roadmap with a decision-maker, subject matter experts, and doers. The absence of agreed upon roles and responsibilities inevitably leads to confusion.” CREATING THE ROADMAP. Every project needs a roadmap with a decision-maker, subject matter experts, and

See JULIE BENEZET, page 10

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

TRANSACT IONS DBR ENGINEERING CONSULTANTS, INC. EXPANDS EL PASO PRESENCE WITH ACQUISITION OF BORUNDA & ASSOCIATES, INC. CONSULTING ENGINEERS In 2016, DBR Engineering Consultants, Inc. opened its first El Paso office to serve the West Texas region. After three successful years DBR Engineering Consultants, Inc. has expanded its El Paso presence through the acquisition of Borunda & Associates, Inc. Consulting Engineers who has served the El Paso area since 1984. “We are excited about our increased presence in El Paso through our recent acquisition. The El Paso office will be led by Robert

Borunda, P.E., who has a long and well respected reputation with his existing clients in terms of service, quality, and integrity. Our charge is to continue to provide those values while continuing to remain focused on our commitment to growth,” said Randy E. Curry, P.E., CEO of DBR Engineering Consultants, Inc. In addition to the expanded presence, the acquisition brings together the talents and expertise of two firms that will significantly increase the firm’s capabilities in both K-12 and higher education markets as well. DBR Engineering Consultants, Inc.’s El Paso office is currently working on projects with El

Paso ISD, Socorro ISD, and El Paso University Medical Center. Founded in 1972, DBR Engineering Consultants, Inc. is a consulting engineering firm providing mechanical, electrical, and plumbing engineering with seven offices throughout Texas: Houston, San Antonio, McAllen, Corpus Christi, Austin, Dallas, and El Paso. The firm offers additional expertise in commissioning, low voltage technology, and sustainability. Founded in 1984, Borunda & Associates, Inc. is an electrical engineering consulting company serving El Paso, Texas and Fort Bliss, Texas.

JULIE BENEZET, from page 9

complaining about it. It provides them with an identity and a guilt-tripping opportunity. ❚ ❚ “Moi?” This person can never find a reason why they should be responsible. They constantly question whether something falls within their job description. “Well, how could we possibly do Y when we haven’t seen the X study results?” They pass on suggesting how to overcome the contingency. ❚ ❚ The Border Guard. This person treats their functional area as a personal fiefdom. This often appears in project management roles with generic position definitions. Nevertheless, they will start a holy war if anyone fails to respect the ill-defined boundary. They spend little time learning what others do, much less how to advance the project goals. ❚ ❚ The Procrastinator. A first cousin of “Moi?” this person knows their role, but the right time to act never appears. “We don’t have enough data,” they whine. These counterproductive behaviors may be conscious or unconscious. Both result in project dysfunction. HOW TO OVERCOME THIS? Preventing project dysfunction offers an important leadership opportunity. Somebody has to lead the way through the thicket of confusion, stubborn- ness, and fear to establish an agreed roadmap. Conversa- tions about roles and responsibilities are not known for their entertainment value, but the contribution to project success is worth the pain. Most important to formalizing roadmap agreements is the conversation itself, because it surfaces assumptions that must be aligned. It requires many follow-on questions, good listening, and a focus on closure. A project roadmap creates group cohesion and overcomes project gaps and overlaps. It also redirects human roadblocks toward a more productive and successful outcome. JULIE BENEZET spent 25 years in law and business, and for the past 16 years has coached and consulted with executives from virtually every industry. She earned her stripes for leading in the discomfort of the new as Amazon’s first global real estate executive. She is an award-winning author of The Journey of Not Knowing: How 21st Century Leaders Can Chart a Course Where There Is None . Her new workbook, The Journal of Not Knowing , a self-guided discovery guide based on the Journey principles, was released in fall 2018. She can be reached at juliebenezet.com.

doers. The absence of agreed upon roles and responsibili- ties inevitably leads to confusion. It appears when a project is in full swing and important steps are missed. They pro- duce such disruptions as, “Did anyone check the project scope?” “Did someone call the city about how long this per- mit process will take?” or, my personal favorite, “Did you check with the attorney to make sure that’s okay?” Cries of recrimination erupt because things are done incorrectly, without authority, or not at all. The cure for chaos is to develop a roadmap that everyone understands and supports. It sounds simple and yet, it does not happen. Why is that? “While having no roadmap could be simply due to a bias for action rather than planning for it, formalizing roles and responsibilities trips defensive levers around power, identity, and avoidance. Their behavioral consequences can cause negative impacts on projects.” While having no roadmap could be simply due to a bias for action rather than planning for it, formalizing roles and responsibilities trips defensive levers around power, identity, and avoidance. Their behavioral consequences can cause negative impacts on projects. THE HUMAN ROADBLOCKS. Below is a cast of characters whose behavior can thwart project planning and execution: ❚ ❚ The Over-Functioner. This individual derives their value from being the go-to person who will always come through, even when it is outside their job function. Others like it be- cause it allows them to avoid things they don’t want to do. What results is a bottleneck while the Over-Functioner strug- gles to figure out how and when to do the work. ❚ ❚ The Martyr. Similar to the Over-Functioner, the Martyr inherits the void others have created. Unlike the Over- Functioner, the Martyr hates the extra work and feels abused. They passive aggressively react by doing a mediocre job and

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

O P I N I O N

Most AEC leaders are aware of the common causes of scope creep, but there are also some subtler internal causes to consider. Seven secret causes of scope creep

S cope creep – that vicious blood-sucker that steals your project profits. When the scope of the completed work exceeds what is promised in your contract, and you don’t get more money, you pay for it. It comes straight from your profit margins and, in the end, can leave a project at a loss. Just think: You are paying your client for the privilege of working for them!

June Jewell

Many of these common reasons for scope creep happen because of your firm’s culture and your project managers’ unwillingness to ask for money. With a culture focused mostly on technical excellence and client satisfaction instead of “What is so insidious about most of these secret scope creepers is that your client has nothing to do with them. Most of them are internal issues that require specific attention, focus, and training to overcome.”

We are all well versed on what causes scope creep – at least we think we are. Your client asks for something outside the scope and you don’t get approval for a change order. There are many reasons for this and these are the most common: ❚ ❚ Employees are trying to keep the client happy and the client does not like change orders ❚ ❚ Employees are afraid to ask the client for a change order (conflict stinks!) ❚ ❚ Employees don’t know how to ask for a change order (very common) ❚ ❚ Your client says you are “nickel and diming” them if you get a change order for every small change (in fact, these changes could cost hundreds and thou- sands of dollars – not nickels and dimes)

See JUNE JEWELL, page 12

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

ON THE MOVE DOUG BOTTORFF NAMED SHIVE-HATTERY’S IOWA CITY VICE PRESIDENT AND OFFICE DIRECTOR Shive-Hattery announced that Doug Bottorff will succeed Phil Larson as vice president and office director of its 70-person Iowa City design office. Bottorff has 23 years of service with the architecture and engineering firm and has held a variety of leadership and management roles throughout his career. “Doug has been very successful and a key leader serving the Iowa City area, and for that matter, the State of Iowa,” said President Jim Lee. “Doug has a deep understanding of our industry and has remained a strong advocate for our clients and our communities. He will be an exceptional leader for the Iowa City Office.”

Bottorff joined the firm in 1997 after graduation from the University of Iowa. In 2008, Bottorff returned to the University of Iowa and obtained his MBA degree. “Doug draws from more than 20 years of experience cultivating and deepening client relationships in the architecture and engineering industry,” says Larson. “He’s also adept at developing talent – he is surrounded by very talented architects and engineers. Doug brings the right leadership and management skills to provide success to both our clients and colleagues. He is a proven leader, so we know there will be many years of success ahead for the Iowa City office under his leadership.” “I am excited to take on this new role and

the opportunity to continue the growth of the office. I look forward to strengthening my roots in the Iowa City/Cedar Rapids Corridor and the rest of the State of Iowa,” said Bottorff. “Phil and I will work closely to ensure the leadership transition is seamless both internally and externally.” Shive-Hattery is a 400-person architecture and engineering firm with offices in Iowa, Illinois, and Indiana. As a client-intimate consulting firm, Shive-Hattery goes beyond traditional design. With deep knowledge of each client’s business, the firm offers customized solutions and provides support as an extension of client staff. Shive-Hattery consistently ranks in the top 20 percent of architecture, engineering and construction firms for client satisfaction.

JUNE JEWELL, from page 11

4)Too many meetings. Meetings tend to multiply or run way longer than planned, especially in times when project sched- ules get extended or projects get delayed. 5)Turnover at client’s office. Turnover with your key contacts at your client’s office may require you to spend a great deal of time orienting the new client reps about the project. This is scope creep – it is unexpected and outside the scope but hard to get reimbursed for. 6)Time held too long. Your well-meaning project managers may put extra services time on hold thinking that they are waiting for eventual approval or they can bill for it later after they see if there is extra money in the budget. This is why so many firms have huge write-offs! The longer time is on hold the lower the chance of collecting it. 7)Time not tracked on time sheet. In order to bill against a change order you must track the time against it, but employ- ees don’t always fill their time sheets out correctly and the time just goes against the base contract. Each of these secret causes of scope creep can be addressed and corrected with new processes, employee education, and better communication. However, if you are not looking for it, you won’t find it. Focusing like a laser on causes for scope creep – both common and hidden – can make a huge impact on your firm’s profitability. Some of the remedies are quick fixes and can add up to several percentage increases per year. Get your team on board with working toward reducing scope creep and your firm can join the ranks of the top performing firms in the AEC industry. JUNE R. JEWELL, CPA, is a leading expert on business success in the AEC industry, and author of the best-selling book, Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering, and Environmental Firms . Jewell and her team guide AEC firm leaders to reach top level industry profits by getting their employees to take ownership in their firm’s success and be financial guardians for their projects and clients. Through her extensive work with hundreds of AEC firms over the last 30 years, Jewell has discovered that the key to business success is the firm’s employees and what they do every day that either waste time and leak profits or help the firm to grow and prosper. Jewell and her team at AEC Business Solutions have developed a proven program to change employees’ mindsets and daily behaviors to increase productivity, financial performance and project success. Learn more about Jewell and her company at aecbusiness.com

business excellence, these common reasons for scope creep will continue to drive profits down right out in the open. In fact, these common causes of scope creep are actually easier to deal with because they are so common. You can put change order processes in place, teach employees how to ask for money, and work with clients closely to set better expectations up front. “When the scope of the completed work exceeds what is promised in your contract, and you don’t get more money, you pay for it. It comes straight from your profit margins and, in the end, can leave a project at a loss. You are paying your client for the privilege of working for them!” The real danger lies in the subtle everyday issues that cause scope creep that don’t get as much attention. What is so insidious about most of these secret scope creepers is that your client has nothing to do with them. Most of them are internal issues that require specific attention, focus, and training to overcome. These are the seven causes of scope creep that secretly steal your profit margins: 1)Scope not detailed enough. When it’s time to get a change order, it is critical that the scope is well defined and clearly details assumptions, inclusions, and exclusions. Without this level of detail, conflicts with clients can arise and the AEC professional is usually on the losing end of the argument. 2)Staff doesn’t know what is in the scope. If your staff has never been told what is in the scope, they may mistakenly make assumptions of their own and perform services that were not included in the contract. 3)Staff ignores scope. Believe it or not your staff may actually ignore the scope on purpose. Again, this is because of a cul- ture that focuses on quality above all else. Unfortunately, not every client has enough budget to afford the level of quality that your employees wish to deliver.

THE ZWEIG LETTER June 10, 2019, ISSUE 1300

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