w w w . t h e z w e i g l e t t e r . c o m
HR | FINANCE S U P P L E M E N T S Pages 9 - 12
O c t o b e r 2 4 , 2 011 , I s s u e 9 3 2
E D I T O R I A L
T R E N D L I N E S
Observations on the A/E business in the new economy Mark Zweig offers five examples of the effects of volatility. T his economy we are in is tough! I’ve lived through a bunch of recessions but have never seen anything quite like this. As you plan for the new year, I thought I would share some of my observations about how A/E and environmental firms are being affected and how they are dealing with this economic volatility: 1) It’s getting harder and harder to just be a design firm. The fact is that more and more clients need much more from their design professionals than a set
of plans and specs they can let out for bids. Better construc- tion cost knowledge is essential. Financing assistance may be needed to make the project a reality. Getting the facility built and commissioned is what clients may REALLY want. Not every firm is able to come to the table with the kinds of services
F I R M I N D E X AECOM................................................................ 10 Baskervill............................................................... 4 Chambers Group, Inc........................................... 11 DOWL HKM........................................................... 6 ESI Consultants, Ltd.. ............................................ 3 KPA Associates, Inc............................................... 4 Matern Professional Engineering, Inc................. 11 McDonough Bolyard Peck. .................................... 9 MSA Professional Services................................. 11 Steven Schaefer Associates, Inc........................... 5 Valerio Dewalt Train.............................................. 5 West Yost Associates............................................ 5 Firm spending on human resources has been affected by the economic downturn of recent years. ZweigWhite’s 2011-12 Operating Expenses Survey finds that total HR spending as a percentage of net service revenue has been on a gradual decline in the last few years, dropping from a high of 1.3 percent in 2007, to 1 percent in 2008 and 2009, and to a four-year low of 0.9 percent in 2010. This year, however, saw a slight increase with the median percentage of HR spending to NSR, rising back up to1 percent. – Margot Suydam, Survey Manager
its clients really need today. This is no doubt creating a situation where the larger, more diverse firms in our business are better able to compete in many cases. 2) Top-heaviness is a huge problem! It’s more and more common to see firm staff utilization rates in the mid-50s or less. The reason is top-heaviness. Firms cut from the bottom. Or, firms lost staff from the bottom and didn’t replace them. Either way, they have too many high-paid people who just aren’t that billable. This “condition” sure makes it hard to make money in this business! 3) Collections are a bigger and big- ger problem. It seems like more than ever, firms have ACPs (average collection periods) in the 90-day-plus range. This is due to a variety of issues – problems with clients who are struggling, certainly, foreign clients (and companies that have done well certainly have more of them), and service quality problems. For many firms, the poor cash flow is just now starting to affect them, four years into
See Mark Zweig, page 2
Not every firm is able to come to the table with the kinds of services their clients really need today. This is no doubt creating a situation where the larger, more diverse firms in our business are better able to compete in many cases.
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Sustainability; is it a choice anymore?
I N S I D E
xz top player: Forward-looking business attains success. Page 3
xz HR: MBP helps alleviate everyday stress. Page 9 xz finance: Updating the business plan. Page 11
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 LT I N G F I R M S
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
A/E BUSINESS NEWS AIA docs go green: Five AIA Contract Documents are going green. Developed using the American Institute of Architects flagship documents as a base, and incorporating concepts and model language from the AIA’s Guide for Sustainable Projects, the new documents address the unique roles, risks, and opportunities encountered on sustainable documents for sustainable projects is a natural next step following the release of the Guide for Sustainable Projects in the spring,” said Ken Cobleigh, managing director and counsel for AIA Contract Documents Content. “We continue to see a demand for incorporating sustainable elements in projects. The AIA Contract Documents program continues to revise existing documents and develop new documents and guides, as necessary, to remain current with trends and changes in the industry and law.” The new AIA Contract Documents created for use on sustainable projects include: design and construction projects. “The development of these new xz A101-2007 SP, Standard Form of Agreement between Owner and Contractor, for use on a Sustainable Project where the basis of payment is a Stipulated Sum xz B101-2007 SP, Standard Form of Agreement Between Owner and Architect, for use on a Sustainable Project xz A201-2007 SP, General Conditions of the Contract for Construction, for use on a Sustainable Project xz C401-2007 SP, Standard Form of Agreement Between Architect and Consultant, for use on a Sustainable Project xz A401-2007 SP, Standard Form of Agreement Between Contractor and Subcontractor, for use on a Sustainable Project. A case for public transportation: The American Public Transportation Association’s (APTA) has released an updated report making the case for investment in the public transportation industry by detailing the enormous growth in ridership, service provided and funding levels. The report, “The Case for Business Investment in Public Transportation,” reinforces that there has been a steady growth trend over the past three decades
CALENDAR Principals Academy coming
and it is now a $55 billion industry. The data in this report point to an even more prominent future standing. The report shows that America’s public transit systems carried more than 10 billion passenger trips for the fifth consecutive year in 2010, the highest levels since 1957. It also shows support for better public transportation through public approval of transit ballot measures. These ballot measures have a 73 percent approval rate over the past 12 years.
to Arizona: The Principals Academy, a crash course in all aspects of managing a professional services firm, is coming to Scottsdale, Ariz., on Nov. 17 and 18. The program is presented by a team of speakers – including ZweigWhite founder and CEO Mark Zweig – with extensive experience working with and for A/E firms. They have a clear understanding of what it takes to survive, and even thrive, in any economy. The two-day agenda covers six critical areas of business management from the unique perspectives of architecture, engineering and environmental consulting firms, and is presented in tutorial and case study workshop sessions. xz Business planning
Mark Zweig , from page 1
this slowdown. They were larger four years ago and have been collecting the cash from a busier time. They had some cash in the bank, too, that provided a cushion. Either way, bad cash flow from weak collections is becoming a larger problem for A/E and environmental firms. 4) Ownership transition plans are in a tizzy. With reduced financial performance, many firms have seen sig- nificant changes in their equity values. This is causing all kinds of problems in terms of cashing out departing owners and reselling their stock or raising new capital through treasury stock. Same thing for companies that have been on the acquisition trail – their stock is not as valuable as currency to finance trans- actions. Buyers are also finding that sellers are more scarce than one would think because many privately held firm owners are figuring they’ll have to delay their exits until their firms are again worth what they were five years ago. 5) The job market at the entry level is horrible – yet experienced people with strong track records are still in demand. We can really see it in our executive search business – strong demand for key, principal- level talent, marketing people, finance people, and doer-managers of all types and sizes. Other recruiters in this busi- ness I keep frequent contact with are seeing similar upticks this year. I’ll be at our Hot Firm Conference in Laguna Beach on Oct. 26 and 27. It will be very interesting to interact with the firms in our business that are making it happen in spite of the hostile environment. I’ll be sure to share what I learn with our readers! Mark Zweig is the founder and CEO of ZweigWhite. Contact him with questions or comments at firstname.lastname@example.org .
xz Financial management xz Project management
xz Ownership transition planning xz Human resources management xz Marketing/business development The Principals Academy program also includes a case study workshop session that will provide an opportunity to practice implementing these management strategies in a supervised test-case scenario. For more information or to register, call 800-466-6275 or log on to www.zweigwhite.com/seminars/pmo/ index.asp.
38West Trenton Blvd., Suite 101 Fayetteville, AR 72701 Mark Zweig | Publisher email@example.com João Ferreira | Managing Editor firstname.lastname@example.org Julie Kyle | Editor email@example.com Christina Zweig | Staff Writer firstname.lastname@example.org Tel: 800-466-6275 Fax: 508-653-6522 E-mail: email@example.com
Online: www.thezweigletter.com Twitter: twitter.com/zweigwhite Blog: zweigwhite.blogspot.com Published continuously since 1992 by ZweigWhite, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/yr.). $475 for one-year membership, $775 for two-year membership. Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399-1900, ext. 139, or e-mail TheZweigLetter@TheYGSGroup.com. © Copyright 2011, ZweigWhite. All rights reserved.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
TO P P L AY E R
Forward-looking business attains success
This Hot Firm leader is a believer, in more than one way. T he subtle tone of a response dur- ing a face-to-face meeting could telltale whether a deal is won or if more coaxing may be needed. Joseph Chiczewski, the president of ESI Consultants, Ltd. (Naperville, IL), a planning, design, construction, infrastructure, environmental, and en- gineering services firm, is a firm believ- er that face-to-face interactions are im- mensely more effective in the business world. That strategy partly explains the success of ESI Consultants, No. 150 in The Zweig Letter 2011 Hot Firm List. Diversification, a forward-looking business plan, and meeting client ex- pectations, are other ways ESI Consul- tants has attained success, as Chicze- wski explains in the interview below. The Zweig Letter: What does it mean to be a Hot Firm? Joseph Chiczewski: Being a Hot Firm three years in a row is a great ba- rometer to get a relative idea of how we are performing. That is a positive for employee morale, for owners and for clients. TZL: How did you get where you are today? JC: Our company is as successful as it is today because of some hard work, some great people to work with, some flexibility in how we define and mar- ket ourselves, and a lot of blessings. It would be shortsighted to think I knew all the answers. TZL: Do you remember your first paid job? What did you learn then that still influences the way you work today? JC: I think my first paid job was as a bagger (groceries). I learned that it did not matter what I did before – in school or in sports – I had to perform on my job every day. And I learned that it did not matter what my position was, I needed to work hard.
TZL: What is it in your DNA that drives you to success? Is it audacity and risk- taking; a can-do atti- tude and a relentless pursuit of perfec- tion; something else more abstract? JC: I think my work DNA that drives me is a combination of be- ing driven to build and a bit of a fear factor.
TZL: Where do you see this indus- try in 10 or 20 years? What trends are influencing it? What about your company? JC: Clearly, the midsize generalist firm (of which we are one) is going to have struggles over the next 10 to 20 years. Global markets are an increasing influence and government regulations are clearly tilted toward large nation- al/international firms and D/M/WBE firms with set asides. New forms of communications are already greatly in- fluencing our business and will contin- ue to do so. I believe that our business (like most) is a people business. Chang- ing technologies allow communica- tion without personal contact, such as emails and video conferencing (instead
Joseph Chiczewski, President, ESI Consultants, Ltd.
Like most people, I truly enjoy many aspects of this business. Whether it is building a new road or building a team or business, being able to see how the pieces can fit together and being a part
of building it is very rewarding. At the same time, I have learned to acknowledge that some of what pushes
“Today’s market makes it essential that all your eggs are not in one basket.”
me is a fear of failing. That is not al- ways a good thing, but it does drive me at times. TZL: In today’s difficult business climate, what does it take to suc- ceed? Is the spectrum of failure a motivator? JC: Today’s market makes it essential that all your eggs are not in one bas- ket. It means you cannot take any cli- ent, employee or partner for granted. It is even more important than ever that any business leader is looking for con- stant improvement and new opportu- nities. Yes, failure can certainly be a motiva- tor. And it can be humbling. The chal- lenging times we are going through have shown that it is not enough to work hard and to work smart. There are factors that can knock out even a good business plan – it seems to me that the phrase “man proposes and God dispos- es” is an adaption of several different Bible verses (Proverbs 19::21 for exam- ple) and rings especially true in chal- lenging times. We have been a Hot Firm three years in a row, and yet I am more concerned with the future than ever. Businesses always need to look forward, adapt and grow.
of a personal visit) and webinars (in- stead of attendance at a group semi- nar). Certainly, in one sense this change is more cost-effective and efficient. But that misses the big picture. Business networking does not take place at a we- binar. An email does not allow you to see a person’s reaction to a question or hear subtle tones of a response. For ex- ample, this interview (which is not in- person or even over the phone) does not allow for follow-up questions and responses or meeting face-to-face to know each other and learn from that. Also, flexibility is a very critical issue moving forward. Public clients are con- stantly under pressure and therefore constantly changing requirements. Private clients tend to be under even greater pressure. Like society in general that can no longer wait for microwaved food, our industry is shortening sched- ules while increasing expectations. TZL: Do you hold someone as a special mentor? How did this per- son influence who you are? JC: I don’t have a simple answer for this. Certainly my father held a great deal of influence and mentoring. And since he died young (age 47) when I
See TOP PLAYER, page 6
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
S U R V E Y
Sustainability; is it a choice anymore?
Sustainable projects are on the rise despite architects’ and designers’ doubts about manufacturers’ claims and potentially prohibitive costs. By Christina Zweig Staff writer T he majority of architects and in- terior designers, 87 percent and 86 percent, respectively, acknowledge a concern about sustainability in the manufacturing of products, according to an online survey of 812 architects and designers. The research by IMRE (Digital. Adver- tising. Marketing. Public Relations) in conjunction with the American Insti- tute of Architects and the American So- ciety of Interior Designers, shows that sustainable projects performed by ar- chitects and interior designers are pro- jected to increase in number in the next year. Nevertheless, the study shows sus- tainable products are often associated with higher cost. Sustainability often paired with greater expense. A huge majority of survey respondents, nearly 90 percent of architects and 82 percent of interior designers, said their clients think sustainable products cost more. It also reported that more than half of all respondents agreed sustain- able products are more expensive. is Furthermore, architects and interior designers seem to hold a good deal of skepticism about the “sustainability” of such products. According to the IMRE study, 40 per- cent of architects and 34 percent of interior designers are “uncertain” if products claiming to be sustainable are actually sustainable, and almost 22 percent of architects and 11 percent of interior designers are “somewhat” or “not at all confident” that products are actually sustainable. A very small num- ber – only 2 percent of architects and
3 percent of interior designers – are “completely confident” in manufactur- ers’ claims that products are actually sustainable.
ed use is on the rise. According to the survey, 70 percent of architects and 49 percent of interi- or designers surveyed used sustainable products in their projects “very often” or “always” in the past year, and more than half of respondents from each group expect the number of designated sustainable projects they complete will increase in the coming year. Architects and interior designers are using sustainable products because they want to, not because of external pressures. Nearly 60 percent of architects and 56 percent of interior designers iden- tified their own sense of environmen- tal responsibility as the key driver for specifying sustainable products, while 19 percent of architects and 20 percent of interior designers said they specify sustainable products because they are required to, either by project scope or client request. Government and industry incentives are nearly negligible as a key driver – only 0.5 percent of architects and 1 percent of interior designers. Lopez agrees. “It’s best practice to use products that minimize the negative environmental impact, so as a design- er, I look for products that have sus- tainable characteristics,” she says. Bergman feels sustainability is be- coming a necessary element in all proj- ects, citing two examples of new build- ing codes: California’s new CalGreen building code and the International Green Construction Code due for adop- tion in 2012. “Architects that contract with public agencies are presented with program requirements to design sustainable buildings. This is the current trend for the GSA, the U.S. Military, state-fund- ed projects, and the Los Angeles Com- munity College District, to name a few,” Bergman says.
What practitio- ners are saying. “Many manufacturers claim their products are sustainable and use words like ‘high recy- cled content,’ ‘sustain- able product,’ etc... but this doesn’t mean the product meets all the requirements to be la- beled as sustainable.
Patricia Lopez, Interior Designer, Baskervill.
The use of these words are being mis- represented and sometimes abused,” says Patricia Lopez, an interior design- er with Baskervill (Richmond, VA), a 93-person architecture, engineering, and design firm. The company recently completed Hy- att Dulles, a certified LEED Silver build- ing that won an interior design excel- lence award. Bruce Bergman, principal at KPA Associates, Inc. (San Diego, CA), a 17-person firm that provides architec- tural design, construction consult- ing , and forensic services, suggests skepticism may be due to a heightened awareness of legal concerns, insurance issues, the FTC and other certification organizations. “A product’s performance be- comes more and more crucial as new codes and standards push the boundaries on efficiency. Durabil- ity may be compromised in the ef- fort,” he says. “Compatibility should and will always be a concern, wheth- er it is a sustainable material or not.” Adoption high. Despite the neg- ative statistics, professionals still seek out sustainable products, and project-
“Many manufacturers claim their products are sustainable and use words like ‘high recycled content,’ ‘sustainable product,’ etc... but this doesn’t mean the product meets all the requirements to be labeled as sustainable.”
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
T R E N D S
Driving forward; eye in the rearview
Three firms, three assessments ‘post-recession’.
vides water, wastewa- ter and storm water engineering consult- ing services primarily for municipalities and public agencies in Cali- fornia and Oregon. “The current empha- sis of our clients is not on expansion, but rath- er on renewal and re- placement of facilities,” Cantrall says. “We have maintained our work-
2011) than in the last two years,” De- walt says. “They are for major projects that are funded and not dependent on banks. We are hiring. In the past month, we have hired four architectur- al staff and are currently interviewing for three additional positions.” Anything else? “Some firms have been decimated or have closed in the last three years. We have had only a small downsizing,” Dewalt says. “This is mainly due to the fact that our firm is diverse in project type and geographi- cal location. We sell and design big and small projects – retail, institutional, corporate, etc. We choose not to fo- cus on one project type and become an expertise-driven practice. We are also a national firm. Our main office is in Chicago and we have a small group (10 staff) in Palo Alto. With the two offices, we are a day trip from any city in the U.S. As a result, we are currently work- ing in 10 different states.” Firm: Steven Schaefer Associates, Inc. (Cincinnati, OH)
By Bryan Sullivan Correspondent W ith 14 million people in the United States unemployed, the data looks bleak for most industries. The U. S. Department of Labor reports that the number of long-term unem- ployed is as high as it’s been since the data was first collected in 1948. “Long-term unemployed” is defined by the Bureau of Labor Statistics as those people who have been out of work for 27 weeks or more. As of Au- gust 2011, that number was six mil- lion; this accounts for around 42.9 per- cent of the total unemployed. It was this alarming data that prompt- ed The Zweig Letter to survey three firms to see how they are faring these tough economic times. Fidings follow: Firm: West Yost Associates (Davis, CA)
Carola Cantrall, HR Manager, West Yost Associates.
load to keep current staff busy through concerted marketing efforts. We don’t anticipate making any significant hires in the next year, other than possibly a senior-level engineer or two to aug- ment and eventually replace staff who plan to transition into retirement. Be- fore the end of the year, we may hire an entry-level engineer in one or two offic- es to support more senior staff.” Anything else? “We have not gained business through any of the stimulus funds, but have continued to provide excellent service to our current clients, resulting in some follow-on work, although most clients are facing severe budget restraints and are not necessarily going forward with even the work that they have already award- ed us,” Cantrall says. “We’ve been successful in gaining a number of new clients over the past two and a half years, which has served to diversify our client base and has helped us to continue to be profitable and successful.”
Employees in 2008: 61 Current employees: 50
Employees in 2008: 114 Current employees: 90
Types of reductions due to the slowdown? “From a staffing perspective, we had layoffs,” says Sally Wehrman, HR manager. “In 2010, the firm made a strategic decision to keep remaining talent intact and instead re- duced work hours across the board, rather than make staff eliminations.” Signs of growth? “We have maintained a recruiting philosophy to hire key talent as an investment, re- gardless of economic conditions,” Weh- rman says. “We have a strategic plan for growth and continue to secure talent for our future. In response to the continued state of the economy, we recently creat- ed a new position and hired a business development leader to help increase revenue opportunities. We have grown 10 percent in 2011 compared to 2010 and expect a similar level of growth in 2012.”
Types of reductions due to the slowdown? February 2009 – layoff of 11 professional and support staff; January 2010 – layoff of eight professional and support staff; reduced hours for eight staff; December, 2010 – announced the closing of the Portland, Ore., office and offered staff a move to other offices. According to Carola Can- trall, HR manager, these reductions naturally resulted in merging some po- sitions. Some employees work longer hours depending on their project work- loads. “We have continued to encourage uti- lization of the 9/80 option for our ex- empt staff (if their workload allows it) to provide for time to reenergize over long weekends,” Cantrall says. “In- creased marketing efforts have result- ed in much heavier workloads and lon- ger hours for senior staff.”
Firm: Valerio Dewalt Train Associates, Inc. (Chicago, IL)
Employees in 2008: 50 Current employees: 42
Types of reductions due to the slowdown? “We had one staff reduction that cut off a ‘side’ of the pyr- amid – not just staff cuts to junior ar- chitects. We cut a principal and asso- ciate as well as other staff,” says Mark Dewalt, founding partner. Signs of growth? “We have more opportunities this month (September,
Signs of growth? West Yost pro-
See FORWARD, page 6
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
F E E D B AC K
Are employees not grateful?
Reader reacts to Mark Zweig’s editorial.
owner/principal. Not being a princi- pal or owner myself and in “mid-level management,” from my vantage point I can see both sides of many company issues where senior management and staff perspective diverge. You point No. 5 is probably the most correct of the points you made in answering your ar- ticle’s question. For senior managers to think employees are going to fall over themselves to thank the firm that has reduced pay, cut benefits, and has mar- ginal if any future stability, just for hav- ing a job is unrealistic. Often they want to tell war stories of when they were coming up through the ranks and how employees today have it easier and are ungrateful – just as you said. What se- nior managers fail to recognize is it’s a different time, opportunities are few- er, the future is less stable for everyone and employees simply want to feel ap- preciated, wanted, needed, and yes – I’ve learned to try to look beyond the initial limiting perceptions of people. The second very unique issue was liv- ing through being a victim of a violent crime. About 20 years ago our home was invaded and our 5-year-old daugh- ter was attacked. Feeling how friends, family, and people we did not even know came to our support was amaz- ing and humbling. Through the difficul- ties of re-living this during the trials and through the recovery of our daugh- ter and mending of our family I learned to seek God and to be thankful for what I have. (And yes – our daughter recov- ered and is an amazing person.) Both of these experiences have shaped my faith in Christ. Both have also shifted me a bit from a personality focused on judg- ment and have made me more empa- thetic/focused on perception (at least to some extent). TZL: What question would you ask of another Hot Firm leader? JC: Where are you going next? TZL: What lesson learned would you pass along to a recent college graduate embarking on a career in the A/E/P and environmental con- sulting fields?
get as much compensation as they can. The problem is one of understanding and education on both sides. If you really want to give good insight into this, have someone do a poll of staff level employees. Just some thoughts for your consid- eration.
I n his editorial “Why your employ- ees are not more grateful” ( The Zweig Letter , Oct. 10, 2011) Mark Zweig offered seven reasons why this is happening in a difficult economy. Kendall Gee , senior project manag- er, DOWL HKM (Ankorage, AK), a 360-person planning, surveying, civ- il/transportation, and environmental services firm, wrote:
Mark Zweig responds:
Thanks for your thoughtful email. Please don’t think I am saying “this generation” is any different from the last. I don’t. That said, I meant what I wrote. And yes, management may very well be the problem. But management isn’t always the problem, either! I really appreciate your comments, though – thank you much for reading – and writing. JC: I am trying more and more to look at traits outside of our industry to develop within our industry. We con- sulting engineers and architects tend to look at other engineering firms (like the Hot Firm List) for comparisons and that is certainly valuable, but often the paradigm shifts are coming from oth- er industries. Other industries can be better at understanding marketing or implementing financing or operation- al systems that can be adapted to our business. Sometimes we seem to be able to do that more with project de- signs (adapting ideas from one appli- cation to another) than we do with our businesses. Anything else? “Supply is still more than demand and, as a result, competition can be fierce. It’s not un- usual for competitors to lowball fees. Generally, it appears firms are get- ting a little busier, but there are a lot of differences between firms regarding backlog. In many cases, backlog is not strong and often very sensitive to proj- ects placed on hold or dying,” Weh- rman says. forward , from page 5
Hello Mr. Zweig –
I enjoy reading The Zweig Letter and find a variety of articles insightful and informative. However, your lat- est article, “Why Your Employees Are Not More Grateful” was off-base and written with the attitude of a typical
TOP PLAYER , from page 3
was in my early 20s, I was able to see a lot about how to develop and grow with age from my father-in-law. I would also say a couple of my uncles influenced me a great deal when I was younger – by seeing their faith, morals and work ethics firsthand. TZL: What’s the one trait you most admire in people and why? JC: Faith in God. True faith can allow someone to be balanced in life in good times and bad. It allows a person to see beyond the immediate successes or fail- ures in business. TZL: Describe the most challeng- ing thing you have ever done/the biggest challenge you have taken on outside of work. JC: Two items come to mind. The easy answer – and it is true – is to raise a family. In our family we have a son with special needs, and that has been one of those hidden blessings. Most parents are humbled a bit by parenthood – kids can do that. But to see him and oth- ers grow up and develop with learning disabilities, and other physical needs, has been a true learning experience.
© Copyright 2011. ZweigWhite. All rights reserved.
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
O P E R A T I N G M O D E
Keep your eyes on those work plans Without regular updating, they’re useless. W e’ve talked and written much about the process of preparing good work plans with the appropriate level of detail and how they serve the firm in many ways in- cluding, most importantly, providing the basis for good rev- enue projections. There are many examples of good work plans, and even some good examples of fairly basic ones that serve the proj- ect managers and teams well, informing all of what is need- ed, how long it should take, and who needs to do the work. The financial metrics at the onset of the project generat- ed by common software used by the A/E/P world provide what is necessary, including target and projected profit dol- lars and percentages, resource utilization and target, and planned and estimate at completion multipliers, among other things. There is one key component of the work planning process that is often overlooked, and can render all the hard work at the beginning of the project basically meaningless and without use as the project moves forward. Project work plans must be monitored and updated on a regular basis until the project is 100 percent complete. Nothing short of this is acceptable for our project managers and teams. I like to conduct project financial reviews on a monthly schedule and prefer that the key team members participate. Depending on your firm’s size, makeup, and “how things are done around here,” this could also be done with the ac- counting department staff and individual project managers and/or principals. It can work quite well as a group meeting that would involve market sector or discipline leaders with discussion, feedback, and recommendations for report- ing the progress and other accounting information that is needed on a monthly basis for all projects. I prefer to do it by groups – according to your organiza- tional structure – as it is a great time for team-building, learning from past experiences, mentoring future project managers and principals, and reporting the critical project information to your accounting departments. Most software used by the industry allows for reporting earned revenue within the work plan, so this presents an- other opportunity to take at least a high level view of the work plan to see how the project is going and schedule a more detailed review with team leaders if updates appear necessary. Start a good project plan with what everyone thinks is do- able; then monitor it on a monthly basis for the life of the project. If there is anything certain about architectural, en- gineering, and design projects in general it is that the pro- cess is dynamic, there will be changes at all phases of work,
and your work plans must be responsive and adapt to these changes when they occur. It works well for most firms to conduct the project financial reviews the last week of the month, and here is a good agenda for these meetings: 1) Report amounts to bill/invoice the client. 2) Report amounts approved for consultant
services. 3) Does AR need someone’s action?
4) Report earned revenue amounts for “internal” accruals. While on this item and with the work plan open, look at the following at a minimum: a. What are the job-to-date, year-to-date, and month-to-date profit dollars and percentages? b. What is the current job-to-date effective multiplier for the project compared to the planned and target multipliers? c. What is the estimate-at-completion multiplier and resulting profit dollars and percentages? d. What is the estimate-to-complete raw labor dollars and can it be modified to respond as may be needed to meet profitabil- ity targets for the project? e. Are there additional services that need to be addressed with the client? 5) How is the project team performing and are staffing changes needed at this time? You can be overwhelmed by the financial data in the re- porting output from common software. As one that en- joys this part of the profession, I find it can be useful to dig deeper in the analytics at times, but it simply is not neces- sary to do this to get a good picture of project performance. Multipliers provide a simple and useful means to both un- derstand and communicate what is happening, and if ad- justments are needed. How is it going now? What is the current JTD effective multiplier and profit amounts? What is it going to look like at the end of the project? What is the current EAC multiplier and profit amounts? If you need to adjust to meet your targets, what do you do? Evaluate and modify the ETC raw labor dollars. It is really that simple and allows you to address a project element that you can control. I see some very good A/E/P firms that do great design work, have satisfied clients, and have an excellent work ethic. So what could be missing? A sound business acumen that is part of the firm’s culture – supporting design, client service and performing the project – is one thing. A good work ethic does not guarantee that projects and firms will be profitable. Monthly meetings with project leaders and business man- agers support and enhance a strong business acumen with- in the firm. This is my reason for recommending the group approach to project accounting and work plan reviews. Call it a party if you want, as it is always a lively and productive event for everyone.
Stephen Evans is operations consultant for ZweigWhite. Contact him at firstname.lastname@example.org.
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
Partners in space Firms can help clients
managed by an organiza- tion’s internal facilities group – or sometimes the brokerage community – there is a compelling argu- ment as to why the design firm would want to partici- pate in this effort. How can a new partner-
web-based management tool will allow tracking of the occupants by location (butts in seat). Why is it important to track down to the occupant level? xz By maintaining where people are located through a move/add/change process, the client can continuously monitor vacancies and work to reduce under-utilized space. No one wants to pay for space they don’t need. xz When tagging departmental at- tributes to individuals, the client can begin to monitor how a profit center is managing their area. If general over- head is allocated to a profit center based on space requirements, then the profit center becomes incented to only use the space they need. xz A client needs to track and manage direct employees and also any contract or consulting resources tied to a depart- ment. Many times these resources aren’t tracked through the HR systems, but certainly there is a cost to house them. Tracking all types of resources allows a more complete picture of space requirements and occupancy costs. xz It’s the law! In some jurisdictions, there is a requirement (known as E-911) to provide individual location information to EMT responders. xz When monitoring and maintaining occupancy information, the design professional can provide strategic support by determining which depart- ments are trending toward growth or compression and how the space is being utilized. These insights can be factored into future strategic planning efforts. Recommendations based upon trending data can help support a client’s future real estate strategy and contribute to appropriate real estate decisions. By bringing low-cost CAFM options to the client and partnering in under- standing and managing their space and how their resources work within that space can position the design pro- fessional as a trusted partner. Demon- strating to the client that a beautiful space can also be cost-effective and efficient will galvanize the relationship and hopefully lead to multiple assign- ments in the future. Mark Welch is the owner of Mark Welch International, a business strategy consulting practice focusing on the AEC industry. Contact him at email@example.com.
manage their real estate. A s design professionals we are committed to giving clients the best of our services, resulting in in- novative, efficient, dynamic, aestheti- cally compelling and sometimes, yes, award-winning solutions. We believe that clients commission us to bring best of practice ideas to their work environment, allowing for improved retention and staff productivity as well as becoming a magnet for attracting high-talent employees to their organi- zations. In turn, by leading our clients to differentiate themselves from their competition in these areas, we can demonstrate the significant value that can be driven from our enlightened design and delivery approaches. But is this enough to win work? The truth is, many – if not all – design firms are offering the same elixir. Most firms can offer relevant portfolios with compelling case studies or stunning photography. Some firms measure the productive gains from their design so- lutions utilizing research data as well as pre-occupancy and post-occupancy survey results, suggesting a purposed foundation to their design philosophy. Do these approaches help you retain the client relationships that have fu- eled your success? Will they spark the curiosity of potential new clients? Is what your firm is offering truly differ- ent than your competitors? If it is becoming more and more dif- ficult to differentiate the value of your firm’s design and delivery approach, how else can you demonstrate the kind of thought leadership that helps build trusted relationships? One way is to partner with clients (potential or existing) in the management of their physical spaces. After all, who is better positioned than the design profes- sional to provide guidance and direc- tion overseeing the portfolio of leased and owned space? While facilities and workspace have traditionally been
ship between client and designer help reduce capital outlays and position the design professional to become a stra- tegic partner in important business decisions his client is confronted with? What are the alternatives to expensive and cumbersome CAFM (computer- aided facility management) systems clients have purchased to manage their real estate assets? Recent developments of third-party- hosted, web-based occupancy and space management solutions reduce the upfront expenditure for the client and provide greater flexibility, allow- ing for enhanced analysis and strategic dialogue between the parties. The ser- vices provided and the data captured become the instruments of the trusted partnership – not who owns the ap- plication software. Here are important touch-points where the design firm and client can partner to bring advan- tages and savings with a client’s real estate requirements. xz Pre-selection phase: Collaborating on a BOMA study of the space – this study, based on BOMA Standard of Measurements, calculates the R/U Ratio (rentable versus useable square foot- age). A study on behalf of your client may provide a competing calculation to the landlord’s rentable square footage. A small difference in this number extrapo- lated over a long-term lease can result in significant savings. xz Design phase: Once the drawings are loaded into the web-based tool, the designer can utilize this information to provide space planning services. Some tools allow for what-if scenario planning that documents multiple layouts and of- fers options. Integrating departmental requirements (current and future) into the planning process can also contrib- ute to the development of design. Some web-based tools also facilitate the stack- ing analysis, bringing greater efficiency and utilization of the space. The cost of this service is small when compared to the resulting value that is generated. xz Post-occupancy phase: A robust
© Copyright 2011. ZweigWhite. All rights reserved.
HR A SUPPLEMENT OF THE ZWEIG LETTER
OCTOBER 24, 2011, ISSUE 932
B E S T F I RM
About MBP Who are the founders? Charlie Bolyard and MBP helps alleviate everyday stress Perks result in gratifying employment.
Trust and values = employee re- tention. Palfrey says that it is also MBP’s trust in their employees that is very gratify- ing. “The understanding is that MBP hires the right individuals and it is not necessary to impose strict protocols,” Palfrey says. Having a core set of shared values and top- notch perks also takes some of the stress out of recruiting and retention. “Our commitment to caring for the com- munity, both internally (caring for our fellow team members) and externally (our partici- pation in local community events) sets MBP apart from the rest,” Detwiler says. “And, our excellent benefits package definitely helps us with employee retention. One-third of our team members have been with us for more than five years; 50 percent have been with us for more than three years.” Employees participate in an array of events. In the past, employees and their families have joined forces to “Race for the Cure” and
Blake Peck have diverse backgrounds which make for a well-rounded team. Bolyard is the resident cost and scheduling expert who comes from a family of electrical contractors, and Peck is a West Point graduate who worked for the U.S. Army Corps of Engineers performing construction management and claims analysis services. Both men wanted to start a firm based on their own set of core values (hard-working, quality, forward-looking, caring for community, integrity and teamwork) and wanted a team that shared in the culture they sought to create.
By Liisa Sullivan Correspondent
F or many, healthcare coverage may be a luxury; however, if you are an employ- ee at McDonough Bolyard Peck, Inc. , it’s a human right. “The 100 percent paid premium for health- care is a meaningful perk provided by MBP,” says Dave Palfrey, project manager, who has been with the firm for three years. “This was a substantial savings over what I was paying at my previous employer. The benefits were very similar and the only difference was in the doctor visit and prescription copays. I es- timated that I saved more than $4,500 per year at MBP even with the slightly higher co- pays.” Due to its efforts to provide full coverage at a time when companies have cut back on their benefits, the Fairfax, Va.-based 293-per- son multidiscipline construction consulting firm is the top 2011 Best Multidiscipline A/E Services Firm To Work For. “For 20 years, the firm’s owners have made it a personal goal of theirs to eliminate causes of stress in our everyday lives: healthcare, dental premiums, and life insurance are paid for team members and their families,” says Danielle Prezioso, director of communica- tions and marketing. Prezioso attributes this company goal to the founders’ set of distinct values – integrity, quality, teamwork, hard work, forward-look- ing, and community. “These values mirror my own,” says Prezio- so, who has been with the firm for four years. “Work-life-family balance is just as important here as it is to me.” Julie Detwiler, HR director, has worked at MBP for eight years and adds that, “The fact that we continue to pay 100 percent of the premiums for our health, dental, and vision insurance shows candidates that we are com- mitted to the well-being of not only them, but their families, too. We take every oppor- tunity to include families in wellness activi- ties and company events. Candidates want more than just a place to work; they want to feel that they’ll be part of something bigger.”
took part in “Light the Night Walk,” just to name a few. They have also swung hammers to help build new futures for those in need while volunteering with Hab- itat for Humanity. MBP also offers edu- cation reimbursement, flexible schedules, gym memberships, 24-hour emergency travel as- sistance, team member referral programs, and more.
MBP team members at work.
What do they do? MBP is a multi-disciplined construction consulting firm experienced in assisting clients in managing the entire construction process. Awards and recognitions. Besides the Best Firms To Work For placing, MBP is consistently recognized by Engineering News-Record as a national Top 100 construction management firm and Top 40 program management firm.
In addition to top-notch perks and bene- fits, community involvement and a core set of shared values, MBP prepares for its fu- ture growth through careful planning, en- thusiasm, hard work, and optimism. Its team strives for professional and personal develop- ment through education, on-the-job training, and communication. The firm embraces new ideas and technologies by approaching work with a passion for innovation and a desire to take advantage of new opportunities. “If I had to sum up our company culture in a few words, I’d say, ‘We do things the right way’,” Prezioso says.
THE ZWEIG LETTER | OCTOBER 24, 2011, ISSUE 932
G U E S T S P E A K E R
Mobilizing your HR team around HR strategy Changing the function from administrators to strategic partners can impact the bottom line. M uch has been written about human resources needing to be a strategic partner within a company and how the function can drive strate- gic activities that impact the bottom line. As most HR practitioners know, a transformation must occur within the organization to develop this partnership. The transformation must happen on two fronts – the first is that the HR function must mature to the point where it can be a strategic contribu- tor. Secondly, business leaders must shift how they perceive and utilize HR – changing their view of the function from that of administrators to key members of their leadership team who provide strategic value to the business and can impact the bottom line. Given the amount of change, these transformations can span multiple years and require concerted effort. It’s important to establish an overall vision and strategies that will help achieve the vision. This will create a roadmap to drive the change and set expectations for HR employees, as well as executive leadership. As AECOM grew through successful acquisitions and significant organic growth, our human resources leader- ship team identified opportunities to best serve our organization and contribute to the company’s success. Key to achieving this was having a clear direction and plan to mature our function and drive a shift in how our business leaders leverage HR to recruit, retain, develop and engage our
talent. We developed a roadmap that set out the HR vision and key strate- gies and addressed how we would transform our function while taking into account industry trends that could impact our business in the
had agreed, along with a common set of talking points to present to busi- ness leaders on our overall vision and strategy. The team also had summary implementation plans and initial bud- gets for the initiatives we agreed upon for the upcoming fiscal year. Given the investment needed to bring these resources together, it was critical that we identify tangible outcomes and hold the HR team ac- countable to meeting them. To “pres- sure test” our outcomes, we invited a handful of business executives to a session on the last day of the meet- ing, where we presented our summary implementation plans and obtained their feedback. Today, the roadmap is central to everything we do and is woven into all of our communications to our employ- ees. We have also implemented metrics to measure our ongoing progress and it’s clear we have made great move- ment toward being a true strategic partner with our business. And while we celebrate our achievements, we also continually adjust the roadmap based on changing industry trends and busi- ness needs. Our roadmap positions HR to identify shifts in key trends and pro- actively develop strategies to address these shifts and minimize impacts to our business. A clear vision and strate- gies that support the realization of the vision are keys to the success of any business or function. However, this is the first step in the process. For any long-term vision, it’s equally critical to share the vision and key strategies with executives and stakeholders to ensure they are in agreement and will serve as sponsors. Engaging and mobi- lizing resources around the vision and strategies, and continuing to reinforce key messages in everything you do, is critical to ensure that resources remain focused on driving change. Finally, remaining agile and shifting strategies as industry trends and business needs change are a necessity to achieve the vision.
future. This was tied to our company’s vision and strategies and focused on four major areas: employee and future leader development; efficient deploy- ment of people resources; knowledge sharing across the organization; and contributions to the company’s bottom line. For each area, we cre- ated a goal statement, objectives, and enterprise-wide initiatives for the next fiscal year, as well as key areas of focus for subsequent years. Once the roadmap was completed, the real work began. The roadmap needed to be socialized and the re- sources needed to support it had to be engaged and mobilized. To accomplish this, we brought together global HR leadership in a three-day working ses- sion designed to evaluate and priori- tize initiatives and produce implemen- tation plans and budget estimates. At the kick-off of our session, we ensured that we reinforced HR’s vi- sion and the company’s overall vi- sion. One of our key senior executives discussed the company’s overall vision and reinforced our corporate purpose as a way to ensure that the HR team remained focused on AECOM’s big picture. It was also an effective way to demonstrate to HR leaders that senior executives at the highest levels of the organization supported our overall HR strategy. As we prioritized initiatives at the meeting, we also had frank discussions and healthy debates about potential obstacles we could face in funding and implementing the initiatives, given the business opportunities and challenges in various parts of our organization. At the end of the discussion, the team had a common set of initiatives, prioritized by year, to which everyone
Annissa Deshpande is director of HR Strategy and Programs at AECOM .
A clear vision and strategies that support the realization of the vision is key to the success of any business or function. However, this is the first step in the process.
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