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Incentive compensation

Draconian policies – or not “Do these policies do more harm to morale than

W hen you have an AEC or environmental firm – or any business, for that matter – there is always a question about how strict your policies can or should be. Generally speaking, I am not a fan of draconian measures (severe laws which result in harsh punishments for small offenses). Truth is, what we consider draconian in the context of an AEC firm has little to do with punishment, and more to do with an overly strict rule. Here are some examples of what some might say are draconian policies – all taken from real AEC firms. (I made them sound like they were written by Aristotle himself!) ❚ ❚ “Thou shalt not arrive to work any later than 8 a.m. nor depart any sooner than 5 p.m.” ❚ ❚ “Thou shalt not install any art in thine cubicle above the highest cubicle wall.” ❚ ❚ “Thou shalt make thine request for vacation time off to thine supervisor no later than 30 days prior to thine vacation.” ❚ ❚ “Thou shalt dress like a professional, which for men means a suit or sports coat, slacks, col- lared shirt, tie, and lace-up leather shoes.” There are many more of these but you get the idea. The question is, is it a good idea to have these kinds of policies – in a firm that employs high IQ, difficult-to-find professionals? Do these policies do more harm to morale than they do good in terms of solving the problems they address? There’s no simple answer. I was personally never a fan of strict policies, because I wouldn’t want to work in any environment

Zweig Group recently released the 2017 Incentive Compensation Survey and found that fast-growth firms are investing in their staff more than other growth categories. Fast-growth firms spent just over 5 percent of their NSR on incentive compensation, whereas slow-growth and stable firms spent more than 4 percent. Declining- growth firms spent less than 3 percent of NSR. Researchers found this interesting because fast-growth firms were not always very profitable but still used incentive programs to motivate staff.

Mark Zweig

they do good in terms of solving the problems they address?”

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F I R M I N D E X Assemble Design Group. ......................12 Burns & McDonnell Engineering Co. .....10 Environmental Partners Group, Inc..........6 Gryphon Technologies, LC......................2 Microdesk...............................................4 SCAFCO Corporation. ............................2 STUDIOS Architecture...........................12

MORE COLUMNS xz M&A INSIGHTS: The seller series, part 2 Page 3 xz GENERAL COUNSEL: Recovering unpaid fees Page 9 xz GUEST SPEAKER: CRM = CCCC Page 11

See MARK ZWEIG, page 2

Conference call: Paul Gabriel

Page 6

T H E V O I C E O F R E A S O N F O R A / E / P & E N V I R O N M E N TA L C O N S U L T I N G F I R M S

BUSINESS NEWS GRYPHON TECHNOLOGIES WINS $49 MILLION SINGLE AWARD TASK ORDER CONTRACT FOR UNDERWAY REPLENISHMENT ENGINEERING DEVELOPMENT & SUPPORT OF THE NAVAL SURFACE WARFARE CENTER, PORT HUENEME, CA DIVISION Gryphon Technologies, LC was awarded a competitively bid single award Task Order contract to provide engineering development and support for the Navy’s new E-Stream and existing underway replenishment systems. The Naval Surface Warfare Center, Port Hueneme Division is a field activity of Naval Sea Systems Command supporting the timely meeting of key program milestones for the TAO-X program, the next generation fleet oiler, while managing the lifecycle of the UNREP systems. The first new UNREP system in forty years will be developed, tested, and deployed through the work performed under this contract. Gryphon will support the current UNREP program while providing design, prototyping, testing, documentation, software development, and sustainment of the new E-Stream program. If all options are exercised, the contract will be completed in June 2022. “It is a privilege to be selected to provide engineering and technical support to the Navy’s Underway Replenishment Program,” said P.J. Braden, founder of Gryphon Technologies. “Gryphon’s team of professionals is committed to do everything we can to ensure the success of this program which is crucial to the mission of the U.S. Navy.” Gryphon Technologies is a premier engineering and professional services firm headquartered in Washington, D.C., and specializing in warfare systems and integration, naval architecture and marine engineering, program management, test and evaluation, and logistics. DANIEL L. WAMBEKE IS RECOGNIZED BY CONTINENTAL WHO’S WHO Daniel L. Wambeke is recognized by Continental Who’s Who as a 2017 Professional Engineer of the Year as a

Take your advice from Mark Zweig to-go.

result of his role as vice president of SCAFCO Corporation , a company that specializes in manufacturing grain storage systems and steel framing products. Wambeke has more than 40 years of experience in design engineering and more than 30 years of experience listening to customers’ needs and finding ways to satisfy them. Although Wambeke still has involvement with SCAFCO’s engineering design and interaction with the engineering department, the past 18 years of his career have been heavily involved with international sales of SCAFCO products to leading farms and grain terminals worldwide plus small and large agro processing industries. As a result of his dedication and professionalism, Wambeke maintains memberships with the American Society of Agricultural and Biological Engineers; Order of the Engineer; National Society of Professional Engineers; International Code Council; National Frame Builders Association and the American Institute of Steel Construction. He serves on the GEAPS/ASABE Grain Entrapment Prevention Committee; PAFS- 202 Bulk Solids Storage Committee; PAFS-03 Plant, Animal, and Facility Systems Standards Committee and is the Chair of Grain Bin Manufacturer’s Council Engineering Committee. Furthermore, Daniel serves as Committee Chair and Leading Author of ASAE S412.1 Ladders, Cages, and Walkways. He is especially honored to be a member of ASABE as he was elected to the membership grade of Fellow, of which, only 2 percent of ASABE’s members can be fellows. Wambeke earned his bachelor’s degree in agricultural engineering from the University of Wyoming. He is currently a registered professional engineer in Iowa, Montana, New Mexico, Wyoming, Hawaii, Washington, Oregon, Utah, Idaho, Nevada, North Dakota, Wisconsin, Alberta, and British Columbia.

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MARK ZWEIG, from page 1

that had them. At the same time, as an employer, I wish everyone was smart enough to figure out the culture or do what they think their employer wants them to do. My experience is they don’t. So we are too often torn between being upset with people for not doing what we want while at the same time not wanting to upset them. Firm culture must provide the answer. “Culture” is defined as “what behaviors are rewarded and what behaviors are punished.” If the culture is strong, it will guide behavior. New members of the firm will learn the culture or be rejected. The rewards will be tied to cultural compliance. The fear here, too, is that the culture can be too strict – stifling creativity and making newcomers feel unwelcome. Nothing is simple in business! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

O P I N I O N

The seller series, part 2 The non-disclosure agreement is an important piece of any M&A transaction, so make sure it gives you the protections you need during and after negotiations.

I n the dynamic world of M&A there are a few key documents that are necessary to ensure a successful and painless transaction. The first document we discussed in “The Seller Series” was the M&A transaction teaser. But what happens after a buyer has reviewed the teaser and has confirmed that they are interested in learning about your firm? Glad you asked! My goal for “The Seller Series” is to educate our readers and demystify key M&A documents associated with a sell-side transaction.

Noah Hunt

2)One-way versus mutual NDAs. A one-way NDA, also called a “unilateral” NDA, protects the issuer of the confidential information. The receiving party is bound to protect and restrict disclosure of such information to any third party. In contrast, if a com- “If, after reading a firm’s teaser, the buyer is interested in learning more about the seller, the two parties are advised to enter into a confidentiality agreement, also known as a non- disclosure agreement.”

If, after reading a firm’s teaser, the buyer is interested in learning more about the seller, the two parties are advised to enter into a confidentiality agreement, also known as a non- disclosure agreement. The NDA is designed to enforce confidentiality among buyers, define terms of engagement, limit what can be disclosed to third parties, and dictate terms to which counterparties must agree. Important elements to consider before entering into an NDA include: 1)Why use an NDA? An NDA is a legal document, designed to protect confidential information from being revealed to unwanted third parties, or being negatively used against the parties disclosing the information.

See NOAH HUNT, page 4

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

ON THE MOVE MICRODESK EXPANDS TALENT ACQUISITION TO SUPPORT UNPRECEDENTED GROWTH Citing exceptional growth in sales and new seat development, Microdesk , an Autodesk Platinum Partner and the nation’s largest AEC industry consulting firm with expertise in building information modeling, announced the expansion of its talented consulting team. The company’s unprecedented growth is a result of its ongoing success from partnerships with the world’s largest building and infrastructure design projects and high-profile organizations such as Stanford University, Denver International Airport, The Port Authority of NY & NJ, MassDOT, Kohn Pedersen Fox, and University of Massachusetts. With 11 locations in the United States and a growing presence in London, talent acquisition is a key component of Microdesk’s culture. During the first quarter Microdesk hired 24 new team members. New hires are key indicators of the company’s momentum. “We pride ourselves on the ability to attract world class talent,” stated Microdesk President and CEO Michael DeLacey. “Microdesk’s latest hires reinforce our commitment to our clients, as well as build upon the strong team structure we already have in place. We’re anticipating the rapid growth to continue in the upcoming years, as we pursue additional projects that aim to change the design and construction process.” Microdesk strategically identifies talented individuals with specific technical experience,

accompanied by active in-field experience. Microdesk also seeks to find a good balance of people who like to have fun and enjoy life, which is a big component of the company’s culture. Paul Seletsky, AIA, views BIM as a catalyst toward positive transformations in the building industry, enabling architects and engineers to capitalize on visual augmentation for faster, iterative, design options, and cloud-based collaboration and services for improved construction management and energy analysis. He served as digital design director for noted architecture firms Skidmore, Owings & Merrill in New York, and KieranTimberlake in Philadelphia, from 2005-2010 and 2010- 2012, respectively, where he spearheaded research and development efforts. Seletsky served as chair of the Technology Committee at the AIA New York’s Center for Architecture from 2003-2013, and has managed, written, and lectured on design technology in both the public and private sectors. He is a registered architect and a graduate of the Cooper Union School of Architecture in New York. Chris Fercho, recently a principal at BCS IS|IT LLC with stops at Pierce Engineers and Structural Dimension, Inc, comes to Microdesk with previous management and consulting roles at esteemed organizations. His extensive experience in AutoCAD and Revit coupled with his project management skills allow him to assume the responsibilities of assessing business goals. Natural

leadership and strategic planning skills permit him to effectively integrate the right mix of technology, processes, and training to address an organization’s unique needs. Fercho understands that maintaining a long-term, successful BIM strategy requires the dedicated support of a partner to stay current on technology, troubleshoot issues, and look for additional opportunities to leverage BIM. He holds a degree in construction technology and architectural drafting from Waukesha County Technical College. Bonyan Zolghadri, formerly a BIM coordinator for WSP | Parsons Brinckerhoff with preceding employment at Güzin İnşaat and Varjavand Consulting Engineers, enters Microdesk with an expertise in architectural design. His comprehensive knowledge of Autodesk Revit, Indigo Renderer, and Lumion 3D paired with his expanding skill set in visual coding on Dynamo and Python enable him speed up the BIM process while minimizing errors in BIM management tasks. Zolghadri’s specialty in BIMallows him to produce project and template set ups, perform BIM model maintenance, conduct BIM automation, and create related content. His passion for architecture and technology along with his vast knowledge of BIM has led him to successfully manage the digital data and workflows with high profile companies in the past. Zolghadri holds a bachelor’s degree in architectural engineering from Shahid Bahonar University of Kerman.

Usually, this ranges from two to five years, depending on the nature of the transaction and market conditions. While business owners want to protect their information as long as possible, a buyer doesn’t want to be bound by an NDA for an indefinite amount of time. 5)Purpose of disclosing information. This will state the spe- cific purpose for which confidential information has been disclosed. 6)Use of confidential information. Ensure the NDA includes a clause clearly stating that information is not to be used for any purpose other than what was set forth explicitly in the agreement. Remember to seek the advice of professional legal counsel when drafting or structuring an NDA. The next document we will demystify is the confidential information memorandum, also referred to as the offering memorandum or deal book. Until next time! NOAH HUNT is a consultant with Zweig Group’s Merger & Acquisition Services. Contact him at nhunt@zweiggroup.com or at 479.856.6244 “Remember to seek the advice of professional legal counsel when drafting or structuring an NDA.”

NOAH HUNT, from page 3

petitor approached your firm, they may require that you sign a mutual NDA. In this case, any confidential information that you disclose, and any confidential information the competitor discloses, is protected by the NDA. 3)Define confidential information. The answer to what con- stitutes confidential information is different in many cases. In an M&A transaction within the AEC industry, usually an NDA stipulates that any information relating to drawings, plans, models, services, transactions, reports, corporate development, pricing, customers (past, current, and pro- spective), suppliers, financials, and other items is to be kept confidential. Never, and I repeat NEVER, sign an NDA that does not specifically indicate what constitutes confidential information. “An NDA is a legal document, designed to protect confidential information from being revealed to unwanted third parties, or being negatively used against the parties disclosing the information.”

4)Define the terms of the NDA. The term of the NDA speci- fies how long the confidential information will be protected.

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

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THE ZWEIG LETTER July 31, 2017, ISSUE 1210

Paul

P R O F I L E

Conference call: Paul Gabriel President of Environmental Partners Group, Inc. (Hot Firm #22 for 2017), a 55-person firm based in Quincy, Massachusetts.

By LIISA ANDREASSEN Correspondent “T heir problems need to be your problems,” says Gabriel, referring to the client-firm re- lationship. A CONVERSATION WITH PAUL GABRIEL. The Zweig Letter: What’s your philosophy on fee/ billing and accounts receivable? How do you col- lect fees from a difficult client? Paul Gabriel: We communicate as clearly as we can and include a brief work summary for what was completed during that billing period. Inade- quate or no explanation of services being invoiced only slows down the cycle on the client’s end. We typically invoice monthly and include a summary of unpaid invoices from previous months. On our end, we expect our project managers to monitor cli- ent processing and invoice payment and to follow up on any unpaid invoices after 60 days.

TZL: What’s the recipe for creating an effective board? PG: This year we will begin the process of imple- menting a board of directors to be drawn mostly from our current management team. I expect it to be five members, one of which will be an outside member. I want the board to focus on what are tru- ly apex strategic issues for the firm, such as own- ership/leadership transition, strategic direction, fi- nance, and risk management. “We believe our marketing efforts have contributed significantly to our growth and success, and they will continue to be a high priority.”

Paul Gabriel, President, Environmen- tal Partners Group, Inc.

TZL: Is there a secret to effective ownership transition?

THE ZWEIG LETTER Ju

Gabriel

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PG: We founded Environmental Partners on a concept of shared ownership with key employees. From the outset, we were committed to sharing risk and reward, and incentiviz- ing key employees to think and operate as an owner, and to stick with the company for the long haul. Heeding the ad- vice of multiple management consultants in our industry, all of whom stress the need to begin the ownership transi- tion process at least five years before you think you should, we began actively transitioning ownership about five years ago. “The industry has always been competitive, so marketing must be continuous. It cannot be underfunded in corporate budgets if management seeks to grow and diversify.” A number of critical factors come to mind when it comes to effective ownership transition: ❚ ❚ First, the company needs a shared vision of the future – one of growth, diversification, and prosperity. For us, entrepre- neurship is a vital part of that vision. ❚ ❚ You need steady growth to maintain enthusiasm and oppor- tunity for new and existing owners. ❚ ❚ Along with the steady growth, you need to be fairly profitable to provide sufficient resources to distribute to the junior part- ners, which they can then use to buy more stock. ❚ ❚ Demonstrated ability to grow and remain profitable makes for a worthy investment option for existing and prospective own- ers. In addition to attracting new owners, the existing owners should want more stock. ❚ ❚ There needs to be a broad group of owners willing to buy into the company. Ideally, that group should include both second- and third-generation owners, covering a broad age spectrum. This provides continuity and sustainability for a continuous ownership transition process well beyond the second genera- tion of owners. ❚ ❚ Owners are partners, and each of them need to believe that the other owners hold the larger company interests para- mount. TZL: How do you go about winning work? PG: Our philosophy has always been to build relationships of trust and confidence in our firm’s capabilities. This takes patience, time, and the willingness to be active in client-ori- ented professional organizations. Another key is to under- stand the client’s ongoing and upcoming needs so that you can anticipate and prepare for opportunities coming down the line. Perhaps the most important element, though, is to do your utmost to communicate with clients and be respon- sive to their pressures and concerns. Their problems need to be your problems. That means establishing partnerships with your clients. If you are truly their partner, follow-on

assignments and tasks will come along the way, and that can account for more than half of a firm’s revenues. Of course, you also need to have the senior staff resources that can win work with their expertise, and also develop and maintain client relations. That means employee retention has to be a high priority. TZL: What’s the greatest problem to overcome in the pro- posal process? PG: Learning about the opportunity as early as possible so you can develop the most comprehensive and responsive approach to the client’s issues. Being innovative and cre- ative in developing that approach often takes considerable thought and time commitment. TZL: Once you’ve won a contract, what are the “marching orders” for your PMs? PG: Listen to the client, stay on or ahead of schedule, use all company resources to develop solutions, and stay in regular communication with the client. Pay particular attention to project changes or developments that impact budgets and cost projections, and communicate these as soon as possi- ble. Avoid surprises at all costs. TZL: How does marketing contribute to your success rate? Are you content with your marketing efforts, or do you think you should increase/decrease marketing? PG: The industry has always been competitive, so market- ing must be continuous. It cannot be underfunded in cor- porate budgets if management seeks to grow and diversify. We believe our marketing efforts have contributed signifi- cantly to our growth and success, and they will continue to be a high priority. “Our philosophy has always been to build relationships of trust and confidence in our firm’s capabilities. This takes patience, time, and the willingness to be active in client-oriented professional organizations.” TZL: What has your firm done recently to upgrade its IT system? PG: This is another area that requires continuous improve- ment and upgrades – especially as a firm grows rapidly. You can’t think about keeping up with technology; you really need to stay ahead. So, for the past 10 years, we’ve used an outside firm to manage our IT system. It’s one of the best decisions we’ve ever made. Virtually every engineer and scientist has a laptop or note- book computer, and servers and software are upgraded on See CONFERENCE CALL, page 7

uly 31, 2017, ISSUE 1210

8 what seems to be a continuous basis. Our Deltek accounting system is cloud based, and we are deploying many advanced modules to increase efficiency and reporting accuracy for our project managers, and to speed up the invoicing cycle. We’re also undertaking a complete overhaul of our website. CONFERENCE CALL, from page 7 “We are a smaller company that wins large projects, and manages them very successfully – effectively ‘punching well above our weight class.’ This provides significant career growth opportunities for younger staff and a sense of energy and excitement in the firm.” TZL: What’s the best way to recruit and retain top talent in a tight labor market? PG: A few key recruiting elements for us are: ❚ ❚ A solid reputation among clients and peers ❚ ❚ Growth, longevity, and stability ❚ ❚ Diversity of services, including projects of the scope and scale that are the envy of our larger competitors ❚ ❚ Salary and benefits packages that are competitive or leading edge ❚ ❚ The real opportunity to become a meaningful owner Employee retention factors include all the recruiting ele- ments, as well as: ❚ ❚ Interesting and diverse projects to work on – the results of entrepreneurship ❚ ❚ A culture that promotes mutual respect and a work/life bal- ance ❚ ❚ Flexible schedules

TZL: What’s your preferred strategy for growth, M&A or organic? Give us a synopsis of how your firm effected growth in the recent past. PG: So far, our only source of growth has been organic. Many of the factors discussed above have allowed us to re- cruit aggressively and minimize employee turnover. We ful- ly subscribe to the co-op program at Northeastern Universi- ty, which is the best approach to recruiting entry-level staff.

TZL: What’s the greatest challenge presented by growth?

PG: The challenges that have been most evident to us in- clude keeping a good handle on overall operations manage- ment – especially among the mid-level and senior project management staff. A significant element of that challenge lies in the branch office management bucket. Supporting branch offices with marketing and business development activities, and maintaining good communications between offices are essential. Other notable challenges that come with rapid growth in- clude maintaining a solid QA/QC structure, and making sure the administrative staff grows appropriately to sup- port the line staff functions – especially marketing and ac- counting.

TZL: What is the role of entrepreneurship in your firm?

PG: We were built on entrepreneurship. It continues to fuel our growth and development. The firm has won numerous industry design awards for projects that many would see as out of our weight class. For example, this year we’ll receive our second American Public Works Association Top 25 Na- tional Project Award in three years. The award this year is for a $130 million water system that Environmental Part- ners Group designed for the small town of Eastham on Cape Cod – a community that had no public water supply system. We’re now managing the construction of the system over a six- to eight-year timeframe. “We were built on entrepreneurship. It continues to fuel our growth and development. The firm has won numerous industry design awards for projects that many would see as out of our weight class.” TZL: What’s your prediction for 2017 and for the next five years? PG: So far 2017 has been a very good year for the public works engineering community, and the prospects for the future appear to be bright in light of the infrastructure bill being debated in Washington. Given the heightened aware- ness that America’s infrastructure has not kept pace with the public demand for safe drinking water, a cleaner envi- ronment, and more efficient and modern transportation systems, I am optimistic about the next five years.

❚ ❚ Multiple offices that reduce commuting challenges ❚ ❚ Respected mid-level and senior level managers

TZL: What’s the key benefit you give to your employees? Flex schedule, incentive compensation, 401(k), etc.? PG: I believe that the entire spectrum of benefits are im- portant to employees, since each employee has their own individual or family priorities and needs. For some, the top consideration may be salary and bonuses; for others its flex schedules that allow them to manage child care needs. I also maintain that a key benefit is the entrepreneurial spir- it the company has always had. We are a smaller company that wins large projects, and manages them very successful- ly – effectively “punching well above our weight class.” This provides significant career growth opportunities for young- er staff and a sense of energy and excitement in the firm. TZL: How do you raise capital? PG: Profitability, efficient invoicing with relatively low aver- age collection periods and retained earnings.

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

O P I N I O N

Recovering unpaid fees What does your contract say about the ability to recover legal fees or staff time incurred to recover unpaid fees? Good question, huh?

T wo recent cases show that architects with good contracts can recover not only unpaid fees for services rendered but, in some cases, termination expenses and internal costs of collection. Design professionals can learn from these cases that when seeking unpaid fees, there may be additional costs that can be recovered if proper wording is included in the contract.

William Quatman GENERAL COUNSEL

by the Architect.” The 2007 AIA form unfortunate- ly did not contain any percentage or other method to calculate “termination expenses.” “Two recent cases show that architects with good contracts can recover not only unpaid fees for services rendered but, in some cases, termination expenses and internal costs of collection.”

AIA LANGUAGE. The 2007 edition of the AIA B101 Owner-Architect Agreement, like the old B141 form, contained the following language dealing with termination: “9.6. In the event of termina- tion not the fault of the Architect, the Architect shall be compensated for services performed prior to termination, together with Reimbursable Ex- penses then due and all Termination Expenses as defined in Section 9.7.” Section 9.7 then stated: “Termination Expenses are in addition to com- pensation for the Architect’s services and include expenses directly attributable to termination for which the Architect is not otherwise compensated, plus an amount for the Architect’s anticipated profit on the value of the services not performed

See WILLIAM QUATMAN, page 10

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

WILLIAM QUATMAN, from page 9

and other losses. The court awarded a total of $287,920 and the owner paid all but $62,190, which was the amount awarded for “losses.” The parties had modified an AIA contract to add a new section 11.10.2 which said, “If Architect employs counsel or an agency to enforce this Agreement, Owner agrees to pay the attorneys’ fees, costs, expenses, and losses incurred by Architect prior to and through any trial, hearing, and/or subsequent proceeding, relating to such enforcement.” The “losses” sought by the architect consisted of the value of the time spent by a principal in the architectural firm plus several of its employees related solely to the enforcement of the contract. The architect made it clear that he was not seeking “lost profits” on new business not obtained – but merely the value of his time that he was not able to devote to that pursuit. The court noted that section 11.10.2 was not a part of the standard AIA form, was negotiated separately, and added as an addendum. The architectural firm produced evidence that its employees had expended 79.5 hours evaluating the case and preparing for and attending mediation, 154.5 hours investigating the facts, dealing with discovery, and preparing for and attending depositions, and 69.5 hours preparing for and attending trial. At oral argument, the court was advised that the architect was a small local firm with between 20 and 30 employees. The court ruled that diverting a total of more than 300 hours of staff time at hourly rates ranging from $100 to $200 from income- producing work to assist legal counsel in preparing a lawsuit to collect wrongfully withheld fees, and defending against a meritless counterclaim by the owner, constituted a measure of “loss” as defined by the dictionary. As a result, the award of $62,190 for “losses” was upheld by the Maryland Court of Appeals. “Many architects do not like to bring up the unpleasant thought of termination or legal expenses at a time when the parties are trying to establish a working relationship.” YOUR CONTRACT. What does your contract say about the abil- ity to recover legal fees or staff time incurred to recover unpaid fees? Does your contract have any method to com- pute termination expenses? Many architects do not like to bring up the unpleasant thought of termination or legal expenses at a time when the parties are trying to establish a working relationship. But these two cases show that pay- ing attention to these topics up front can reap benefits in the event that the relationship does not turn out as hoped. Two firms in California and Maryland are sure glad they were bold enough to address collection of unpaid fees early on. WILLIAM QUATMAN is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@ burnsmcd.com.

The AIA has revised this language in the new 2017 edition of B101. Section 9.6 now states: “If the Owner terminates this Agreement for its convenience pursuant to Section 9.5, or the Architect terminates this Agreement pursuant to Section 9.3, the Owner shall compensate the Architect for services performed prior to termination, Reimbursable Expenses incurred, and costs attributable to termination, including the costs attributable to the Architect’s termination of consultant agreements.” “Design professionals can learn from these cases that when seeking unpaid fees, there may be additional costs that can be recovered if proper wording is included in the contract.” New Section 9.7 provides a blank space to fill in a “Termination Fee.” This is a helpful change, and architects would be wise to include such language and fill in the blank so that a court or arbitrator can compute those termination costs. A new 2017 case out of California shows how such a formula can work to the architect’s advantage. CALIFORNIA CASE. In this case, an architect (FCA) performed services for a hospital project. The contract contained a termination clause which allowed the hospital to terminate the contract “for convenience” after seven days’ written notice. If the termination occurred during the design or bidding phases of the work, however, the contract said that the hospital was obligated to pay FCA a fee in the amount of 20 percent of all compensation. After the design phase, the hospital asked FCA to submit a fee proposal for the bidding and construction administration phases of the project. When the parties disagreed on the fee for those phases, the hospital hired another architect. The next day, FCA confirmed its termination by letter and invoiced the hospital for the 20 percent termination fee pursuant to the contract – in the amount of $2.7 million. The hospital refused to pay and FCA filed for arbitration. The arbitrators awarded the full $2.7 million in termination expenses and the hospital appealed. The California court of appeals up- held the arbitration award in the architect’s favor. MARYLAND CASE. In another 2017 case in Maryland, the architect had a contract for design and professional man- agement services for a new visitor center on a corporate campus. The owner withheld fees allegedly due and the architect filed a lawsuit for the unpaid fees, plus interest, losses and attorneys’ fees. The owner filed a counterclaim for damages allegedly due to substandard design work and inadequate project management. The jury ruled in favor of the architect and awarded unpaid fees of $58,940. Following entry of the jury’s verdict, the architect filed a motion with the court for attorneys’ fees, costs, expenses,

TALK TO US Do you have an interesting story to tell? Is your company doing things differently and getting results? Let us know. We’d love to contact you and feature you in an upcoming case study. If interested, please email rmassey@zweiggroup.com.

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

O P I N I O N

CRM = CCCC Customer relationship management has changed over the decades, but some things have remained the same: currency, correctness, consistency, and completeness.

W alkmen were all the rage, cell phones were the size of eggplants, and Whitney Houston’s “I Wanna Dance with Somebody” was the No. 1 hit. The year was 1987, a time when technology was advancing at a tremendous pace. Just imagine – in four more years, some Americans would begin communicating via SMS text.

H. John Oechsle

Enter 2017. Driverless cars are cruising the streets, and high school students are Skyping with astronauts in space. New technologies are shaping the world around us, and small businesses have a tremendous opportunity to capitalize on these advancements. This is especially true with customer relationship management, an area that businesses were smart to pay attention to 30 years ago in 1987 – and can no longer afford to ignore in today’s competitive environment. As the technological complexity of customer relationships evolve, so must our approaches to them. The area is best tackled through the four Cs of customer information, which are crucial

components of any business plan. Currency, correctness, consistency, and completeness are – and, arguably, have always been – the most effective path toward forging intimate, long-term relationships with customers. CURRENCY AND CORRECTNESS. Currency and correctness go together like the PC and the mouse. After all, data only has value when it’s up-to-date and ac- curate. While the internet makes it easy to link up with others, it’s important to ensure connec- tions are managed properly. Remember, customer information is constantly changing. People move,

See H. JOHN OECHSLE, page 12

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

TRANSACT IONS CONVENE ACQUIRES ASSEMBLE DESIGN GROUP Convene has acquired Assemble Design Group to internalize their architecture and design capabilities. Brian Tolman, the managing partner of Assemble Design Group, was named the head of product for Convene. Tolman is widely recognized as a defining influence on contemporary workplace design. He was named to ENR ’s list of top 20 New York professionals, selected as a David Rockefeller Fellow, is a LEED accredited professional, and is licensed to practice architecture in 12 states and the District of Columbia.

Before founding Assemble, Tolman spent 18 years at STUDIOS Architecture , most recently as managing principal, leading the growth of the firm’s New York office. He has managed several complex national and international design projects, and is best known for bringing a sense of place and hospitality to large-scale office headquarters projects including Bloomberg, Coach, IAC, Tribune, and Time, Inc. “Bringing Brian, his dynamic team, and their design capabilities in-house accelerates Convene’s ability to scale and deliver a better

workplace experience for our clients,” said Ryan Simonetti, CEO and co-founder of Convene. “Today’s employees are more agile than ever – they want to choose where they work, when they work, and how they work,” said Tolman. “Landlords that have been disrupted by the changing preferences of their tenants can now collaborate with Convene and our incredible team of design professionals to create workplaces that spark a sense of connection, community, and dramatically improve tenant engagement.”

H. JOHN OECHSLE, from page 11

files. To put that in context, the ’86 Mac had enough space to store about one decent quality MP3 song file today. COMPLETENESS. Completeness is not just about knowing a customer’s address and birthday; it’s an across-the-board collection of customer information aimed at document- ing every individual customer interaction. And complete record keeping wasn’t always easy to accomplish through technology. In the late 1980s, computers were only begin- ning to make their way into mainstream life. By 1989, just 15 percent of U.S. households owned one and customer records were often kept tucked away in filing cabinets. Today, we’re fortunate to live in an age where we can keep an effortless record of emails, web analytics and online sales with the right technology. We can detail each interaction a customer has with any point of contact at the business, and that information can then be stored and shared so everyone has the same, complete information about the customer’s experience. It’s easy to make notes of face-to-face meetings and phone calls, too, with tools that have been developed for just that purpose – including pioneering software solutions like Act! that were laying the foundation for modern CRM technology all the way back in 1987. “Currency, correctness, consistency, and completeness are – and, arguably, have always been – the most effective path toward forging intimate, long-term relationships with customers.” With such effective and reliable technology available at our disposal in 2017, we are wise to take advantage. Bringing the four Cs together gives businesses the ability to mine information, examine trends, and forge lifelong relationships with their customers that enable the business to grow and thrive. And, at the end of the day, isn’t finding ways to connect and form relationships with our customers what it’s all about – both today and back in 1987? H. JOHN OECHSLE serves as president and CEO of Swiftpage. Oechsle has a track record of building highly profitable and sustainable revenue growth for emerging companies and established global leaders. Contact him at joechsle@swiftpage.com.

switch jobs and update email addresses. Social media ac- counts might be inaccurate or outdated. This all under- scores the importance of maintaining current and correct customer information. “As the technological complexity of customer relationships evolve, so must our approaches to them. The area is best tackled through the four Cs of customer information, which are crucial components of any business plan.” If customer information is kept accurately and up to date, it can prove to be invaluable when used with predictive analytics technology. It can help an organization learn a lot about customer trends and who to reach out to for a sale at what time and via which method of contact to give the company the best chance for a successful interaction – giving the business its best chance to retain existing customers while developing new customer relationships. We’ve come a long way since 1987, when the first version of Microsoft Excel was released for Windows. Excel was preceded by programs such as Lotus and VisiCalc, which were used to store customer data and other important company information. Before then, punched cards were a popular way to save information. Oh, and don’t forget the infamous rolodex, the original CRM. It’s truly incredible to think of the advances information management has made in such a short time period. CONSISTENCY. Consistency has always been a hallmark of helping businesses grow. After all, success is impossible if a business can’t maintain positive and long-lasting re- lationships with its customers. We have infinite options for storing detailed customer information. We use mobile apps, cloud servers, customizable CRM software solutions, email, Google Docs, Excel spreadsheets, and – gasp – pen and paper when we’re in a pinch! If the customer informa- tion is not consistent across all of them, currency and cor- rectness go out the door! It wasn’t always so simple to store all that information on a computer. Apple’s 1986 enhanced Macintosh computer had limited capacity and could store just 4 MB worth of

THE ZWEIG LETTER July 31, 2017, ISSUE 1210

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