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T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M O c t o b e r 3 0 , 2 0 1 7 , I s s u e 1 2 2 2

PM owners

Keeping your head on straight

W ith the environment we are living in – crazy political stuff – potential nuclear war – mass shootings by maniacs – it would be easy to let it all get to you. But you can’t. You are the leader of an A/E firm. You have everyone who works for you and their families to take care of. You have to be strong in the face of the storm and cannot waiver. It’s a big responsibility! You can’t just tell your boss to “take this job and shove it!” as Johnny Paycheck did in his pop country song from 40 years ago. So what can you do to help yourself stay cen- tered? Here are some thoughts: ❚ ❚ Limit your intake. Limit your intake of nega- tive information. That may mean you need to curtail the amount of TV news you watch and radio talk shows you listen to because you know it can poison your mind and your spirit. And that it won’t help you do your job better or be a happier person! ❚ ❚ Take time to do nothing. That means pure shut down. “Boredom” can be good. It lets your brain rest and recharge and helps you be more creative. Constantly occupying your mind with something (i.e., grabbing your phone every moment you have a break), is terrible for you and deprives you of badly needed, non-sleep downtime. This past weekend I went to a fall party hosted by one of my University of Ar- kansas co-workers (a fellow professor). Their place isn’t too far out of town but is completely idyllic with a beautiful small house, workshop building, spring-fed pond, etc. I sat there on a comfortable couch on their sunny deck and looked out on the beautiful surroundings. My

“With the environment we are living in – crazy political stuff – potential nuclear war – mass shootings by maniacs – it would be easy to let it all get to you. But you can’t. You are the leader of an A/E firm.”

In Zweig Group’s 2017 Project Management Survey , we asked if project managers were owners in their firms. Seventy-five percent of PMs in very high-profit firms said they were owners compared to 70 percent in high-profit firms, 40 percent in average-profit firms, and only 25 percent in low-profit firms. This is consistent with previous findings that incentive programs can develop more efficient workflows. If PMs have a larger stake in the outcome of their work, they tend to find ways to improve a project’s profitability. OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/ F I R M I N D E X Ames & Gough. ....................................12 BIG RED DOG. .......................................4 CHA Consulting, Inc............................2, 4 Fluor Corporation..................................10 HDR........................................................2 Jacobs Engineering Group Inc................4 KBR, Inc.. .............................................10 Maintenance Design Group.....................2 Nevados Engineering..............................8 PDT Architects........................................2 Pennoni. .................................................8 Universal Engineering Sciences...............6

Mark Zweig

MORE COLUMNS xz GUEST SPEAKER: Team vs. family Page 3 xz GUEST SPEAKER: A change in attitude Page 5 xz GUEST SPEAKER: The R&D tax credit Page 9 xz GUEST SPEAKER: Look before you leap Page 11

Conference call: Mark Israel See MARK ZWEIG, page 2

Page 6

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

TRANSACT IONS HDR ACQUIRES MAINTENANCE DESIGN GROUP HDR has acquired Maintenance Design Group , which specializes in the planning and design of vehicle and fleet operations and maintenance facilities. Going forward, MDG will do business as HDR | Maintenance Design Group. Founded in 1995, Maintenance Design Group is known for industry firsts such as designing a 250-bus maintenance facility with a 100 percent drive-through maintenance bay, and designing upper level work platforms for light rail facilities that provide convenient, safe places to work. The firm has offices in Denver, Los Angeles, Minneapolis, Houston, Baltimore, and Nashville. “MDG’s innovative approach to facility design makes them a perfect fit for HDR,” said Eric Keen, president and COO for HDR. “We see tremendous growth opportunities in the operations and maintenance facilities market, and MDG’s strengths in facility planning and design complement our asset life-cycle approach to infrastructure development.” Keen added that the relationship is not new. “We have worked together to serve transit clients for more than a decade, and we are pleased to welcome everyone at MDG to the HDR team.” Projects the firms have collaborated on include the Sun Link Streetcar in Tucson, Arizona, and the Kansas City Streetcar. “MDG is excited about joining forces with HDR,” said Don Leidy, MDG managing principal. “We will be able to serve new clients and offer a wider range of services to our current clients. It’s also important that HDR shares our values and offers opportunities for employee-ownership and professional development. We look forward to all the great things we can accomplish together.” Leidy will join HDR as vice president/managing principal and will continue to lead the HDR | Maintenance Design Group team. Co-owners,

Take your advice from Mark Zweig to-go.

Ken Booth, Mark Ellis, Jon Holler, Steve Radomski, and Darren Pynn will join HDR as senior facility design managers. CHA CONSULTING ACQUIRES PDT ARCHITECTS CHA Consulting, Inc. has acquired PDT Architects . PDT specializes in K-12 schools, health care facilities, corporations, municipalities, colleges and universities, and auditoriums and theaters in and around Portland, Maine, and surrounding New England towns and cities. CHA’s CEO and President Mike Carroll states, “PDT brings CHA experienced licensed architectural resources that will enhance our ability to expand our service offerings in many of our markets. This partnership is extremely positive for both companies. Our values and vision are very well aligned, and I am confident that together, these two firms will continue to responsibly improve the world we live in.” David Webster and Lyndon Keck, PDT’s founding partners stated, “Our vision in 1977 was to create a high-quality, collaborative design firm that stressed innovation grounded in careful listening to client’s functional needs. Our tag line has been ‘Combining art and science to rethink, refine and reshape the built environment.’ This exciting opportunity to join the CHA family gives us a much larger platform to implement that vision.” CHA will actively support PDT’s structure, processes and vision during this transition while allowing PDT to continue to manage daily operations. However, CHA and PDT will work closely together tomaximize the expertise of both firms in order to enhance our ability to provide world-class engineering and architectural services to CHA’s and PDT’s clients. PDT joins the CHA family of companies including CHA Tech Services, Novara GeoSolutions, American Fire Protection, and Gryphon Engineering.

thezweigletter.com/category/podcast/

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

MARK ZWEIG, from page 1

cell phone didn’t work very well there so I wasn’t tempted to look at it. It was so refresh- ing and peaceful. ❚ ❚ Have some solitary activities. Whether that’s super early-morning golf by yourself, your after-work run, your antique car you’re restoring, quilt-making, grass cutting, or motorcycle riding – do something by yourself that gets you off your phone and lets you think. It is so helpful and healthy to have this time to really think things through. ❚ ❚ Avoid negative people. Some people will always put you in a bad mood. They never see a glass as half-full. They absolutely have no joy in their lives. They will suck you down into their vortex-toilet bowl of negativity IF you let them. Don’t! Stay away from them so their disease doesn’t infect you. Because believe me, it IS contagious! ❚ ❚ Pass your knowledge down. It helps you feel better about yourself and the world when you can pass on the lessons you have learned to the next generation. Spend time help- ing others avoid the mistakes you have made. Share with them your wisdom accumu- lated over the years. It is like an antidote for negativity. Folks – it’s time to stop fooling around and take your mental health seriously. What hints do you have for your fellow readers? We’d love to hear from you! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

Tel: 800-466-6275 Fax: 800-842-1560

Email: info@zweiggroup.com Online: thezweigletter.com Twitter: twitter.com/zweigletter Facebook: facebook.com/thezweigletter Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/yr.) $250 for one-year print subscription; free electronic subscription at thezweigletter.com/subscribe Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399- 1900, ext. 139, or email TheZweigLetter@ TheYGSGroup.com. © Copyright 2017, Zweig Group. All rights reserved.

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

O P I N I O N

Team vs. family The concept of a work family is nice. The problem is, you’re stuck with family, good or bad. With a team, you can pick and choose.

O n many occasions, we’ve heard office culture described as a family. This sounds like a great concept to embrace. But is it really the best thing for our companies?

In most places, a family represents a unit where there is unconditional love, unconditional understanding, and no sin so great that one would be excommunicated. Even if our family member is in jail for a heinous crime, they’re still our blood relatives. They’re still family. In contrast, a team is built to achieve a desired outcome, and with that outcome, we have expectations that must be filled in order to remain a member of the team. Teams must always be looking to find key additions, make timely subtractions, and know when to make substitutions in order to increase performance. Families don’t work that way. Do you remember the name of the player that Kevin Durant replaced when he joined the Golden State Warriors? Who cares? That wasn’t the point of the hire. The point was to make the Golden

State Warriors better. Do you think the rest of the Warriors sat around bemoaning the loss of a mediocre power forward, or did they perk up with the prospect of a selfless league MVP joining their starting lineup? “Teams must always be looking to find key additions, make timely subtractions, and know when to make substitutions in order to increase performance. Families don’t work that way.” Just because you’re on the team today, does not guarantee you’ll be a team member tomorrow. Like

Will Schnier GUEST SPEAKER

See WILL SCHNIER, page 4

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

BUSINESS NEWS TÜPRAŞ SELECTS JACOBS EUROCLAUS TECHNOLOGY FOR THREE REFINERIES Jacobs Engineering Group Inc. ’s proprietary EUROCLAUS sulfur recovery technology was selected by Tüpraş for its new sulfur recovery units that will be installed in the company’s Izmit, Izmir, and Kirikkale refineries in Turkey. Jacobs’ EUROCLAUS sulfur recovery technology will expand Tüpraş’ crude slate by processing more sour crudes while reducing its environmental footprint, delivering industry leading SO 2 emissions abatement. Under the contract terms, Jacobs will provide technology licensing, basic engineering, and start-up services. “This award builds on the successful delivery of similar plants in Tüpraş’ refineries and fortifies our reputation as a global leader of sulfur recovery technologies,” said Jacobs Mining and Minerals and Specialty Chemicals Senior Vice President and General Manager Andrew Berryman. “Supporting our clients

in their efforts to reduce their environmental footprint is fully aligned with Jacobs’ vision to provide solutions for a more sustainable world.” CHA CONSULTING, INC. TO HIRE 125 IN THIRD QUARTER 2017 TO SUPPORT GROWTH CHA Consulting, Inc. , a highly diversified full- service engineering and construction management firm, is recruiting candidates to fill 125 jobs in the next three months due to double-digit growth and continued positive outlook in the industry. CHA is seeking talent in transportation, water/wastewater, environmental, civil engineering, structural engineering, electric distribution, and many technical groups. Positions available range from entry-level openings to mid- to senior- level positions. CHA is recruiting engineers, project managers, technical staff, architects, planners, surveyors, scientists, and software developers. While hiring will be occurring across the CHA network of more than 30 offices from Maine to

Ohio to Georgia, the following cities have the greatest number of open positions:

❚ ❚ Albany, New York ❚ ❚ Atlanta, Georgia ❚ ❚ Chantilly or Richmond, Virginia ❚ ❚ Indianapolis, Indiana ❚ ❚ Boston, Massachusetts ❚ ❚ Parsippany or Newark, New Jersey

“We are looking for employees who share our vision to responsibly improve the world we live in,” stated Amanda Overstreet, talent acquisition leader. “If you want to work on exciting projects with some of the top talent in the industry and explore boundless opportunities to be creative and innovative, CHA is the place for you.” With technical personnel and offices throughout the United States and Canada, CHA offers engineering, architectural, survey, construction, and other services necessary to complete projects on time and within budget.

WILL SCHNIER, from page 3

or even the firm. Then, over time, you’ll find the entire organization is mired in mediocrity. Netflix has a great litmus test that may seem very aggressive for a conservative industry like architecture and engineering. Managers at Netflix must answer the question, “If this person tried to resign, how hard would I fight to keep them?” If the answer to that question for any given team member is that you would not fight that hard, or not fight at all, then you have some room to improve that team. As leaders, we are obligated to the firm, not to the employment of any one individual. That sentiment goes straight to the top of the organization chart. If the CEO is falling asleep on the job, then the board needs to act swiftly to find a new general, because the troops will notice. They will lose faith in their leadership, and they will go to work for a competitor. It’s tough managing a team of A-players. They need to be fed; they are demanding. Do you think Kevin Durant is not demanding of his coaches and teammates? Hell yes he is! We need to feed these stars with more responsibility, more training opportunities, and more chances to demonstrate and exhibit their leadership. Ultimately we need to feed them with the chance to be part of our ownership ranks. And we need to feed them by surrounding them with other A-players. We cannot expect the stars that we’re fortunate enough to have to continue to perform at that level if we surround them with B- and C-players. The task is a huge one, no doubt. We’re in an industry with a shortage of prospective talent to begin with, and then we must apply a filter to find A-players. Yes. We. Do. WILL SCHNIER is CEO of BIG RED DOG Engineering & Consulting. He can be reached at will.schnier@bigreddog.com.

athletes, we live in a “what have you done lately” world. A-plus effort with B-minus results is not commendable. It’s not how we build a business. A-plus effort is nice, but you must get A-level results to build. Nobody gets credit for time in the seat or the effort generated; they get credit for results. When we have managers start thinking that every new hire or every team member is part of an idealized family, they are loathe to upgrade the parts of their team that must be upgraded in order to generate A-level results. They will make additions, sure. But they’ll never make subtractions or substitutions on their teams without a knock-down, drag-out fight. This will surely lead to atrophy on the team. Or, as is common in our industry, it will lead to the principals and PMs having to do even more heavy lifting than they already do to get the necessary results. Stagnation will result. “When we have managers start thinking that every new hire or every team member is part of an idealized family, they are loathe to upgrade the parts of their team that must be upgraded in order to generate A-level results.” What else will happen to this team? The stars won’t work as hard and will generate fewer positive results because they’ll play to the lowest common denominator. Eventually the stars will leave for a competitor or to start their own firm. Then what’s left? Maybe you’d have a burnt-out principal and team members nobody else would hire. Then you’d see a degree of negativity start to creep out past the borders of the immediate team and into the office,

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

O P I N I O N

F irst, full disclosure, I have never been a “climate change” advocate. I can accept the fact that our climate does change or is changing, but I’ve never been a strong believer that we are causing the changes. However, my perspective changed recently due to my active role as a design professional. A change in attitude Sustainable design is becoming a must, but you need to drill down to the roots of every project to get the most out of the process.

Joseph Viscuso GUEST SPEAKER

Here at Pennoni, we are making a strong push to have our staff become Envision Sustainability Professional certified. I decided that being part of our leadership team meant that I should lead by example and take the course to pass the exam and obtain my certification. I accomplished this goal in February, leading me to this – the certification process caused me to think differently in my personal approach to projects and how much more we need to do as engineers, architects, and scientists to do our part to protect the environment. Envision teaches us to drill down on every project and look at the following criteria:

❚ ❚ Quality of life ❚ ❚ Leadership ❚ ❚ Resource allocation ❚ ❚ Natural world ❚ ❚ Climate and risk

Each of these criteria have many subsets of factors that need to be considered as part of our design. Each of these factors are then evaluated in terms of how we can improve upon them, moving from conventional design practices to hierarchies of

See JOSEPH VISCUSO, page 8

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

Mark

P R O F I L E

Conference call: Mark Israel President and CEO of Universal Engineering Sciences (Hot Firm #85 for 2016), a 715-person multi-discipline firm based in Orlando, Florida.

By LIISA ANDREASSEN Correspondent “W e make a distinction between marketing and sales,” Israel says. “We believe market- ing is the process of putting yourself in position to make the sale, and that sales is the actual sale of business.” A CONVERSATION WITH MARK ISRAEL. The Zweig Letter: The A/E market is great right now. What are you doing to cushion your firm in the event of a downturn? Mark Israel: Prior to the last downturn, due to sev- eral market forces (some good, some not so good) our workload was more heavily weighted to private work than we prefer. Just prior to the downturn, we started focusing on servicing major projects as

well as design-build highway work. We have been very fortunate in both arenas in that we have won more than our share. We’re currently very busy in both private- and public-sector work which should help cushion against a downturn. Additionally, our balance sheet is better now than before the down- turn and we feel we have better tools to more quick- ly identify a downturn. TZL: Monthly happy hours and dog friendly of- fices. What do today’s CEOs need to know about today’s workforce? MI: We’re always reading about ping-pong tables at work, happy hours, and ice cream parties. Other than holiday parties and the occasional barbecue or ballgame outing, we do very little of this. That said, several of our offices have won multiple best plac- es to work awards. While today’s workforce may be

Mark Israel, President & CEO, Univer- sal Engineer- ing Sciences

THE ZWEIG LETTER Octo

k Israel

Zweig Group is social and posting every day! C O N N E C T W I T H U S

facebook.com/ ZweigGroup

twitter.com/ ZweigGroup

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blog. ZweigGroup .com vimeo.com/ ZweigGroup

MI: We only have one owner so the compensation issue is easy. We never hold back on investment in the firm due to lack of resources. We may be a little too conservative on our risk reward evaluation. 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? MI: We’ve made a renewed effort to expand and improve our marketing department. We make a distinction between marketing and sales. We believe marketing is the process of putting yourself in position to make the sale, and that sales is the actual sale of business. We have always been very fo- cused on sales, we have 16 commissioned business develop- ment representatives. In the last two years we have upgrad- ed our marketing efforts and we see real benefits. If any- thing, we would be looking to increase our marketing ef- forts. TZL: If there was one program, course, or degree pro- gram that you could take or recommend before becoming a principal or owner, what would it be?

different, we still believe in these four principles: 1) Employees want to feel their work is valued 2) People want to know there is room for advancement (cer- tainly faster these days) 3) People want to know their boss and company care about them 4) People need a close friend at work “Our response to failure typically has been to dig our heels in and keep trying. Sometimes it feels like we’re banging our heads against the wall and the smart choice would be to accept defeat, but we don’t like that so we don’t do it.” TZL: In the event of failure, how does your firm react? MI: Our response to failure typically has been to dig our heels in and keep trying. Sometimes it feels like we’re bang- ing our heads against the wall and the smart choice would be to accept defeat, but we don’t like that so we don’t do it. TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline need- ed to retain your top people and not lose them to other firms? MI: The talent war is very real and salaries are skyrocket- ing. We try to identify young future leaders and put them through a management training program so we do have a pipeline when needed. We also try to keep open commu- nication with our current employees to help identify their career goals and try to match them to their roles. The open communication also helps if they’re approached by other firms. TZL: How do you deal with underperforming employees? What are your steps for removal after they have prov- en to be ineffective, or even counterproductive, to your firm? MI: We’re probably too patient with underperforming or counter-productive employees. We’re never accused of not giving someone enough time to turn things around. Once we do make a decision, we very often try to find another role in the company where the employee can be more suc- cessful. That often doesn’t work, but we feel that we have given every effort to make things work. TZL: Firms that have principals and firm owners that lower their compensation and invest back into the firm perform better, grow quicker, and have higher valua- tions. How do you balance owner compensation with in- vestment in the firm?

MI: Managerial/differential cost accounting.

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

MI: Without a doubt, talent/labor shortages.

“We’re constantly trying new avenues of business and new business practices. We refer to it as “intrepreneurialism,” where an employee can start a business unit within our structure that will benefit the company and create greater opportunities for the employee.”

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

MI: We consider ourselves to be extremely entrepreneurial in every facet of our business. We’re constantly trying new avenues of business and new business practices. We refer to it as “intrepreneurialism,” where an employee can start a business unit within our structure that will benefit the com- pany and create greater opportunities for the employee. TZL: What’s your prediction for 2017 and for the next five years? MI: Overall, we feel that 2017 through 2020 will be years of continued growth and profitability. We hope for the same after that, but for us it is too far to predict.

ober 30, 2017, ISSUE 1222

BUSINESS NEWS NEVADOS ENGINEERING RECEIVES $3 MILLION IN STATE AND FEDERAL R&D FUNDING FOR INNOVATIVE SOLAR ENERGY SOLUTIONS San Francisco-based Nevados Engineering , developer of all-terrain, single axis tracking systems that improve solar energy project economics, announced that it is the recipient of $3 million in awards from state and federal agencies. The research funds included nearly $2 million from the U.S. Department of Energy SunShot Initiative and $1 million in matching funds from the California Energy Commission through its Electric Program Investment Charge program. Nevados Engineering, a portfolio company of the Los Angeles Cleantech Incubator, has created a low-cost tracker to help solar developers build projects without the need for land excavation or grading. Leaving the terrain undisturbed results in significantly reduced environmental impact and mitigation. The terrain-agnostic tracker and control system also enables developers to use land that typically would not be considered for solar installations, including slopes of up to 20 degrees in any direction. The state

and federal awards will fund the next 18 months of Nevados’ development activities, including demonstrating Nevados Engineering’s intelligent tracking software and reducing manufacturing costs by roughly 50 percent. “This is a good example of how state and federal agencies can work together to support innovation,” said California Energy Commission Chair Robert Weisenmiller. “It is hoped this award will commercialize a technology that should be able to make projects more cost competitive while reducing the environmental impact. It is also a good example of the partnership the Energy Commission has made with the Los Angeles Cleantech Incubator to bring innovative clean energy technologies to the marketplace.” Through its previous 2015-2016 SunShot award, Nevados Engineering designed, built, and is now testing full-scale rows of the tracker system on simulated rolling terrain. The pilot program, located near Davis, California, is also testing the newly developed control system which optimizes, in real time, the energy

output of each row of modules. Bankability and UL studies are near completion and a wind tunnel study to design for adverse wind conditions has been completed. The pilot of four rows of 20 modules each has been operating over the last year and is exceeding expectations, according to the company. “The world is not flat,” remarked Yezin Taha, Nevados Engineering co-founder and CEO, in a presentation to stakeholders. “More than $1 billion was spent last year alone to flatten land for solar development projects. Our solution not only alleviates the tremendous cost of grading and time intensive construction schedules, but improves ROI through intelligent tracking and installation on sun-facing slopes.” Nevados Engineering has also secured a contract for an 8.4 megawatt utility-scale solar project to commence in 2018. The project is situated on south-facing slopes, which should provide a substantial increase in power generation versus conventional flat-land tracker installations.

prepare a plan to divert 25 percent of the waste to a facility to recycle or reuse. If we could move the project to the “conserving” level, our design would include a plan to divert 100 percent of the waste to be recycled or reused. Climate change believer or not, we can make a difference as a company in how we treat the environment, and these steps help us organize and accomplish just that. Overall the process has been very enlightening and embraced by our staff. We see environmental awareness/ assessment of project impact as a responsibility we all have when wearing our design hats. No doubt that we have limited resources on the planet. Projects all over the world are now using the Envision process and obtaining Envision certification. As the population continues to grow worldwide we must embrace processes like Envision that teach us to do more with less, to conserve our resources, and to look for new sources of energy to power our projects both during the design process and once they are commissioned. We have always had the responsibility to protect the environment in our work, but the Envision process forces us to take that deeper dive and hold our actions accountable. JOSEPH VISCUSO is Pennoni’s senior vice president and director of strategic growth. He can be reached at jviscuso@pennoni.com. “We have always had the responsibility to protect the environment in our work, but the Envision process forces us to take that deeper dive and hold our actions accountable.”

JOSEPH VISCUSO, from page 5

improved, enhanced, superior, conserving, and restorative.

The interesting thing about the Envision process is that it is not a “no growth” alternative. It takes into account that growth will happen and considers how it should be managed. For example, under the “quality of life” criteria, one of the subsets is “stimulate sustainable growth and development.” In the “improved” level of achievement, “the economics of the project are the only contribution to economic growth and development” while in the “restorative” level, “the project owner and project team work with the community to identify existing community assets that if restored would improve the economic growth and development capacity of the community.” In the “natural world” criteria, there is a subset dealing with the “diversion of waste generated by the project from landfills.” Under conventional design practices, engineers would very rarely (if ever) get involved in considering the disposal of waste from a project (assuming the project is one that does not deal with hazardous waste or is a Superfund site). In the “improved” level we now know to “As the population continues to grow worldwide we must embrace processes like Envision that teach us to do more with less, to conserve our resources, and to look for new sources of energy to power our projects both during the design process and once they are commissioned.”

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

O P I N I O N

A re you looking to be more competitive in an ever-changing global economy? Are you being asked to develop and improve designs and processes to be more forward thinking? Are you finding that the cost of this constant development and improvement is becoming more costly? The R&D tax credit A lot of AEC firms might think they won’t qualify for the incentive, but with the increasing complexity of design, they should rethink the issue.

Jason Bainter GUEST SPEAKER

ies, project budgeting, and construction and project management. ❚ ❚ Civil engineering. Engineering and design activities in connection with road and bridge design, water and wastewater treatment facilities, foundations and “Many AEC firms don’t realize it, but the complexity of modern structures often requires a great deal of innovation, design, and development – efforts that may qualify a firm for significant research and development tax incentives.”

Many AEC firms don’t realize it, but the complexity of modern structures often requires a great deal of innovation, design, and development – efforts that may qualify a firm for significant research and development tax incentives. If an AEC firm expends time and effort in the design phase of projects and processes, then they are in a great position to claim the R&D credit. A firm does not have to be operating a laboratory to qualify for the credits as defined by the Internal Revenue Code. The following are examples of activities that AEC firms provide that can qualify for the credit: ❚ ❚ Architectural activities. Design activities in con- nection with energy efficiency, site orientation, structural and functional features. These include commercial office buildings, educational facilities, hospitals, correctional facilities, industrial facilities, airports, stadiums, and other similar facilities. Ac- tivities that don’t usually qualify are feasibility stud-

See JASON BAINTER, page 10

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

BUSINESS NEWS KBR AWARDED PRE-FEED ENGINEERING AND PROJECT SUPPORT CONTRACTS FOR BP’S TORTUE PROJECT KBR, Inc. announced it has been awarded pre-front end engineering design and project support services contracts by BP for the development of the Tortue/ Ahmeyim field offshore Mauritania and Senegal. Under KBR’s global services agreement with BP, KBR has won these new contracts to provide pre-FEED and project support covering design of the subsea, pre-treatment floating production storage and offloading facility, inshore hub/terminal, and interfaces for floating liquefied natural gas for the Tortue Project. This new work will build on the earlier concept phase work for the development of the field already completed by KBR’s subsidiary Granherne for BP’s partner, Kosmos. “KBR is pleased to offer our world-class engineering design expertise to continue to support this significant project from its early stages and to help BP and its partners develop an LNG hub for Mauritania and Senegal,” said Jay Ibrahim, KBR president, Europe, Middle East, and Africa. “This award confirms KBR’s strategic commitment to and builds upon our ongoing relationship with BP for engineering services around the globe.” KBR’s pre-FEED work is expected to be performed over the next six months, with KBR supporting BP in the Optimize Stage of the Tortue field development. The work will be executed from KBR’s London office which has played a key role in multiple recent BP projects including the Glen Lyon FPSO and Shah Deniz Phase II projects. Revenue from this contract is undisclosed and will be booked into backlog for KBR’s Engineering & Construction business segment in Q3 of 2017.

KBR is a global provider of differentiated professional services and technologies across the asset and program life cycle within the government services and hydrocarbons sectors. KBR employs more than 34,000 people worldwide (including its joint ventures), with customers in more than 80 countries, and operations in 40 countries, across three synergistic global businesses. FLUOR-LED JOINT VENTURE ADVANCES FIRST SPAN COMPLETION FOR GOVERNOR MARIO M. CUOMO BRIDGE IN NEWYORK Fluor Corporation announced that the first span of the Governor Mario M. Cuomo Bridge, formerly known as the Tappan Zee Bridge in New York, will opened to drivers beginning August 25. The Fluor-led joint venture of Tappan Zee Constructors, LLC., comprised of American Bridge, Granite and Taylor Bros., shifted all four lanes of westbound traffic from the existing bridge to the new span overnight on August 25. The four eastbound lanes will be shifted onto the new span later this fall making way for demolition of the old bridge and advancing construction on the adjacent new span. “Fluor is pleased to deliver the first span to New York commuters who use this vital crossing for daily commerce,” said Hans Dekker, president of Fluor’s infrastructure business line. “We are proud of the Fluor-led joint venture team for advancing this landmark megaproject and look forward to building on this milestone to complete the second span next year.” The New York State Thruway Authority, in partnership with Tappan Zee Constructors, LLC., is replacing the existing bridge with a new 3.1-mile state-of-the-art, twin-span, cable-stayed bridge crossing the Hudson River between Westchester and Rockland counties. The cable-stayed main span is supported by eight 419-foot towers, which

stand at five-degree angles and feature a sleek, chamfered design. The iconic towers support 192 stay cables, which are made up of roughly 4,900 miles of steel strands. The Governor Mario M. Cuomo Bridge is one of the largest single design-build contracts for a transportation project in the United States and will be the largest bridge in New York State history. Construction began in late 2013 and is expected to be complete in 2018. “After years of hard work by thousands of dedicated people, we are proud to have traffic on the new bridge for the first time,” said Terry Towle, senior vice president of Fluor’s infrastructure business line and president of Tappan Zee Constructors, LLC. “In addition to maintaining one of the best safety records in the industry, our team has consistently met tight deadlines under extremely challenging conditions. Together we are building an iconic bridge that will serve this community for generations.” The second span is scheduled to be completed next year. After completion, all four eastbound lanes of traffic will be shifted to the second span. In the final configuration, the Governor Mario M. Cuomo Bridge will carry eight general traffic lanes (four each on the westbound and eastbound spans), breakdown/emergency lanes, space for future bus rapid transit and commuter rail, and an advanced traffic monitoring system. Fluor Corporation is a global engineering, procurement, fabrication, construction, and maintenance company that designs, builds, and maintains capital-efficient facilities for its clients on six continents. For more than a century, Fluor has served its clients by delivering innovative and integrated solutions across the globe.

JASON BAINTER, from page 9

incentive for many AEC firms. The professionals at Somerset CPAs have been able to obtain millions of dollars in credits for their clients. “The federal R&D tax credit can be an impactful monetary incentive for many AEC firms. The professionals at Somerset CPAs have been able to obtain millions of dollars in credits for their clients.” For additional information please visit bit.ly/2xxgmsG and watch the R&D video on the website. JASON BAINTER, CPA, CGMA, MBA, CDA, is a manager at Somerset CPAs and Advisors. He can be reached at jbainter@somersetcpas.com.

earthwork, retaining walls and structures, site development, and infrastructure will qualify. Services relating to surveying, soil and materials testing, traffic engineering, subsurface and landscape architecture typically do not qualify. ❚ ❚ Environmental engineering. Design activities in connection with Brownfields redevelopment, remediation design, solid waste system design, and drainage system design will qualify. Site assessments and investigation, permitting, and regula- tory compliance usually do not qualify. ❚ ❚ Structural and MEP engineering. Building superstructure design, foundation, HVAC, electrical systems, and pipe sys- tem designs will usually qualify. Forensic engineering, permit- ting, construction management, and feasibility studies usu- ally do not qualify. The federal R&D tax credit can be an impactful monetary

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

O P I N I O N

B efore inking a deal on a new project, architects and engineers should conduct a thorough review of the contract. These days, the use of onerous contractual wording has become widespread. It can greatly expand the design professional’s overall exposure and add potentially significant uninsured liabilities. Look before you leap A/E firms with new projects should carefully examine their contracts, or risk expanding overall exposure and adding potentially significant uninsured liabilities.

Wayne Marshall GUEST SPEAKER

Accordingly, as part of any contract review, pay close attention to indemnification clauses. Often, project owners seek indemnity from design professionals for claims and expenses in See WAYNE MARSHALL, page 12 “Before inking a deal on a new project, architects and engineers should conduct a thorough review of the contract. These days, the use of onerous contractual wording has become widespread.”

To put contractual reviews in context, it helps to understand what an A/E firm’s professional liability policy will and will not cover. Specifically, these policies are intended to cover claims arising from professional negligence or malpractice. They address claims for bodily injury and property damage, in addition to economic loss. On the other hand, underwriters of this insurance want to avoid covering certain types of risks, such as contractual liability, so they inserted exclusions to limit coverage. Thus, if you sign a contract shifting a financial obligation to your firm that would not otherwise exist under common law or statute, then your professional liability insurer may deny coverage.

THE ZWEIG LETTER October 30, 2017, ISSUE 1222

WAYNE MARSHALL, from page 11

“insures” or “ensures” a specific result. Modify any stated absolute result or performance level by insert wording, such as: “… to the best of our professional opinion, knowledge, and belief ….” “Equitable contracts that do not create uninsurable risks for design professionals are essential to a productive relationship on any project. Design professionals need to understand risks inherent in poorly drafted contracts and work with their legal counsel to modify them.” ❚ ❚ Limitation of liability. This restricts the design profes- sional’s financial exposure in the event liability is established. Many design firms actively negotiate an enforceable limit of liability. The clauses typically only protect design profession- als from their client’s direct claims and not those brought by third parties. They should be discussed with legal counsel. ❚ ❚ Waiver of consequential damages. These damages involve indirect economic expenses, such as lost profits, some ele- ments of delay damages or diminution in value. Although insured, they represent a disproportionate risk to the com- pensation provided the professional under the contract. Re- ject language holding your firm responsible for consequential damages. Be aware: if the contract is silent on the issue, A/E firms likely will face this risk. ❚ ❚ Site safety. Contracts should include a clause that makes jobsite safety the contractor’s sole responsibility and excludes the A/E firm from any related obligation. Further, by written agreement, the project owner should require the contractor to name the design professional as an additional insured under the contractor’s commercial general liability and auto policies. ❚ ❚ Prevailing party attorney’s fees. Some agreements con- tain provisions that shift the cost of the prevailing party’s legal expenses to other litigant(s). These fees would likely be considered a liability assumed under contract by your profes- sional liability carrier, so A/E firms should negotiate to have them removed. ❚ ❚ Ownership of documents. Some clients may insert contract language granting them ownership of the A/E firm’s instru- ments of professional service to have an unlimited license to use them. Strike any contractual language that purports to offer a client unlimited license; instead, only provide a limited license for the client’s specific project needs. These agree- ments should be reviewed with legal counsel. Equitable contracts that do not create uninsurable risks for design professionals are essential to a productive relationship on any project. Design professionals need to understand risks inherent in poorly drafted contracts and work with their legal counsel to modify them. WAYNE MARSHALL is vice president of Ames & Gough and head of the firm’s New York operations. He can be reached at wmarshall@ amesgough.com.

connection with their professional services. However, a design professional’s potential liability under an indemnification clause can be much broader and involve liabilities that would not otherwise exist to clients and other project participants. They include: ❚ ❚ Duty to defend. In an indemnity agreement, strike any obli- gations to “defend” a client from claims made by third parties. This can include reimbursement of attorney’s fees and other litigation expenses incurred by the client in resisting a third- party claim. If the client will not agree to this, then try limit- ing any defense obligation to reimburse defense costs that would be recoverable under common law. Insert the qualify- ing phrase, “where recoverable under law” after “reasonable attorney’s fees” in an indemnity provision. ❚ ❚ Tied to negligence. Most professional liability policies pro- vide coverage for the design professional’s negligent acts, er- rors or omissions. Thus, the indemnification clause might be worded to provide for indemnity “arising out of ” the perfor- mance of professional services, “but only to the extent caused by” negligent acts, errors or omissions. ❚ ❚ Indemnifying entities related to the owner. Often, clients insert language requiring design professionals to indemnify numerous entities that may or may not be related to the cli- ent, such as agents, representatives, subsidiaries, affiliated companies, and lenders, among others. This creates insur- ability and risk management issues for design professionals as they do not typically owe a duty of care under common law to these entities. Try to remove any references to parties or agents beyond your client, its officers and employees. ❚ ❚ Flow-down clauses. Some contracts contain clauses obligat- ing the parties to requirements in other contracts, such as the prime agreement. If your firm agrees to an indemnity clause, check if there is a flow down; if so, review the prime contract and make sure you are compliant. “If you sign a contract shifting a financial obligation to your firm that would not otherwise exist under common law or statute, then your professional liability insurer may deny coverage. Accordingly, as part of any contract review, pay close attention to indemnification clauses.” Besides indemnification clauses, design firms should watch for other potential contractual issues, including the following: ❚ ❚ Standard of care. When defined in the contract, the stan- dard of care should require the design professional to “… per- form its services within the degree of skill and care ordinarily exercised by other members of the profession in the same locality and under similar circumstances as of the time ser- vices were rendered.” A design professional’s contract should never promise perfection or total accuracy in its professional services. Try to remove such clauses and any language that

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THE ZWEIG LETTER October 30, 2017, ISSUE 1222

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THE ZWEIG LETTER October 30, 2017, ISSUE 1222 CHARLESTON, SC October 5-26

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