Embed Size (px)
Citation preview
Personnel costs
Zweig Group recently released it’s 2019 Operating Expenses Benchmarking Report of AEC Firms, which compiles financial data on overhead spending from five other survey publications into one comprehensive report. This includes benefits for a firm’s employees, which are highlighted in the chart above as the median percentage of net service revenue. Bonus costs have been on the rise over the last three years. Meanwhile, paid time off and group insurance as a percentage of NSR have been very steady over that same timeframe.
Participate in a survey and save $320 on any Zweig Group research publication. Visit bit.ly/TZLsp to learn more.
T R E N D L I N E S
F I R M I N D E X
W W W . T H E Z W E I G L E T T E R . C O M
T H E V O I C E O F R E A S O N F O R A E C F I R M S & M A N A G E M E N T C O N S U L T A N T S
Catalyst Environmental Solutions ..........10Chipman Design Architecture .................6HED .....................................................10Katerra .................................................10Mithun ..................................................10OHM Advisors ........................................2SABArchitects ......................................10Swinerton .............................................10Walker Macy .........................................10Westwood Professional Services, Inc. .....4WGI ......................................................12
Page 6
S e p t e m b e r 2 3 , 2 0 1 9 , I s s u e 1 3 1 3
Stronger together: Lauren Chipman
See MARK ZWEIG, page 2
“When directly confronted
with a difficult or painful
question and you aren’t
honest with people – they’ll figure that out.
And you can forget them
ever trusting you again.”
It’s too bad there are so many leaders of AEC firms (and other businesses, for
that matter), who just don’t realize what a great tool it is to be honest with people. I’m talking about telling the unvarnished truth to those who want it, need it, and deserve to hear it.
Business partners, lenders, investors, clients, and employees all need your honesty. Here’s more of what I mean:
1) Business partners. These could be the people who mentored you and got you where you are by supporting you. Or, they could be someone who struggled right alongside you and put their house up for collateral to get the business started or bought back from other partners. Either way, they deserve to know what is going on and what you are thinking. Not to say you need to clear your daily decisions with them every time, but they do deserve to know the truth about what is happening, stuff that you know about and that they may not. Hold back, and there will be a lack of trust. They could start wondering what you are up to that may hurt them in the future.
2) Lenders and investors. They have to know the good news AND the bad news, so they don’t get any surprises. So many firm owners only want to give the good news to these people, and in the process, shoot themselves in the foot. Early warnings allow those who have taken on a lot of risk to help stave off or solve the problem before it grows so big it can’t be dealt with. This is so important!
3) Clients and customers. When something is going wrong or has gone wrong, truth is
MORE COLUMNSxz LINDSAY YOUNG: Meaningful connections Page 3
xz MEGAN SCHWARTZ: Score (lots of) goals Page 9
xz BRADY BRYAN & JUSTIN DILAURO: Designing tax savings for AEC firms Page 11
Honesty is the best policy
Mark Zweig
© Copyright 2019. Zweig Group.
All rights reserved. THE ZWEIG LETTER September 23, 2019, ISSUE 1313
2
1200 North College Ave. Fayetteville, AR 72703
Chad Clinehens | Publisher [email protected]
Richard Massey | Managing Editor [email protected]
Christina Zweig | Contributing Editor [email protected]
Sara Parkman | Senior Editor & Designer
Liisa Andreassen | Correspondent [email protected]
Tel: 800-466-6275 Fax: 800-842-1560 Email: [email protected] Online: thezweigletter.com Twitter: twitter.com/zweigletter Facebook: facebook.com/thezweigletter
Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310.
Issued weekly (48 issues/year) $250 for one-year print subscription; free electronic subscription at thezweigletter.com/subscribe
© Copyright 2019, Zweig Group. All rights reserved.
always the best policy. I realize your professional liability carriers may disagree, but what do they know about building a business that maintains long-term relationships so essential to your well-being as a company? It’s best to just be honest and own up to any mistakes early and then work to correct them quickly. That way, they know you’re not only on top of things but will make them right without their pressing you to do the right thing. The trust you build will pay future dividends far beyond the cost of fixing whatever the problem is that you or your people created. Think LONG term. The future will be here before you know it and you only have one reputation!
4) Employees. When you are the boss, you have a tremendous responsibility for the people who work for you. Think about it – they have placed their trust in you to run a good business that provides them with ongoing employment. I always say that being an employee is like being self-employed and having only one client. It’s very risky unless your “client” is a really solid business run by people who actually value you and care about your well-being. If you don’t disclose what is going on and what could affect them, you are violating that responsibility. And when directly confronted with a difficult or painful question and you aren’t honest with people – they’ll figure that out. And you can forget them ever trusting you again. You blew it. And rest assured that it will manifest itself in less effort, less commitment, and higher staff turnover down the road.
MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at [email protected].
MARK ZWEIG, from page 1
Elevate your ability to lead and grow your firm at this
impactful two-day program designed to inspire and in-
form existing and emerging firm leaders in key areas
such as: leadership, financial management, recruiting,
marketing/business development, and project
management.
The Principals Academy
ZWEIG GROUP’S FLAGSHIP TRAINING PROGRAM FOR FIRM LEADERS
NYC 10.31–11.1
REGISTER TODAY
http://bit.ly/PrincipalsAcademy
ON THE MOVEOHM ADVISORS NAMES KENT EARLY VICE PRESIDENT OF ENGINEERING OHM Advisors, an architectural, engineering, and planning firm providing a comprehensive range of award-winning services designed to advance communities, has appointed Kent Early, P.E., vice president of engineering. The announcement was made by John Hiltz, president, OHM Advisors, as part of a strategic restructuring of leadership roles – with all Vice Presidents now reporting directly to newly named Chief Operating Officer Jon Kramer.In his new role as Vice President, Early will oversee the Municipal Engineering, GIS and CADD departments, as well as the firm’s Environmental Water Resources Group.“Kent’s accomplishments and commitment to quality and client satisfaction are hallmarks of his 20-year career at OHM Advisors,” said Hiltz. “His leadership role in infrastructure projects both above and below ground have made him a trusted advisor to our municipal and private sector clients.”Early has more than 25 years of experience as a civil engineer, comprising project expertise in the design and management of every facet of municipal systems, but his greatest strength is his professional growth mindset for his team. Early most recently served as director of municipal engineering, a role in which he applied a strategic big-picture, holistic mindset across all offices in the firm’s service footprint. – resulting in numerous industry award-winning projects.Throughout his tenure at OHM Advisors, Early applied a forward-thinking philosophy, strong technical expertise and sharp client focus to the company’s disciplines in architecture,
planning and construction. He similarly applies that leadership to the firm’s board of directors, to which he has been offering experience in strategic transactions, financial management, and technology development since his election in 2017.
Early is extremely active both within the industry and as a vested community champion. He is a member of the American Public Works Association (APWA) and the American Society of Civil Engineers (ASCE) and represents OHM Advisors at all manner of public functions, including council, board and planning commission meetings, and social and business gatherings.
Early is also past Rotary Club president and currently chairs multiple Rotary committees, is a youth baseball and hockey coach, and is a Meals on Wheels volunteer.
Early earned a bachelor’s degree in civil engineering from Michigan Technological University, and an MBA from Eastern Michigan University. He is a resident of Plymouth, where he and wife, Cheryl, raise their three children.
Headquartered in Livonia, Michigan, and with 15 offices throughout Michigan, Ohio and Tennessee, OHM Advisors is the community advancement firm providing award-winning architectural, engineering and planning services. Founded in 1962, OHM Advisors provides multidisciplinary services to clients in both the public and private sector including infrastructure, stormwater and municipal water systems.
3
THE ZWEIG LETTER September 23, 2019, ISSUE 1313
Connecting with people is such an important component in all aspects of our lives. It gives us purpose and reinforces who we are as human beings. Making
meaningful connections is hard, because it takes time and commitment. It can’t and doesn’t happen overnight. Whether you are connecting personally or for business, it takes effort and dedication to build those meaningful relationships. There are so many touch points.
O P I N I O N
Think about a friend or spouse. When you first met them, you probably didn’t imagine they’d still be in your life today. It’s taken years to form that relationship and keep it. You probably also don’t remember the key point of when you knew they would be friends for life or when you knew you’d spend the rest of your life married to them. There are probably many memories of that person being there for you in good times and bad. It’s the culmination of these engagements that has created this meaningful relationship.
I was talking with one of my best friends, who lives two hours away, about making connections
and fostering friendships. For five years, we lived in the same town, but two years ago we both moved to different cities. Both of us are making connections and developing relationships, but it’s difficult. It has taken both of us a year or two to find those connections that we know will last. We both made the comment that we didn’t think our current circle of friends would make it into the inner core. There wasn’t a specific point in time when, thinking about my closest tribe members, that I can recall thinking, “These people are going to be lifelong friends.” I can say that now, but I
See LINDSAY YOUNG, page 4
Lindsay Young
It’s not easy to do, but if you want lifelong clients who are also friends, you have to commit yourself to the long haul.
Meaningful connections
© Copyright 2019. Zweig Group.
All rights reserved. THE ZWEIG LETTER September 23, 2019, ISSUE 1313
4
can’t say there was a specific point in time that something happened. It’s an accumulation: The lunches together, the texts congratulating me on a presentation I gave, or the attendance at a celebration when there were tornados rotating in the sky. It’s the combination of all the little things that makes the big thing. Your clients feel the exact same way about you.
Connecting is hard, because the people have to be your people. You probably have similar views, although not always, and share those opinions with an open mind and open heart. We don’t all agree on everything 100 percent of the time. As a married woman, my husband and I don’t agree on everything. I must keep an open mind when he’s offering constructive criticism or advice about a
situation. He’s just trying to help me and see it from all aspects. Strong connections should do this. They need to communicate the positive and the negative. That’s another way to know if you’ve developed a deep connection with someone. When that person offers advice or constructive criticism, you know they care about you and your future. They want the best for you and want you to think of all the options that are available. My mom was especially good at this. She would listen and ask some questions, never telling me what to do, but by the end of the conversation, I knew what I needed to do, regardless of if it was easy or not. That’s a rare trait in someone, but she was a master at it.
Making connections in business is no different, although it’s in a different context. You want your business connections to help your firm but you also need to help their firm. It’s creating that win-win relationship. Again, you probably have similar views of how to run a business and how you treat customers. Find those people, build a relationship with them, and make them lifelong customers – and friends. Business relationships take a large amount of investment, but they are well worth it for you professionally and personally. Make meaningful connections with your clients and create a client – and a friend – for life.
LINDSAY YOUNG is president and founder of nu marketing. She can be reached at [email protected].
LINDSAY YOUNG, from page 3
“It’s too bad there are so many leaders of AEC firms (and other businesses, for that matter), who just don’t realize what a great tool it is to be honest with people. I’m talking about telling the unvarnished truth to those who want it, need it, and deserve to hear it.”
ON THE MOVEWESTWOOD APPOINTS NEW VICE PRESIDENTS Westwood Professional Services, Inc. is pleased to announce the appointment of seven new vice presidents for the firm.Clare McDonough, Vice President, Corporate Brand Communications, works with senior leadership and across teams to develop and implement audience engagement strategies, which support brand heritage and drive brand awareness to increase revenue across the business. McDonough and her team have led the firm to receive 10 marketing excellence awards since 2015. McDonough joined Westwood in 2003.Dan Beckmann, P.E., Vice President, Power Delivery, joined Westwood in 2005 and is on the firm’s Board of Directors. He leads the power delivery team in providing quality work for utility clients across the country. Beckmann is a strong proponent for Westwood’s culture across all business units.Joanna Vossen, JD, Vice President, General Counsel, leads Westwood in successfully managing its growing needs related to client service agreements, regulatory compliance and strategically integrating business goals with legal resources. Vossen was also recently elected as chairwoman of Environmental Initiative and was recognized as one of the Twin Cities top Women in Business in 2019 by the Business Journal. Vossen joined Westwood in 2010.Mallory Lindgren, Vice President, Solar and
Storage, is an active advocate for solar and storage advancement, and renewable energy as a whole. She is tireless in monitoring trends in the industry and pursuing strategic growth and new client relationships for the firm. Lindgren joined Westwood in 2007 and was recently elected to the Board of Directors.Randy Pogue, PE, Vice President, Southern Land Region, is highly capable and respected among staff, clients, and peers. He focuses on mentorship, team culture, and client satisfaction to support long-lasting success for all project stakeholders. Pogue joined Westwood through an acquisition of his firm in 2015. He participates in countless professional organizations and has served as an elected official of the city of McKinney, Texas.Rob Copouls, P.E., Vice President, Power Operations, is efficient and effective in managing process improvements, from early coordination with leadership and groups through successful implementation. Copouls enjoys the opportunity to create additional leaders within Westwood to serve clients for years to come.Steve Windingland, P.E., Vice President, Wind, is responsible for Westwood’s largest market and is a vocal advocate of renewable energy. He has led his team through strong organic growth and expansion into new service and geographic regions, consistently
providing clients with quality work and services.On the seven promotions, President/CEO Paul Greenhagen, PS says, “Our new officers represent an exciting step forward in Westwood’s growth strategy. As newly appointed vice presidents, we recognize the importance and magnitude of each person’s role, their contributions to the success of our business, and their strength as leaders going forward. I look forward to engaging each of them on Westwood’s long-term strategies.”Westwood Professional Services, Inc. is a multi-disciplined national surveying and engineering services provider for private development, public infrastructure, wind energy, solar energy, energy storage, and electric transmission projects. Westwood was established in 1972 in Minneapolis, Minnesota and has grown to serve clients across the nation from multiple U.S. offices. Westwood’s Corporate Fact Sheet.In 2019, Westwood received recognition as one of Zweig Group’s Best Firms to Work For. Westwood also won an award for Marketing Excellence, in addition to appearing on Zweig Group’s Hot Firms List. Westwood Professional Services, Inc. is consistently ranked on industry top 25 lists and receives recognition for its involvement on award-winning projects nationwide.
THE ZWEIG LETTER September 23, 2019, ISSUE 1313
5
BUILD YOUR BUSINESS. BUILD YOUR BRAND. BUILD YOUR BRAIN.
October 02–04, 2019Las Vegas • The Green Valley Ranch Resort and Spa
CONFERENCE LOGOSESSION LOGO
COLOR PALETTE
GRAPHIC ELEMENTS
199539158109COOL GREY
1COOL GREY
10
celebrate change promote educatediversify
formerly the Hot Firm and A/E Industry Awards Conference
CONFERENCE LOGO SESSION LOGO
COLOR PALETTE
GRAPHIC ELEMENTS
199 539 158 109COOL GREY
1COOL GREY
10
Zweig Group exists to advance the AEC profession. Our Mission is to Elevate the Industry. We believe in a world that celebrates the built environment and recognizes its impact on individuals, communities, and commerce. Empowering organizations with the resources they need – to perform better, grow and add jobs, pay better wages and to expand their impact on the community – is always at the forefront of our action.
QUESTIONS?For group rates, or if you have any questions, contact Melissa Swann at 479-305-3357, [email protected] or visit zweiggroup.com.
JOIN ZWEIG GROUP FOR THE ELEVATE AEC CONFERENCEThe Elevate AEC Conference is the AEC industry’s premiere experience to connect global leaders, solve industry issues, present next practices, and celebrate the most successful firms in the built environment.
Zweig Group’s annual conference is the largest gathering of award-winning AEC firms, making it the industry’s most comprehensive business conference for leaders and aspiring leaders of AEC firms in the US. EXPANDED EDUCATIONAL OFFERINGS This year, the Elevate AEC Conference marks another leap in the evolution of Zweig Group’s annual event with expanded educational offerings focused on firm management, senior marketers and HR professionals covering the latest strategies and emerging trends critical to grow your business.
M&A Next is a full-day symposium (pre-Elevate AEC Conference event) designed to provide M&A education. The conference-within-a-conference will provide practical application through interactive roundtable discussions, expert panel conversations, and focused networking to connect leaders from across the country.
SAVE $200 ON REGISTRATION THROUGH JULY 15 using PROMO CODE: CSElevate zweiggroup.com/elevate-aec-conference
THE ZWEIG LETTER September 23, 2019, ISSUE 1313
6
P R O F I L E
Stronger together: Lauren ChipmanCEO of Chipman Design Architecture, a third-generation, family-owned firm based in Chicago, Illinois.
With a background in design and the performing arts, Chipman brings a unique perspective to her
position. Her entrepreneurial vision continues to bring a fresh, unconventional direction to the architecture and design firm, and she is a champion of community-based arts and design outreach.
“I am accountable to my team members to ensure that they are well-trained and set-up for success,” Chipman says. “I am accountable to our clients to ensure that we are making them successful in their growth, and I am accountable to our leadership to continue to inspire them to lead to greater heights.”
A CONVERSATION WITH LAUREN CHIPMAN.
The Zweig Letter: How much time do you spend working “in the business” rather than “on the business?”
Lauren Chipman: I think it’s incredibly important to have long-reaching SMART goals that are incorporated into
daily tasks. No matter your role in the company, it’s easy to get stuck in “blinder-mode” where you keep answering the never-ending string of emails, the daily interruptions of someone popping into your office, and the conference calls.
I plan my day the night before, leaving an open window at the start of the day to work on long-term projects, on the business, and the future that it holds for all of us. I have found that this planning not only allows my day to start focused (despite the beautiful chaos that may follow), but allows me to clear my head before sleep.
By LIISA ANDREASSENCorrespondent
“We pride ourselves on a flexible workplace and the ability to truly reach a work/life balance in an industry that has historically consisted of late nights and weekends in the office.”
© Copyright 2019. Zweig Group.
All rights reserved. THE ZWEIG LETTER September 23, 2019, ISSUE 1313
7
HEADQUARTERS: Chicago, IL
NUMBER OF EMPLOYEES: 145
employees
YEAR FOUNDED: 1979
NUMBER OF OFFICE LOCATIONS: Five
offices in five states:
z Chicago, IL
z Los Angeles, CA
z Atlanta, GA
z New York, NY
z Denver, CO
OUR SERVICES:
z Architecture
z Interior design
z Branded environment
z Visualization
z Prototype development
z Sustainable design
z Kitchen planning
z Lighting design
z National site adaptation of
prototypes
z Property improvement plans
OUR MARKETS:
z Retail
z Hospitality
z Restaurant
TZL: What role does your family play in your career? Are work and family separate, or is there overlap?
LC: As a third-generation, family-owned firm, there is no separation! Celebrating our 40th anniversary this year, I’ve been reflecting on what family means as well as what it means to “grow up” in the business. My parents joined my grandfather in Chicago and started the architecture firm in earnest in 1979. For a long time, it was just the two of them working together with a handful of employees until growth took off in the early ‘90s.
They would come home from work every day and we would talk about our days around the dinner table, which always ended in talk about work. This history allows me to have a holistic view of the industry and how we can most successfully run our business, from architectural and design expertise to the personnel items that pepper the week. Even though my parents are no longer involved in the daily operations, my brother, Kyle, and I are proud to carry on the firm’s legacy.
TZL: What, if anything, are you doing to protect your firm from a potential economic slowdown in the future?
LC: Our firm is well-known across the restaurant and retail sectors, growing brands nationally while providing architectural expertise. In the last decade, we have focused on becoming known for our design expertise as well, in addition to growing smaller brands and providing the infrastructure stability and process development they may not internally have on staff.
We are continuing to diversify across sectors, successfully developing hotels, multi-family residential properties, and senior living communities. Cross-training our team members and making sure they are well-rounded allows us to be prepared to respond quickly and be an agile company in the next recession.
TZL: What novel approaches are you bringing to recruitment, and how are your brand and differentiators performing in the talent wars?
LC: We pride ourselves on a flexible workplace and the ability to truly reach a work/life balance in an industry that has historically consisted of late nights and weekends in the office. With flex hours, summer hours, and investment in a
mobile workflow, we invest heavily in our company culture to create an atmosphere of appreciation and transparency. We are proud to cater in hot breakfast every Monday morning, provide free yoga instruction Friday morning, and host four to five events every month, including athletic leagues, wine and cheese socials, and the always popular National Pickle Day! We believe that an environment where our team members feel valued is an environment in which they will thrive.
TZL: Is change management a topic regularly addressed by the leadership at your firm? If so, elaborate.
LC: I am honored to be able to work with my brother, Kyle, who is our process manager. You have never met a man more adept at leading and communicating change management. Working with team members one-on-one as well as addressing holistic challenges on a firm-wide level, Kyle finds solutions through custom-developed platforms for addressing every facet of our business, from our QA/QC process, project scheduling, accounting set-ups, and tracking the passage of time as well as developing tools for our clients to streamline their internal processes. He has spoken on panels and written white papers for such CDA-implemented platforms including Smartsheet, Bluebeam, and Miro.
TZL: Research shows that PMs are overworked, understaffed, and that many firms do not have formal training programs for PMs. What is your firm doing to support its PMs?
LC: In growing our team members and the accounts on which they work, we have created numerous training and mentorship programs including CDAcademy (monthly, targeted training sessions for every level of team member), Lessons Learned (catered lunch series
See STRONGER TOGETHER, page 8
“All of our leadership members have a unique skill set that makes them indispensable to the firm, however a number of things set them apart: design and/or architectural expertise, leadership and mentorship excellence, and the innate ability to problem solve.”
© Copyright 2019. Zweig Group.
All rights reserved. THE ZWEIG LETTER September 23, 2019, ISSUE 1313
8
in which leadership presents pertinent information from recent projects), as well as my monthly series, Lunch with Lauren (sharing project information from around the office, discussing current design trends, or even just bringing in a meditation instructor to impart stress-relieving methods). We believe that together we are stronger, and structure our talent training to cumulatively leverage the shared knowledge across the country.
TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s?
LC: A principal is the one position in our firm for which there is no job description, because no two principals are alike. All of our leadership members have a unique skill set that makes them indispensable to the firm, however a number of things set them apart: design and/
or architectural expertise, leadership and mentorship excellence, and the innate ability to problem solve. I believe that time develops these skills, but that development happens at different rates for everyone, so there is not a minimum age for being named a principal. As a CEO/principal in her 30s, I know that I still have that ability to continue to grow, but I am buoyed by my strong leadership team.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
LC: Accountability. I am accountable to my team members to ensure that they are well-trained and set-up for success, I am accountable to our clients to ensure that we are making them successful in their growth, and I am accountable to our leadership to continue to inspire them to lead to greater heights.
TZL: What happens to the firm if you leave tomorrow?
LC: My voice carries and I love to walk around the office and catch-up with my team members, so the office would probably be a lot quieter.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
LC: I am proud to say we are a diverse team across the spectrum of gender, sexual orientation, religion, and race – it’s something that we truly celebrate. I believe that empathy can be informed by diversity. By engaging with someone different from you on a daily basis, we are able to become better listeners, better mentors, and better designers.
Chipman Design Architecture participated in Stan’s Donut 5k in Chicago last year.
STRONGER TOGETHER, from page 7
“With flex hours, summer hours, and investment in a mobile workflow, we invest heavily in our company culture to create an atmosphere of appreciation and transparency ... We believe that an environment where our team members feel valued is an environment in which they will thrive.”
9
THE ZWEIG LETTER September 23, 2019, ISSUE 1313
The U.S. Women’s National Soccer Team played their first game of the 2019 World Cup against Thailand in June. Going in, the USWNT was the heavy favorite and
expected to win, and win they did, crushing Thailand 13-0. After the game, the team experienced media backlash. Various news articles called the women “ruthless” for “running up the score” and criticized them for celebrating their goals.
Should the US Women’s National Team have let up on Thailand during the World Cup? Of course not, and let that be a lesson to you.
O P I N I O N
Should the USWNT have let up when they realized they were the better team on the field and had already scored a few goals? Should they have played down to match the level of play from Thailand, so it was a less lop-sided game? What’s the point of playing a soccer game at the highest level of competition, the World Cup, if both teams aren’t going to play at their highest level? But more importantly for the USWNT in this case, when athletic teams begin to “play down” to their opponent, they can adopt bad habits and make mistakes that can translate into future games. Players slack off and underestimate the opponent they are guarding. The other team begins to score and that is how upsets happen. How would the soccer community have reacted if, after eight goals, suddenly the USWNT started sloughing
off? This is the World Cup after all, not a Saturday recreational game, and, to win the World Cup, you need to play at your highest level for the entire tournament.
These same concepts apply to business. Every day, a competitor is targeting our key clients and our project opportunities and they are putting
Score (lots of) goals
Megan Schwartz
Rose Lavelle Photo credit: Lionel Bonaventure, AFP
See MEGAN SCHWARTZ, page 10
“What’s the point of playing a soccer game at the highest level of competition, the World Cup, if both teams aren’t going to play at their highest level?”
© Copyright 2019. Zweig Group.
All rights reserved. THE ZWEIG LETTER September 23, 2019, ISSUE 1313
10
together their strategies to take over those clients and win those projects away from us. They are hiring key staff with the specific skillsets and experience to break into a marketplace we thought we had locked up.
As a small business, we can be especially vulnerable to larger companies thinking they can sweep in, dominate the ball, and start scoring goals against us and winning favor with our clients. We are playing a game of inches, where seemingly little things can count big. As business owners, we need to come to work each day ready to play our best and motivate our staff to do the same. Perhaps most importantly, we need to always be on the offensive, working at the management level and filtering down to the staff level, to build a strategy for not only keeping our best clients, but identifying the next big market and
next key client. We need to be taking calculated risks and putting out new proposals, even while diligently delivering on the work-in-hand. Like every great soccer player, our heads need to be on a constant swivel not only defending our position in the marketplace where we already stand, but being able to read the game and plan our attack so we know precisely what we are going to do with the ball (i.e., that great opportunity) when we get it.
We need to be diligent in our quality control and project tracking. We shouldn’t settle for staff who put in the hours but deliver mediocre work. We need to always be at least one step and one goal ahead of our opponents, by not letting up on our regular contact with key clients, delivering high-quality work on-time and within budget, and effectively providing value and solutions to our clients. It’s when companies settle into their heels rather than staying on their toes and start delivering so-so reports, average proposals, or client managers start thinking “I’m too busy, I’ll just call her or him tomorrow,” that suddenly there’s an upset and that contract you thought was in the bag is handed to your number one opponent. It’s game on and we must stay focused and keep our eyes on the prize!
MEGAN SCHWARTZ is CFO and director of environmental regulatory compliance and permitting at Catalyst Environmental Solutions. She can be reached at [email protected].
MEGAN SCHWARTZ, from page 9
“We are playing a game of inches, where seemingly little things can count big. As business owners, we need to come to work each day ready to play our best and motivate our staff to do the same.”
BUSINESS NEWSUC SANTA CRUZ STUDENT HOUSING WEST TO EASE HOUSING CRUNCH The University of California Board of Regents approved critical new student housing projects at the UC Santa Cruz campus. The project, Student Housing West, is being led by national developer Capstone Development Partners, and will create more than 3,000 new student beds on campus at two sites: the Hagar Site, located near the southeast corner of the main campus and the Heller Site, located on the western side of the main campus near the Heller Drive entry gate. The project will also include a new Early Education Center serving 140 children of UCSC’s students, faculty, and staff.Lead architect, HED, is responsible for the design of approximately 800,000 square feet of undergraduate student housing across five buildings at the Heller Site, along with a community plaza hub that includes cafe, market, and wellness amenities. HED is working with design-build contractor, DPR Construction. Walker Macy is serving as the project’s lead campus planner and landscape architect for both sites. Additional design architects include Mithun and Katerra for the Graduate Student Housing building at the Heller Site. The Hagar Site design team includes Katerra for Family Student Housing and the Community Building, and SABArchitects for the Early Education Center with design-build contractor, Swinerton. Overall project cost is estimated at $713 million.The Graduate Student Housing and Undergraduate Student Housing are a blend
of apartment-style units and co-living models with shared common areas and kitchens. These were designed to achieve affordable rental rates – a key concern among students surveyed – and panelized components are expected to be fabricated off site and assembled on site.“Every decision on this project is focused on quality of life outcomes for the students. Each design solution enhances and supports the unique qualities of UC Santa Cruz,” said development leader and Capstone Senior Vice President Chad Izmirian.Santa Cruz’s unique coastal geography demands a highly sensitive focus on the preservation of its natural resources and the development’s design has required an intimate understanding of the geological and environmental factors of the site. The Heller site contains an improved habitat on the site to ensure safe migration of the California Red-Legged Frog (intended to support species recovery). The campus’s published final environmental impact report was certified by the UC Regents this spring.Both project sites are being designed to achieve a high level of sustainability, including focused efforts to decrease use of non-potable water (through a dedicated wastewater treatment plant on each site) and decrease the generation of carbon and waste. In addition, the development team is striving to achieve LEED Platinum certification for both sites and is engaged in an innovative partnership with Puttman Infrastructure.
HED Principal Gene McDonald, AIA, is proud to celebrate this project’s advancement. “We expect that this significant public private partnership project will set a new standard for the design of affordable and sustainable student housing,” he says, “and have a dramatic impact for a housing-hungry campus and region.”UC Santa Cruz currently provides on-campus housing for approximately 9,300 students, about half of its student population. However, there is a still a pressing need for affordable campus housing, especially for upper-division students who otherwise live in the surrounding community. Student Housing West is the single largest housing project underway in Santa Cruz County.According to UC Santa Cruz Chancellor George Blumenthal, “Student Housing West is a bold attempt to help our current students, too many of whom are struggling to get by in this overheated housing market. I believe the end result is an economically prudent project that will maintain housing affordability for all students, mitigate environmental impacts to the extent they can be lessened, and minimize the displacement of students with families while construction is underway.”HED seeks creative solutions that have a positive impact for its clients, the community, and the world. Since its founding in 1908, HED has earned a reputation for excellence in all facets of the designed and built environment, including architecture, consulting, engineering, and planning services.
11
THE ZWEIG LETTER September 23, 2019, ISSUE 1313
AEC industry business owners, and their CPAs and advisors, have become increasingly aware of several specialized tax credits and incentives that are
available to them. For example, federal and state R&D tax credits have now been expanded to include many architecture and engineering design activities, in addition to certain activities conducted by contractors, even those activities performed pursuant to a client contract.
The R&D tax credit is the most widely applicable and powerful tax incentive, but it’s not the only one AEC firms should take advantage of.
S P O N S O R
It is for these reasons, amongst others, that a $5.5 million annual gross revenue architecture firm is able to secure around $120,000 of federal and state R&D tax credits annually for architecture design activities on their education, healthcare, and commercial projects. Likewise, a $127 million annual gross revenue civil engineering firm that conducts design projects for land development, transportation, water/wastewater, and other civil applications is able to capture about $550,000 of annual federal and state R&D tax credits.
While the R&D tax credit may be the most widely applicable and powerful tax incentive for an AEC business to capture, it is not the only one. The Section 179D Energy Efficient Commercial
Building Deduction, which is available for commercial building owners as a part of an overall accelerated depreciation strategy, is also available for AEC businesses that design certain systems
Designing tax savings for AEC firms
Brady Bryan
Justin DiLauro
See BRADY BRYAN & JUSTIN DILAURO, page 12
“These tax credits and incentives are very powerful, and since many AEC businesses are entitled to claim them by law, all prudent owners and officers should ensure they are fully assessed.”
© Copyright 2019. Zweig Group.
All rights reserved. THE ZWEIG LETTER September 23, 2019, ISSUE 1313
12
of newly constructed, or renovated, government-owned buildings. This federal tax deduction can be as much as $1.80 per square foot depending on the results of the required energy analysis, so an AEC business with even just a modest government portfolio (whether federal, state, or local) can quickly accumulate a significant amount of deductions. For example, a multi-disciplinary architecture and engineering firm secured more than $750,000 of 179D tax deductions for its design work on only four projects for a local school district.
The Section 45L New Energy Efficient Home Credit is another powerful tax incentive for certain AEC businesses, most specifically residential home builders and residential real estate developers. This federal incentive provides a $2,000 income tax credit per new qualifying residential dwelling unit for the builder or developer upon the initial sale or lease of the unit. For a home builder selling hundreds of homes per year, this could quickly mean hundreds of thousands in annual tax savings. Likewise, residential developers constructing apartment complexes can also capture the tax credits upon completion of the complexes and their initial leases of the units.
So, how does an AEC business proceed with capturing the lucrative tax incentives they are entitled to? Certainly, the involvement of their CPA tax return preparer and other business advisors is critical, but all these specialized tax incentives require a certain level of design and engineering expertise. At a minimum, this expertise will ensure code and regulation compliance, but additionally, the right design and engineering expertise will help maximize the claims.
Therefore, seeking help from a niche tax consulting firm that, like BRAYN Consulting LLC, specializes in these design and engineering-based tax credits and incentives and also has in-house design and engineering expertise – including licensed professional engineers, engineers in training, LEED accredited professionals, certified home energy rating system raters, and other professionals with engineering education and backgrounds – is of utmost importance in seeking to secure these tax
credits and incentives. Coupled with BRAYN’s in-house licensed attorneys and tax compliance professionals, this engineering expertise truly maximizes the supportable claims.
For example, federal and state R&D tax credits are activity-based and established through qualitative analyses of the facts and circumstances of the taxpayer to the qualification requirements. Having a tax consultant with design and engineering expertise who understands the design and engineering principles being used in the schematic design, design development, construction documents, and other design phases is critical.
For both the 179D and 45L tax incentives, energy models and savings’ analyses and calculations are required to be performed by licensed and certified professionals, which are even more of an engineering-type of analysis. Furthermore, having such expertise in-house like BRAYN (as opposed to outsourcing) is essential to ensuring that tax incentive claims are maximized.
These tax credits and incentives are very powerful, and since many AEC businesses are entitled to claim them by law, all prudent owners and officers should ensure they are fully assessed. BRAYN Consulting LLC is happy to provide any such business at no cost and no further obligation a Phase 1 assessment to help vet these opportunities, so that you can make an informed decision. Contact us at 888-773-8356 or [email protected] to learn more.
BRADY BRYAN is CEO of BRAYN Consulting LLC. JUSTIN DILAURO is a partner at BRAYN Consulting LLC. Contact them at [email protected] and [email protected].
BRADY BRYAN & JUSTIN DILAURO, from page 11
ON THE MOVEDAVID M.Y. MILLIKAN, P.E. JOINS WGI IN ITS AUSTIN OFFICE WGI announced that David M.Y. Millikan, P.E. joined the firm’s Transportation Division as vice president, Texas transportation regional manager, in its Austin office. He comes to WGI with over 40 years of experience in engineering business management, project management, transportation, water resources, infrastructure facilities design, and public agency involvement.In his new role at WGI, Dave will utilize his experience working with local government agencies and the Texas Department of Transportation districts to identify opportunities to collaboratively provide solutions which meet or exceed public agency expectations.
“I’m excited for the opportunity to extend WGI’s long-standing reputation for providing high quality and innovative project delivery to the transportation engineering market within Texas,” he says.David Wantman, P.E., and CEO of WGI, says, “We are fortunate to have Dave join our team. His decades of experience in transportation engineering, recent experience working with the Texas Department of Transportation, and business-development skills seamlessly align with WGI’s steadfast commitment to client-services excellence.”Dave is a registered Professional Engineer in Texas, Oklahoma, New Mexico, and California and holds a bachelor’s degree in civil
engineering from the University of Arizona. He is actively involved in several professional and community groups. As a multidisciplinary solutions-providing consulting firm, WGI has 18 offices in six states, serving an active client base in over 30 states, specializing in the following disciplines: land development/municipal engineering, traffic and transportation engineering, parking solutions, geospatial services, subsurface utility engineering, structures, landscape architecture, environmental sciences, architecture, land planning, MEP engineering, and creative services. Zweig Group ranked WGI No. 23 on the 2019 Best Firms to Work For and No. 76 on its 2019 Hot Firms list.
