The role of the CFO · .BUILD domain names focused on the construction industry. The .BUILD namespace was recently created by (ICANN), the controlling authority for the Internet

T R E N D L I N E S

A L S O I N S I D E

F I R M I N D E X

M a r c h 2 4 , 2 0 1 4 , I s s u e 1 0 4 8

w w w . t h e z w e i g l e t t e r . c o m

Developing the firm vision

Page 3

xz SPACE: The old question: rent or buy? Page 5 xz GUEST SPEAKER: Professional liability premiums rising. Page 6xz BRAND BUILDING: Do or sell: striking the balance. Page 7

Rising worth

ZweigWhite’s 2014 Principals, Partners & Owners Survey finds that the percentage of respondents reporting that their investment in their firm is worth more than what they paid for it is on the rise again. Over the past few years, this number has been on a gradual decline: From a five-year high of 87 percent in 2010, it dropped to 77 percent in 2011. After rising to 83 percent in 2012, it then declined to 79 percent in 2013. This year, the percentage of principals who say that their investment in their firm is worth more increased to 82 percent. – Margot Suydam, Survey Manager

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 T A L C O N S U L T I N G F I R M S

60%

70%

80%

90%

100%

Architectural Engineering Design Group .............. 9Carl Daniel Architects ........................................... 8FINLEY Engineering Group .................................. 10Harley Ellis Devereaux .......................................... 3KSS Architects ................................................... 12Luckett & Farley .................................................... 9Marstel-Day .......................................................... 3Mulhern & Kulp ..................................................... 4Parkhill Smith Cooper............................................ 8Sanderson Stewart ............................................. 12Short Elliot Hendrickson Inc. ............................... 11Ware Malcomb ................................................... 12See MARK ZWEIG, page 2

Mark Zweig

MARKETINGS U P P L E M E N T

Pages 9 - 12

WH

AT

’S W

OR

KIN

G

“One size fits all?” Nowhere is that less true than when it comes

to describing the role of the CFO (or director of finance, etc.) in any given A/E/P or environmental consulting firm.

What that person is supposed to do and who best fits the role varies greatly based on a wide variety of factors. Such factors include who started the firm, who owns it, what its history is, how large it is, who its clients are and what services it provides, among others.

That said, there are certain constants that need to be there. Thirty four years of working in this industry – with successful AND struggling firms – have shown me that certain functions have to be filled by whomever is in charge of this critical functional area. And it is indeed critical. A good CFO can make the firm successful. A bad one can lead it to ruin.

Here are some critical CFO roles:

1) Accounting and reporting. Account-ing reports to the CFO. If you have a controller (or in some firms an account-ing manager) this person should report to the CFO. The CFO ensures all reports are done properly (they make sense), are done in a timely fashion, and are

The role of the CFOA good CFO can make a firm successful. Here’s five critical functions, from Mark Zweig.

Sometimes it is only those who

sell and those who produce who

get the accolades in A/E/P and environmental

consulting firms. A little pat on the

back – recognition and appreciation

for hard work and a job well done –

may be in order for your CFO, too.

Pages 10 & 11

The news: Print and electronic.

THE ZWEIG LETTER | MARCH 24, 2014, ISSUE 1048

2 © Copyright 2014. ZweigWhite. All rights reserved.

A/E BUSINESS NEWSP3S BOOSTS ECONOMY: Public-private partnerships (P3s) are major contributors to Canada’s economy, generating $51.2 billion in direct economic output and 290,680 direct full-time equivalent jobs between 2003 and 2012. According to an economic impact study conducted by InterVISTAS, a management consulting company, P3s play a major role in boosting Canada’s economy.

The report notes: “With the public sector facing aging infrastructure, population growth and budget constraints, P3s are bringing together the expertise of both the private and public sector to expand the number and scale of infrastructure investments for public benefit.”

Based on a review of public-private partnerships in operation or under construction from 2003- 2012, the report highlights the following cumulative economic impacts over the 10 years:

z 517,430 total full-time equivalent (FTE) jobs, including 290,680 direct FTE jobs

z $32.2 billion in total income/wages and benefits, including $19 billion in direct income/wages and benefits

z $48.2 billion in total gross domestic product, including $25.1 billion in direct GDP

z $92.1 billion in total economic output, including $51.2 billion in direct economic output

z $9.9 billion in cost savings

z $7.5 billion in tax revenue to government

“The numbers clearly demonstrate the incredible value public-private partnerships provide. These projects lift Canada’s GDP and ultimately help drive our global competitiveness,” said Mark Romoff, president and CEO of The Canadian Council for Public-Private Partnerships.

MARK ZWEIG, from page 1

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distributed to whomever manage-ment deems critical to receive them. Most importantly, the CFO can and does interpret what the data means to management. He or she should not be just a passive “reporter” of whatever has happened. This is one of the criti-cal distinctions between a CFO and an accountant.

2) Dealing with the bank. The CFO should be on the front line of manag-ing the firm’s relationship with its bank(s) and other lenders. They ne-gotiate the deal each year, including loan covenants on credit lines. CFOs give banks the information they need when they need it. They maximize the firm’s available credit at the least cost. And they sound the alarm to manage-ment if anything starts looking like trouble.

3) Being on the BOD as either an acting or advisory member. The CFO needs to be at every BOD meet-ing. Often, he or she is the treasurer as well (a corporate officer position) and in some cases corporate secretary. In any case, when questions come up about the numbers, credit, ownership, financial performance, liabilities, etc., the CFO needs to be there to answer them.

4) Dealing with insurers. The CFO is usually the one with the best knowledge of the numbers and costs,

so it makes sense all insurance and bonding-related matters fall under the CFOs domain. A good CFO – in firm of sufficient size – will often earn his keep and then some through cost con-tainment strategies in this area alone.

5) Dealing with everything else no one wants to. Yes – I said it. Unfor-tunately for them (but fortunately for their firms), the CFO’s desk is usually the landing spot for ANYTHING that no one knows what to do with. This is because, probably more than anyone else, the CFO is really a broad-based business manager. Not to say the CFO needs to be mired in detail – he or she may kick something back or over to someone else to be dealt with – but they are typically a clearinghouse for most non-technical issues, problems, or RFIs.

One last point. It should be clear that a good CFO is worth her weight in gold to you. Sometimes it is only those who sell and those who produce who get the accolades in A/E/P and environmental consulting firms. A little pat on the back – recognition and appreciation for hard work and a job well done – may be in order for your CFO, too.

Just sayin’...

MARK ZWEIG is the chairman and CEO of ZweigWhite. Contact him with questions or comments at [email protected].

“P3s are providing tangible benefits to Canadians and have put us on the map as ‘best in class’ internationally.”

AGC JOINS .BUILD: The Associated General Contractors of America and .BUILD have announced a joint initiative to provide new .BUILD domain names focused on the construction industry.

The .BUILD namespace was recently created by (ICANN), the controlling authority for the Internet. .BUILD is one of several new top level domains launching in 2014 that provide an opportunity for companies to improve their web presence and Internet marketing through offering new web addresses ending in .BUILD instead of the generic .COM.

The Association will be working closely with .BUILD to help commercial construction companies register their new domain names at the best available prices.

These targeted domains will become an integral part of any company’s web presence and search engine optimization strategy in 2014 and moving forward.

“Staying relevant online is a critical component for every business,” said Stephen Sandherr, chief executive officer, AGC.

“This will offer our members a way to successfully compete for new business in the increasingly crowded online world.”


3

It usually starts with the founding leaders, and it sometimes needs some fine-tuning.

By LIISA SULLIVANCorrespondent

Editor’s note: First of a two-part article.

Developing the vision for a firm is where it all begins. Sometimes lit-

erally, as is the case of Marstel-Day (Fredericksburg, VA), which evolved from a vision to turn closed military bases into useful spaces.

Work drives vision. Rebecca Ru-bin, president and CEO of the 130-per-son environmental consulting firm, says that it all started in 2002. She be-came aware of the need to find long-term, landscape-scale conservation strategies for disposal and reuse of closed military bases. Most of these sites had been “orphaned” in the prop-erty disposal process, where they sat abandoned, despite having consider-able “beneficial reuse” value as wildlife refuges, parks and so forth. By partner-ing with the Army and Navy, Rubin was able to get a contract in place that led to the creation of a new authority per-mitting the value of those sites to be realized for wildlife, habitat and parks – and increasingly for climate buffers and carbon sinks.

“This initial work al-lowed me to give the company a name, a tagline, and an early brand,” Rubin says. “It also led to opportuni-ties to build on this initial commitment through additional partnerships with the Defense Department for conservation pur-poses.”

This work has evolved and morphed over the years to now include climate adaptation and climate risk planning, natural capital investment techniques,

ecosystem services, carbon markets and water resource anal-yses, in addition to more traditional envi-ronmental consulting work such as environ-mental assessments and impact statements.

An evergreen vi-sion. Harley El-

lis Devereaux (Southfield, MI), a 105-year-old, 235-person architec-ture and engineering firm, has evolved through the decades in response to changing political, economic and busi-ness conditions and its view of the stra-tegic opportunities the changing times presented. And, while the firm’s focus evolved in concert with the times, it has held on to its core beliefs along the way. That’s not to say it hasn’t experi-mented with new services, markets or locations. It has. But, it has also man-aged to maintain core standards re-garding integrity, quality, service and fairness to its people and clients.

In 2010 the time had come to define what exactly the firm’s vision was and what it meant.

It began with a day-long retreat of rough-ly 75 people from five different offices rep-resenting all of the markets HED serves. Through iterations of whole-group and breakout sessions, leaders were able to share openly a wide range of thoughts, opinions and concerns

about where the firm had been and where it was going. The resulting mot-to, “Advancing your world… by design.”

“As a multidiscipline firm in five loca-tions serving multiple markets, you can imagine the range of opinions ex-pressed,” says Gary Skog, chairman and CEO. “We discussed the markets we served. Were we in too many markets or too few? Were we in too many loca-tions or too few? Did we offer too many services or too few? And, were they all the right ones?”

In the end, everyone agreed that that they all shared a passion to do great work for great clients, which was ex-pressed as great “design.” Not design from a purely aesthetic viewpoint, but design that encompassed all disci-plines.

“We agreed that this was not merely a desire on our part, but imperative for us to survive and grow as a firm given the globally competitive world we find ourselves in,” Skog says.

Secondly, leaders agreed that the true value HED delivers to its clients is the ability to help them achieve their vision and to help them get to their next level. In many cases, HED helps them to de-fine that vision.

F O U N D AT I O N

Rebecca Rubin, President and CEO, Marstel-Day.

Gary Skog, Chairman and CEO, Harley Ellis Devereaux.

See VISION, page 4

“We discussed the markets we served. Were we in too many markets or too few? Were we in too many locations or too few? Did we offer too many services or too few? And, were they all the right ones?”

Developing the firm vision

Practically all principals (94 percent) participate in their firm’s business planning process.Among principals that participate in their firm’s business planning process, nearly all (90 percent) provide input on the firm-wide business plan.

Source: 2013 Principals, Partners & Owners Survey, ZweigWhite: www.zweigwhite.com/p-2153-principals-partners-owners-survey-2013



N E W S RESOURCESPRINCIPALS, PARTNERS & OWNERS SURVEY: Have you been struggling to resolve disputes, clarify expectations, and set policies that work for principals in your architecture, engineering, or environmental firm? Or would you just like to see how you and your firm stack up in comparison to hundreds and hundreds of other principals from around the country?

The new edition of the most comprehensive study ever undertaken of owners and top managers of U.S. architecture, consulting engineering, and environmental consulting firms – ZweigWhite’s 2014 Principals, Partners & Owners Survey of Architecture, Engineering, Planning & Environmental Consulting Firms – is now available. It’s the one annual report for, by, and about principals and top managers in U.S. A/E firms, and it’s the only source of inside information on the issues that principals are really concerned with.

For the 2014 edition, principals from across the U.S. were questioned about their compensation, perks, privileges, ownership, work habits, professional backgrounds, personal life, and feelings about business practices, fellow principals, and industry issues. Their responses were then tabulated and analyzed.

The result is a 230-page report covering the roles, responsibilities, risks, and rewards of being a principal. The Principals, Partners & Owners Survey has the lowdown on ownership, stock appreciation, buy/sell agreements, non-compete agreements, voting rights, and more.

The Principals, Partners, and Owners Survey will help you:

z Learn what’s normal in terms of principal compensation and perks

z Find out what common issues principals in firms like yours are grappling with today

z Make sure you’re getting what you’re worth in every way, including company cars and other special benefits

z Learn what it takes to become and stay a principal in a firm in this industry

z Discover what other firms are doing in terms of employment agreements, non-competes, and stock buyback provisions

z Find out how principals in firms like yours manage their time and break down their work day

For more information or to buy a copy, call 800-466-6275 or log on to www.zweigwhite.com/p-2193-principals-partners-owners-survey-2014.

VISION, from page 3

Lastly, HED recognized that by doing this, it also helps its people to grow, de-velop and perhaps define their individ-ual visions as well.

Vision starts with people. Mi-chael Mulhern, principal, Mulhern & Kulp (Ambler, PA), a 36-person, full-service structural engineering firm, says that its vision emerged with the incep-tion of the firm in 2000. The firm’s two founding leaders shared an unwavering belief that they could provide value to builders, while creating “a cool place to work.”

“It all began with me and my part-ner, Joe Kulp,” Mulhern says. “We con-firmed our vision as a two-man firm in our first year or so of business. From

there, priority number one began with the care-ful selection of the em-ployees who we would need to carry out that vision – in other words, utilizing others to do what we were already doing. This is essen-tial and a little scary – ‘a little yeast works its way through the whole dough.’ This means that

not only do you need the intuition to select the right employees, but you also have to have the courage to let go of seemingly productive employees who work against this vision, especial-ly ones in a position of influence.” Part two will address how to get people to fol-low your vision.

Michael Mulhern, Principal, Mulhern & Kulp.

Groups enlist help of architecture student community nationwide.

The American Institute of Architects and the American Institute of Ar-

chitecture Students (AIAS) committed to timely passage of the National De-sign Services Act (NDSA), which will give architecture students the same re-lief from crushing student loan debt, which is already granted young lawyers, doctors and others – in return for com-munity service.

The bipartisan legislation, H.R. 4205, was introduced by Rep. Ed Perlmut-ter (D-CO) and co-sponsored by Rep. Greg Meeks (D-NY), Rep. Gwen Moore (D-WI) and Rep. Dennis Ross (R-FL), in early March.

“Millions of young people aspire to help their communities build a better fu-ture – but a lack of opportunity and the crushing cost of education hold them back,” said Robert Ivy, AIA CEO. “As a result, the design and construction in-dustry faces a severe shortage of talent at exactly the moment America needs to rebuild for the future.”

Roughly 40 million Americans owe $1.2

trillion in student-loan debt, an amount that surpasses every other type of household debt except mortgage debt.

The NDSA eases this burden by provid-ing loan assistance to architecture stu-dents and recent graduates who con-tribute their design services to under-served areas. The bill would authorize the Department of Housing and Urban Development to create a program allow-ing architecture students to work with Community Design Centers in exchange for assistance with their student loans. As a result, communities will receive a broad range of architecture services that may not have otherwise been avail-able, and architecture graduates will be induced to stay in the profession. One young architect, Evan Litvin of Philadelphia, has launched an on-line petition that enlists the sup-port of architects nationwide for speedy passage of the NDSA. The link to that petition can be found here: www.change.org/petit ions/mem-b e r s - o f - c o n g r e s s - s u p p o r t - t h e -n a t i o n a l - d e s i g n - s e r v i c e s - a c t -n d s a ? u t m _ s o u r c e = s u p p o r t e r _message&utm_medium=email&utm_campaign=supporter_message.

AIA lauds student act intro


5

Expert offers the pros and cons of each option; two firms say the choice is clear.


The question of whether to lease or buy office space is one that Coy Da-

vidson, senior vice president at Colliers International, a leader in global real estate services, gets often – especially when lease rates are high or property values drop.

“The decision to buy versus lease is not a consideration that should be based solely on the financial con-siderations, but should include evaluation of a more comprehensive set of decision drivers,” Davidson says. “Many internal and external factors affect such de-cisions and their even-tual outcomes.”

Leasing benefits and risks. Ac-cording to Davidson, leasing benefits include:

z Lower up-front capital

z The availability of various lease term choices (length) that best fit your com-pany’s projected operational requirements

z More flexibility for growth and contrac-tion – short- and long term

z Ease of disposition at the end of the lease term

Risks include:

z Exposure to market fluctuations in rent

z Potential for missed option and notice

dates

z Disposition prior to end of term can be challenging, depending on market conditions

z Dependency on third party

z Building ownership can change hands

Ownership benefits and risks. Davidson also reveals ownership bene-fits:

z Property value appreciation

z At some point, ownership becomes less expensive

z Realization of residual value of tenant improvement costs

z Depreciation for some entities

z Tax benefits

z More control over quality of life and property management vendors

…and risks:

z More time, expertise and resources are invested

z Less flexibility than leasing

z Potential loss in asset value

z Economic and interest rate risk

z Risk associated with changes in demo-graphics, transportation issues, and

perceived neighborhood quality

What are the decision driv-ers? Davidson says you need to ask these questions first:

z What is your required capital outlay (including retrofit costs)?

z What is your required ROI?

z What other internal capital needs do you have?

z How are your short- and long-term plans impacted by other large capital investments?

z What is your projection of required employee headcount based on revenue, product or service demand?

z What are the projected market conditions?

z Are there any demographic and labor force shifts?

z Is the neighborhood stable?

z What is the capital appreciation?

z What are the income tax implications?

“The buy versus lease decision has nu-merous financial and operational fac-tors,” Davidson says. “While purchas-ing a facility can certainly be a prudent long-term occupancy decision with sig-nificant financial reward and opera-tional advantages, the real questions are, ‘How likely is it that your business or space requirements will change? Will owning a building create significant challenges in managing those chang-es?’ Owning versus buying is not only a financial decision, but equally as much a risk and operational decision.”

The real deal. Davidson provides two real-life scenarios – one for buying and one for leasing.

Scenario one: The case for buying. Da-vidson worked with a professional ser-

S PA C E

Coy Davidson, Senior VP, Colliers International.

See RENT OR BUY, page 8

“The decision to buy versus lease is not a consideration that should be based solely on the financial considerations, but should include evaluation of a more comprehensive set of decision drivers.”

The old question: rent or buy?

Source: 2013-14 Operating Expenses Survey, ZweigWhite: www.zweigwhite.com/ p-2188-operating-expenses-survey-2013-2014.Firms’ rent and utility costs are a median of 10.5 percent of total labor. Firms’ rent and utility

costs per employee ($7,143) decreased slightly this year.



DanKnise

Professional liability premiums risingFirms urged to focus on effective risk management and insurance planning.

The survey found rate changes are driven by a number of different factors. Not surprisingly, type of project (condominiums, tunnels, schools, etc.), recent claims experience (within the past two years), and type of work or service remain key underwriting considerations.

See DAN KNISE, page 8

Architecture and engineering firms with poor loss experience and those engaged in higher risk projects,

such as condominiums and schools, may be in line for the largest rate increases when they renew their professional liability insurance this year. Yet, even firms with good loss experience may see rate hikes in the low single-digits based on insurers’ current 2014 planning. Although the increases may not be dramatic for most buyers, the evolving insurance market signals a need for A/E firms to maintain their focus on effective risk management and insurance planning.

After multiple years of intensifying competition and flat or lower premium rates, most top underwriters of professional liability insurance for architects and engineers generally had modest price increases last year, after similar hikes in 2012. This year, most insurers are planning single-digit increases, according to a new survey by Ames & Gough of 14 of the top insurance companies providing this coverage. Together, these insurers account for roughly 75 percent of the overall market for A/E professional liability insurance.

Besides concerns about “inadequate” rates, the insurers cite past and recent claims, which half those surveyed see as increasing in severity, as key factors in their rating practices. Notably, with respect to claim severity, the majority of insurers surveyed (64 percent) paid a claim of $1 million or more in 2013, including 21 percent that reported their largest claim was between $10 and $19 million.

The good news is that capacity for A/E PLI coverage remains stable – even for the largest design firms.

Among insurers surveyed, maximum limits for anyone insured varied from $5 million to $25 million or more. And when higher limits are required, many underwriters will participate in excess layers of larger programs, adding coverage incrementally in amounts equal to what they would provide for any individual insured.

How do insurers rate individual accounts? The survey found rate changes are driven by a number of different factors. Not surprisingly, type of project (condominiums, tunnels, schools, etc.), recent claims experience (within the past two years), and type of work or service remain key underwriting considerations. This year, there’s an increased focus on historic loss experience and more insurers note the overall need for a higher rate.

In establishing rates for architect/engineer professional liability insurance, underwriters typically apply a premium rate to billings. Generally, higher billings mean higher premiums and lower billings, lower premiums. However, not all billings are given the same rating by insurance companies. Billings from studies and abandoned projects are considered less risky and priced at lower premium rates than, for example, billings tied to condominium design or structural engineering, which are considered high risk.

As A/E firms renew their professional liability insurance, consider the following:

z Think carefully before switching insur-ers. Building a track record with one insurer can be invaluable in addressing unique cover-age needs or complex claims issues. Nonethe-less, A/E firms should consider evaluating


7

Do or sell: striking the balanceThe biggest threat is our reluctance to let go of project management tasks when things get busy.

As we see the economic recovery offering many opportunities to bring in more work, now is the time to commit to growth seriously.

As I write this article, we have just finished delivering the first session of our new seminar, “Becoming

at Better Seller” in the great city of Dallas. This article expands my answer to a thought-provoking question from a gentleman named Frank at the end of the session. He posed a question I hear often when consulting with clients across the country. It pertains to their marketing and business development practices. The query identifies one of the biggest struggles we face in this industry: “What is the appropriate split between developing business and project management?” This quandary illustrates the struggle the “doer-seller” faces in deciding how much they should do (project management) versus how much they should sell (business development). The answer? There is no answer.

In an ideal world, the answer would be: Whatever allows the individual to be the most effective in both roles. Unfortunately, this question gets asked over and over again because we don’t ever have the practices in place that allow us to strike that perfect balance. Often, the biggest threat to that balance is our reluctance to let go of project management tasks when things get busy. Here are some of the things you need to consider to get more out of your doer-sellers:

1) Stop focusing so much on utilization and billable work. The culture at many design firms is that projects are king and all other parts of the business are secondary to getting the work done. I am a strong proponent of keeping clients happy, having the absolute highest quality standards in design, and meeting schedules and budgets. You can do all those things and have a consistent focus on business devel-opment and other critical business functions – at the same time. The problem is that firms focus too much on metrics such as utilization, which causes design staff to stay buried in projects. It causes a “tennis match”-like dynamic with the doer-sellers where they develop business when project load is low, but then focus only on projects once they are busy again with projects. They become victims of their own suc-cess to a certain extent. This is one of the things that causes the “feast or famine” effect in our industry.

2) Stop being reluctant to let project tasks go to ju-nior staff and being stingy on hiring. This is another problem. When the work starts coming in, the doer-sellers get busy with the projects because they refuse to hire more people and let junior staff step up. Design and technical pro-fessionals often have issues with delegation and when things get busy, it is even harder to let go of critical tasks. It is criti-cal that doer-sellers hire, train, and grow staff along with their business development and project management duties.

Of course, I see in many doer-sellers who are willing and ready to hire and train when things get busy, but they do not get the support from upper management to make these critical investments.

Firms want more business development out of their people, but they stop short of providing all the necessary resources to really make it happen. We often see members of upper management say things like, “Let’s grow!” but then they do not promote the necessary hiring to keep up with the workload. We tell our staff to develop more business, but then we resist adding the necessary staff to allow people to actually have bigger jobs and to grow the company. When we sell more work without the intention of hiring more people and giving people bigger jobs, we are just amplifying that feast and famine effect. As we see the economic recovery offering many opportunities to bring in more work, now is the time to commit to growth seriously. A commitment that involves more that just doing and selling, but one that includes mentoring, promotions, and recruiting to build a bigger, better, and stronger company!

CHAD CLINEHENS is ZweigWhite’s executive vice president. Contact him at [email protected].



RENT OR BUY, from page 5

DAN KNISE, from page 6

vices company that provides litigation support and accident reconstruction to law firms and insurance companies. Orig-inally, he completed a long-term lease for them to occupy their current facility. The original landlord ultimately sold the property as part of a multi-property portfolio sale of single tenant-leased properties. The new owner determined that the property did not fit into their long-term portfolio plans and the opportunity for the tenant to purchase the facility arose. His client, the tenant, opted to purchase the 15,100-square-foot facility. The overriding factors in this de-cision were:

1) The purchase price and interest rate environment provided for a lower cost of occupancy than their lease rate at the time and projected lease rate at time of renewal based on market projections.

2) The facility was highly specialized and would be cost prohibi-tive to reproduce either through new construction or build-out of a lease space.

3) The company’s growth projections determined that the facil-ity would be large enough to accommodate their needs in the long-term.

Scenario two: The case for leasing. Davidson worked with a high growth, NYSE-publicly traded company that owned its headquarters’ location. Originally, the com-pany built the 16,000-square-foot property for its own use. After evaluating its projected space needs, Davidson’s cli-ent decided that the property would not fit their long-term space requirements as a headquarters location – both from a size perspective and operation use. The client opted to sell the property to an investor and to lease back the property

for 10 years, in effect monetizing the asset. The decision was made to relocate the corporate headquarters in a new lease at another location to provide more flexibility for growth and to build out a space that suited the image of a corporate headquarters location. The original headquarters location was used to house an operational division of the company of back office staff separate from the headquarters location.

The key driver in this decision was flexibility to grow the headquarters location in larger multi-tenant office location by structuring a growth option into the lease structure.

Architects save by owning. Carl Daniel Architects (El Paso, TX), a 12-person firm, and Parkhill Smith Cooper (El Paso, TX), a 40-person civil engineering and architecture firm, recently moved their offices to downtown El Paso, ren-ovating buildings in the Union Plaza Entertainment District that have long been vacant.

Parkhill Smith Cooper invested $2.5 million to purchase and renovate the old El Paso Electric building, outbidding several other interested buyers, says Hector De Santiago, principal.

Carl Daniel Architects invested $500,000 to purchase and renovate a dilapidated building, outbidding two other inter-ested buyers, says Carl Daniel, principal.

“We leapt at the opportunity to build in downtown, where we can walk to restaurants and city offices,” Daniel says.

Daniel says his architecture firm saves a lot of money by buy-ing and renovating a downtown building. He calculates the firm has paid $1.2 million in rent in its previous location.

“Our mortgage payment will be half of our rental payment, and we will own the building in 10 years,” Daniel says.

quotes from competing insurers every three- to 4 years. In your evaluation don’t overlook the financial strength of the potential replacement insurer versus the incumbent, as well as its claims-paying track record. And check whether the policy terms and conditions offered provide identical or better protection.

z Make sure your coverage limits are adequate. When faced with insurance rate increases, some firms look to man-age premiums by reducing their coverage limits. That’s a dangerous strategy – especially in the face of escalating claim severity. Not only are owners and project managers raising their requirements for limits, but losses are trending larger. Insurers surveyed point to higher risk projects as being the source for their largest claims. There are ways to manage costs while meeting coverage needs, such as split-limit programs and project-specific limits. Explore these options with your insurance advisor as your policy renewal approaches.

z Be aware of potential changes in your risk profile. Tak-ing on different projects or merging with or acquiring another firm may elevate your firm’s risk profile and lead to significant increases in your insurance premiums. Communicate actively with your insurance advisor to understand the implications of the changes to your business and risk profile, and in present-ing this information to your insurer.

z Practice good contract hygiene. Today, more owners and their attorneys are looking for creative ways to transfer risks contractually to architects and engineers. Newer and more subtle contract wording used by owners sidesteps the obvious standard of care language while increasing risks for project participants. Unfortunately, the result may be higher costs for A/E firms and significant uninsured exposures. Work with your insurance advisor and attorney to understand and address these issues.

z Be proactive in reporting claims. Notify your insurer of any actual, developing or potential claims on a timely basis. Check with your insurance advisor if there’s any question about how to report any situation that might eventually become a claim.

Finally, it also helps to present a comprehensive and accurate renewal application and submission to the insurance marketplace and work with a specialty broker who knows this coverage and has relationships with the key insurers serving this market niche. As the insurance market continues to evolve along with the risk environment, A/E firms need to play a more active role in understanding, assessing and managing their exposures.

DAN KNISE is the president & CEO at Ames & Gough. Contact him at [email protected].

Training, having information readily available and helping develop deep connections are all part of the effort.


How can marketing enable seller-doers to be more effective in their jobs? In-house

training, easy access to documents and infor-mation, and trusted teamwork are all part of the plan.

Tip cards motivate. Brent Collins, mar-keting manager, Luckett & Farley (Louis-ville, KY), a 76-person multidisciplinary ar-chitectural, engineering, and interior design firm, knows that seller-doers are incredibly busy people, tasked with performing at al-most a superhuman level under tremendous pressure. For the marketing team to provide the best support, realistic expectations must first be aligned.

“These high-performing professionals can’t be all things to all people in all places,” he says. “Most are not trained marketing/busi-ness development professionals, so they need training to make the transition from doer to seller-doer.”

Collins recognized that seller-doers at Luck-ett & Farley were doing their best, but need-ed tools and knowledge to sell more effective-ly. As a result, he implemented an in-house training program included in the weekly mar-keting meetings. At the beginning of each meeting, Collins spends five to 15 minutes focusing on a skill development opportuni-ty. Each week, he makes a business card-sized marketing tip and then the group discusses how to apply that tip. He also created a binder to hold all cards each week. Eventually, these seller-doers created their own marketing best practices binder for reference at any time.

“After a while, some of the seller/doers rec-ognized opportunities to implement lessons learned from the tips and responded accord-ingly,” Collins says. “It was a program built into an existing meeting, so no expensive off-site training and days out of the office were needed. It’s a slow drip of persistent knowl-

MARKETING A SUPPLEMENT OF THE ZWEIG LETTER MARCH 24, 2014, ISSUE 1048

9

R I G H T N O W

See DOER-SELLER, page 12

Anna Martinovichm, Marketing Coordinator, Architectural Engineering Design Group.

“These high-performing

professionals can’t be all things to all people in all places. Most are

not trained marketing/

business development

professionals, so they need

training to make the transition from doer to seller-doer.”

Brent Collins, Marketing Manager, Luckett & Farley.

Marketing complements seller-doer skillsetsedge transfer and the results do come.”

Information at their finger-tips. For Architectural Engineering Design Group (Denver, CO), a 13-person electrical engineering and lighting design services firm, marketing is all about pro-viding the right information to the right person, at the right time.

“Working with our team, I wear a lot of hats and get to be involved with a va-riety of different marketing channels,” says Anna Martinovichm, marketing co-ordinator. “Part of assisting the AEDG team means keeping documents up to date and easily available. A big part of my job is filtering information for our proj-ect leaders, so they are able to present the most relevant experience and assem-ble the best qualified team for each proj-ect. With the work we’ve been involved with over the years, quickly finding the best experience to showcase and creating a custom résumé, firm profile or experi-ence sheet is key. It proves to our clients and partners that we understand their needs, and have the relevant expertise.”

While nothing beats cus-tom collateral, Marti-novichm says that they do make résumé proj-ect sheets and firm pro-files available right on the firm’s website. That way, if a project opportunity pops up with a deadline of “yesterday,” anyone on the team can grab a relevant link and forward it on to a client or partner, even if it’s 10 p.m. on a Friday.

“Knowing that it’s up-to-date, puts our best foot

forward,” Martinovichm says.

Martinovichm adds that a lot of infor-mation flows through the office. As a re-sult, she is always on the lookout for the best ways to let everyone know what they are learning – whether it’s through a bi-monthly newsletter or an update on the



W H AT ’ S W O R K I N G

Though FINLEY Engineering Group (Tallahassee, FL) is a small firm, they know how important it is to get noticed.

The 35-person complex bridge design and construction engineering services firm designed a media-centric, multi-component marketing campaign to highlight their specialized construction engineering services for steel bridges that accomplished that goal. The effort won third place in the 2013 Marketing Excellence Awards, Target Marketing category.

FINLEY didn’t want a large budget for the campaign, but used careful strategy to get the most impact, especially in specialized media and press outlets. The firm chose two projects to be the focus of the campaign: The Chelsea Street Bridge in Boston that required specialized launching equipment and was particularly challenging due to its specifications and timing constraints; and the Checkered House Bridge in Richmond, Vt.

Jerry Pfutner, regional office manager, engaged bridge software developer LUSAS by writing an article on the Chelsea Street Bridge. Pfutner and Craig Finley, managing principal, also participated in an Engineering News Record article with J.F. White Contracting. Theresa Casey, On Target Marketing & Communications, LLC was also hired to write an article.

Ann Schiola, marketing director, was responsible for the overall campaign. She determined that feature articles in industry publications – as well as the use of social media, eBlasts, and press releases – would position Finley as an expert in in their target market. She developed a media list with 12 key publications.

FINLEY organized a comprehensive campaign with multiple elements, including links to case studies posted on FINLEY’s social media pages and the website, and sending e-blasts to 2,232 contacts in FINLEY’s database, including the editors of target publications.

MEDIA POWER

What works

z Multiple strategies were used to promote the same idea

z The power of the media was harnessed to position FINLEY as a leader

z Discussion and interaction encouraged to keep people involved

Results

FINLEY has continued to benefit from the positioning campaign for this specialized service. Pfutner was notified by the National Steel Bridge Alliance that his paper was accepted for the 2014 World Steel Bridge Symposium in Toronto. FINLEY also has received requests from target clients for services. Articles were written and published in seven publications.

FINLEY organized a comprehensive campaign with multiple elements, including links to case studies posted on FINLEY’s social media pages and the website, and sending e-blasts to 2,232 contacts.


1111

W H AT ’ S W O R K I N G

Short Elliot Hendrickson Inc. (St. Paul, MN), a 600-person employee-owned company of engineers, architects, planners, and scientists, redesigned their already successful external newsletter, InSight to create an evolving publication that builds and strengthens their brand.

The effort earned third place in the External Newsletter category of the 2013 Marketing Communications Excellence Awards.

To kick-off InSight’s development, a team at SEH conducted focus groups, both within the company and with established clients, to get feedback. That information, coupled with research on competitors’ external newsletters, provided valuable insight for the newsletter’s layout and cover options, as well as overall design.

InSight developed a multi-channel approach to maximize reach among targeted audiences. Namely: 8,800 readers through both print and electronic mediums, 550 SEH employees, and new prospective clients. A digital campaign helped expand reach with the scheduled release of articles through social media channels.

ELECTRONIC POSITIONING

What Works

z InSight was posted on the SEH website in both text and magazine/PDF format to allow for easy searching, extending publication’s shelf life beyond initial distribution.

z InSight is printed on FSC-certified paper using agri-based inks and is mailed in a clear, ecofriendly envelope.

z The impact of the newsletter is continuously measured and improvements are made in response.

z InSight’s vibrant, eye-catching cover makes it a standout on any busy desk.

Results

Only 1.4 percent of those receiving one of the 3,370 copies of InSight sent electronically requested to be removed from future mailings. The electronic version had a 20 percent click-through rate, and SEH’s website saw a 75 percent increase in activity the day the newsletter was released. A SEH survey reported that 93 percent of respondents indicate they consider SEH a “trusted advisor,” something the firm sees as a sign they have achieved their desired positioning.

InSight developed a multi- channel approach to maximize reach among targeted audiences. Namely: 8,800 readers through both print and electronic mediums, 550 SHE employees, and new prospective clients.



AWARD WINNERSWARE MALCOMB WINS AWARD: Ware Malcomb (Irvine, CA), an international design firm, announced it has been awarded a 2014 Commercial Real Estate Award from the Los Angeles Business Journal for its work in designing the new 100,000-square-foot Stamps.com corporate headquarters building in El Segundo, Calif. The project earned the Silver Award in the office category, which was presented at an awards ceremony in Los Angeles on Feb. 18. Stamps.com is a leading provider of Internet-based postage services.

Ware Malcomb provided interior and architectural design services for this creative office project, which involved transforming two adjacent, three-story office buildings totaling 82,000 square feet into a new contemporary 100,000-square-foot corporate headquarters building. The renovation structurally connected the two existing buildings with the addition of a new two-story 18,000-square-foot high-end lobby with glass box suspended conference rooms, an interactive cafeteria, collaborative lounge areas, fitness center and other employee amenities. Ware Malcomb’s scope of work also included redesigning the main core of the existing building to provide more efficient space layout and easy access, full interior design and architecture services for 60,000 sq. ft., and a full exterior remodel of the entire building.

“We are so pleased to be recognized for our work on the new Stamps.com corporate headquarters,” said Larry Armstrong, Ware Malcomb CEO. “This is one of many creative office projects Ware Malcomb has been designing in Los Angeles that are truly setting the standard for this architectural movement.”

The project was managed out of Ware Malcomb’s Los Angeles office, led by Radwan Madani, regional director.

“This project allowed us to combine our architectural and interior design expertise to create a building as innovative and dynamic as the tech industry itself,” Madani said. “We wish the entire team at Stamps.com much continued success in its new award-winning creative office headquarters.”

This is the second Commercial Real Estate Award Ware Malcomb has been awarded by the Los Angeles Business Journal. The firm received a Silver Award for Best Industrial Building for 9to5 Seatings corporate headquarters in 2013.

SANDERSON STEWART EARNS AWARD: The U.S. Chamber of Commerce named Sanderson Stewart (Billings, MT), a 65-person collaborative community development services firm, a Blue Ribbon Small Business Award winner.

The annual program recognizes companies for their dedication to the principles of free enterprise and contributions to restoring jobs and supporting economic growth.

Sanderson Stewart was selected from a record number of applicants across the nation for demonstrating exceptional business practices in areas including strategic planning, employee development, community involvement, and customer service.

“When the opportunity to nominate a local member presented itself, Sanderson Stewart immediately came to mind,” said John Brewer, president and CEO of the Billings Chamber. “Their creative work environment, and problem solving approach to community development throughout the regional oil play makes them a perfect fit for such elite recognition.”

Reflecting on his team and the recognition, Michael Sanderson, president and CEO of Sanderson Stewart said, “I’m so proud of our team of Cool, Smart, Talented People at Sanderson Stewart. We’ve built a company with a sense of purpose and a great corporate culture, but it takes everyone pulling together to make it happen. This ‘Blue Ribbon’ award shows me that others have also recognized the truly special thing we’ve built.”

As a result of the nomination, Sanderson Stewart is also eligible to receive the Community Excellence Award.

DOER-SELLER, from page 9

Twitter account or LinkedIn page.

“Social media presence is growing within the AEC industry, and it’s a great opportunity to make sure everyone knows exactly what we’re experts in,” she says. “Part of our compa-ny culture is being responsive and proactive in communicat-ing, and social media allows us to connect with our friends, clients and partners on a daily basis. So, when a project comes up that needs a lighting designer or engineer, clients and partners already know who we are and our project lead-ers can get right down to business.”

Building solid relationships. Merilee Meacock, partner at KSS Architects (Princeton, NJ), says that deep human relationships are the heart of all great architecture – the firm values the building of relationships as much as the building of stone and steel.

“To lay a strong foundation with our clients, we have honed a process of ideation, built upon intensive listening, extraor-dinarily deep research, transparently collaborative imagin-ing, and deft consensus-building,” Meacock says. “We help our clients to think strategically and envision their project with a confidence and enthusiasm that is contagious beyond

the project team. The marketing of the proj-ect and its attributes becomes relationship driven and exponential – its efforts extend well beyond the walls of the KSS marketing department.”

As a trusted advisor and partner, KSS also frequently equips its client counterparts, as well as the institution’s development office, with materials needed to market, both inter-nally and externally, the vision and benefits of the proposed project. From renderings and graphics, to cost analysis and sponsor-

ship opportunities, the tools KSS provides secure well-need-ed funding and well-deserved enthusiasm for the project at hand. It is the combined efforts of both “marketing teams” that has successfully solidified the future of many of KSS’s projects.

“Marketing can be highly targeted and laser-focused,” Mea-cock says. “It can also be pervasive and far-reaching. It is the enlistment, support, and deputization of additional team members that transforms a marketing effort into an expo-nential event, leading to successful projects, delighted cli-ents and new opportunities for the future.”

Merilee Meacock, Partner, KSS Architects.

Documents

The role of the CFO · .BUILD domain names focused on the construction industry. The .BUILD namespace was recently created by (ICANN), the controlling authority for the Internet