SEPTEMBER/OCTOBER 2015 INC. www.acec.org
ENGINEERING AWARD-WINNING BUSINESS MAGAZINE ● PUBLISHED BY AMERICAN COUNCIL OF ENGINEERING COMPANIES >> Innovations to Ease the Impact of Drought >>Avoiding Corruption in International Markets
>> Cardno Encourages Science Careers for Women DEEP DIVE WITH >> Congress Close to Transportation Deal Distinguished Award of Merit Honoree
ENGINEERING INC. SEPTEMBER/OCTOBER 2015 ● Vol. 26, No. 5 12
18 Features POSITIVE IMPRESSIONS 12 Making presentations that win work. LOW WATER, HIGH HOPES 18 Engineers address drought conditions, but also weather political, social and economic challenges. INTERNATIONAL CORRUPTION 24 U.S. firms operating overseas must navigate carefully to avoid corrupt practices. LEADING THE WAY, LENDING A HAND 35 8 BALLARD ROBERT BY DR. PROVIDED How Cardno’s employee-driven campaigns Cover Feature benefit their communities. UNLOCKING THE OCEAN’S SECRETS 8 2015 FALL CONFERENCE 42 Deep-sea explorer Dr. Robert Ballard discusses his legendary World-renowned speakers and top industry leaders career and motivates the next generation of STEM students. at the ACEC Fall Conference in Boston.
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FROM ACEC TO YOU 2 GUEST COLUMN 40 BUSINESS INSIGHTS 48 Down to the wire for Analysis of the Affordable Best-selling coalition publications. transportation funding. Care Act. MEMBERS IN THE NEWS 50 MARKET WATCH 4 GUEST COLUMN 44 Demetriou named president and Mining sector sluggish but seeing Growing a firm starts with CEO of Jacobs; Wankmuller named signs of daylight. cultivating strong leaders. CEO and managing director of Cardno. LEGISLATIVE ACTION 6 GUEST COLUMN 46 MERGERS AND ACEC urges quick action on Digital technology for enhanced ACQUISITIONS 52 multiyear transportation bill. quality management. First half of 2015 setting record pace.
COVER PHOTO: PROVIDED BY DR. ROBERT BALLARD
Engineering Inc. promotes the advocacy and business interests of ACEC by offering news, legislative analysis and business practice information to member firms, clients, opinion leaders and policy makers.
The articles and editorials appearing in this magazine do not represent an official ACEC position or policy unless specifically identified as doing so. From ACEC to You ENGINEERING INC. THE OFFICIAL PUBLICATION OF THE AMERICAN COUNCIL OF ENGINEERING COMPANIES AMERICAN COUNCIL OF ENGINEERING COMPANIES Keeping Congressional Feet to the Fire CHAIRMAN Ralph W. Christie, Jr. PRESIDENT & CEO David A. Raymond On Transportation, Energy and Tax VICE PRESIDENT, Mary Ann Emely OPERATIONS VICE PRESIDENT, Steven Hall s you read this, Congress has just returned from its summer recess and GOVERNMENT AFFAIRS will now seek to achieve something over the next six weeks that it hasn’t VICE PRESIDENT, Marie Ternieden achieved in six years—agree on a satisfactory way to pay for a long-term BUSINESS RESOURCES A AND EDUCATION transportation bill and get it to the President’s desk. DIRECTOR, COMMUNICATIONS Alan D. Crockett Meanwhile, the clock continues to tick on the short-term extension that’s set AND MEDIA to expire October 29. And overall government funding and raising the debt limit STAFF EDITOR Andrea Keeney are also up for grabs in October. [email protected] ACEC Members have written hundreds of letters to lawmakers during the 202-682-4347 SENIOR COMMUNICATIONS Gerry Donohue recess, and ACEC-supported radio advertisements and social media campaigns WRITER have flooded key congressional districts—all part of a coordinated, multi-indus- try effort to get Congress off the dime, not only for transportation, but also for ACEC PUBLIC RELATIONS AND energy and regulatory issues and tax reform, as discussed in Legislative Action EDITORIAL ADVISORY COMMITTEE beginning on page 6. CHAIRMAN James Blake Our September/October issue of Engineering Inc. also features an exceptional MANIFEST LLC interview with legendary oceanographer, Dr. Robert Ballard (See page 8), to MANAGING EDITOR Christopher Brandon whom we will present our Distinguished Award of Merit—the Council’s highest ART DIRECTOR Jeff Kibler award bestowed upon an individual—at our upcoming Fall Conference in Bos- PROJECT MANAGER Amy Stephenson Fabbri ton. (See page 42). Conference speakers also include Pulitzer Prize-winning author Doris Kearns ADVERTISING SALES Goodwin, several leading industry CEOs, a wide range of subject matter experts, Leo Hoch ACEC and 35 roundtables and business management seminars that will address bottom- 1015 15th Street, NW, 8th Floor line issues for CEOs, CIOs, CFOs, and other industry professionals and emerg- Washington, D.C. 20005-2605 ing leaders. 202-682-4341 [email protected] This fall promises to be an important and exciting time for ACEC members both politically and professionally. We appreciate your continuing contributions to our industry and look forward to seeing you in Boston.
Engineering Inc., Volume 26, Number 5 (ISSN 1539-2694), is published bi-monthly by the American Council of Engineering Companies (ACEC), 1015 15th Street, NW, 8th Floor, Washington, D.C. 20005-2605. Periodicals postage paid at Washington, D.C., and at additional mailing offices. Annual Ralph W. Christie, Jr. David A. Raymond subscriptions are $24 for members (included in dues as a non-deductible ACEC Chairman ACEC President & CEO amount); $45 for U.S. non-members; $65 for institutional subscriptions. Back issues are $15.
POSTMASTER: Send address changes to Engineering Inc., c/o ACEC, 1015 15th Street, NW, 8th Floor, Washington, D.C. 20005-2605. © 2015 American Council of Engineering Companies. All rights reserved. This publication may be copied, downloaded from the ACEC website, stored in electronic or hard-copy format, and disseminated to third parties for educational and information purposes. ACEC expressly disclaims any liability for damages of any kind in connection with such copying, downloading, storage, and/or dissemination. By copying, downloading, storing and/or disseminating this publication, the recipient of this publication expressly agrees to defend, indemnify, and hold ACEC, its officers, directors, employees, volunteers and agents harmless from and against any and all losses, damages, claims, causes of action and liabilities, including reasonable attorneys’ fees and costs, arising out of or resulting from the recipient’s use of this publication. Notwithstanding the above, no part of this publication may be altered, resold, licensed, or used for any other commercial purposes without the prior written permission of ACEC. Recipients may opt out of receiving the electronic version of this publication from ACEC by sending an e-mail with the subject line “Unsubscribe” to ACEC at [email protected].
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defining characteristic in existing operations, but are aiming to retain and grow mates that 60 to 80 percent of of the mining sector the majority of our work is in market share by trying to reduce project costs for distant mines A has long been the high developing new projects. So participation of smaller mining are just for infrastructure. volatility of commodity prices. when that slows, we feel it.” companies with higher marginal An additional factor adding To succeed, engineering firms cost of operations.” to the complexity and expense, serving mining clients had Supply and Demand This extended period of low says Gingrich, is that while to figure out how to balance The sluggish mining market pricing has damaged mining “larger tonnage mines have their operations through often has a few more years to run, companies’ financial positions. tended to be open pit, we’re tumultuous market cycles. according to BMI Research, According to Statista, the net seeing more underground In the past few years, the which forecasts just 1.9 percent profit margin of the top 40 mine development.” mining industry has slogged annual growth through 2019. mining companies, which Finally, mining operations through a prolonged slump, Three factors are holding the account for almost all industry are under increasing regulatory and commodity prices have market back. activity, fell from 25 percent in pressure in both developed and stabilized at historic lows. Primarily, the slowdown of 2010 to just 2 percent in 2013, developing countries to limit “People are no longer think- two of the world’s largest econo- before climbing back up to 10 emissions, waste and water use. ing about the cyclicality of mies—China and Europe—has percent in 2014. commodity prices,” says Hiran reduced demand for most key Without the funds to invest, Market Strategies Bhadra, the national lead for minerals around the world. global mining exploration is Engineering firms are choos- KPMG’s mining sector prac- And, says Bhadra, “These two expected to fall 10 to 15 percent ing different paths to succeed tice. “They’re wondering how economic centers are not prom- to $10 billion in 2015, accord- within these difficult market to adopt a different operating ising to come back to a signifi- ing to SNL Metals & Mining. conditions. model for a low-price regime cantly higher trajectory in the The decrease would be the third “Even in a soft market, cli- that may last for a long time.” near term.” consecutive annual drop and ents are still producing,” says One of those adaptations Additionally, regulatory would leave global spending at Kevin Beauchamp, principal has been to cut back on the actions by the United States and the lowest level since 2009. and mining business leader at development and opening of other countries that limit the Golder Associates. “The chal- new mines, which has hit engi- use of coal in power generation Remote Mines, lenge for us is to understand neering firms hard. Though have significantly dampened Higher Risk their business and provide solu- engineers serve their clients in demand for one of the industry’s At the same time, the cost of tions that work for our clients.” all phases of a mine’s life cycle, biggest products. developing a new mine has For example, several com- from geological exploration to And third, says Bhadra, never been higher. modities, specifically copper, mine closure, the bulk of their “Some large mining companies “The large, easily acces- nickel and base metals, are work is in the early stages. are not expected to reduce sible properties are more strengthening, he says. “We’re project-focused,” production levels even in the mature and being mined out,” While Amec Foster Wheeler says Duane Gingrich, presi- current low-price regime as a says Gingrich. “We’re seeing offers its mining clients a dent of mining and metals in competitive strategy. By leverag- development in more remote, full slate of mining services, the Americas at Amec Foster ing their large and low-cost- higher-risk locations, such as Gingrich says one of the most Wheeler. “We do some work of-production deposits, they Mongolia, parts of Africa, and active services has been helping the arctic in Canada.” firms fine-tune their business According to the World Eco- processes. Global Spending on Non-Ferrous Metals nomic Forum (WEF), about “We’ve been more active Exploration (billions of U.S. dollars) 40 percent of mining explora- in financial analysis, process 2010 $12.1 tion investment in recent years engineering, due diligence,” 2011 $18.2 “has focused on remote regions says Gingrich. “We are looking 2012 $21.5 in South America and Africa.” through their processes and These distant and isolated methodologies to find capital 2013 $15.2 mining projects tend to be efficiencies.” 2014 $11.4 larger scale, with higher costs MWH Global is using its 2015 $10.0 (est.) and more complex infrastruc- water expertise to capitalize on Source: SNL Metals & Mining Corporate Exploration Strategies ture requirements. WEF esti- the increased environmental
4 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 MarketWatch
Seeing an Uptick opportunities for her firm to Looking forward, Beauchamp help clients deal with the grow- sees signs that the market is ing climate change threat. firming up. “We’re seeing a lot “Climate change affects more front-end study activity, everything from mine plan- which are generally the precur- ning—will the water be sors to development.” available for the life of the Gingrich concurs. “We’re mine?—to the engineering doing more due diligence design basis for water or tail- work, and our mine assessment ing storage facilities,” she says. group is fairly active.” How- “We have seen and expect to ever, he adds, “What we’re not continue to see an uptick in Conveyer belts transport seeing are those projects that engineering and environmental ore through a mine. are within six months of being services that correspond to
OLIVIER LANTZENDORFFER/ISTOCK kicked off. There’s a lack of climate change adaptation and focus on the mining industry. mising the sustainable supply companies being ready to make mitigation.” “We have brought municipal of water for communities and a major capital investment.” drinking and waste water tech- the environment,” says Resa Furey expects the “soft mar- Gerry Donohue is ACEC’s nology to mining companies so Furey, principal market analyst ket” to last about two more senior communications that minerals and energy can for natural resources and min- years. As the sector begins to writer. He can be reached at be exploited without compro- ing at MWH Global. expand, she sees significant [email protected].
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ACEC Urging Quick Action on Multiyear Transportation Bill as Congress Reconvenes he Senate approved a six-year, $8 billion into the Highway Trust Fund to over six years, including $59.5 billion in $360-billion highway bill prior to maintain current funding to states and pro- formula funds to state and local govern- T the summer recess, so all eyes now vide time to agree on a final bill. ments and $14.6 billion for capital invest- turn to House leaders to fulfill repeated “The discouraging reality is that the ment grants. The bill also authorizes $8.9 pledges to produce a long-term bill when clock is again ticking on yet another short- billion over four years from the General House members return in September. term extension,” said ACEC President Fund for passenger rail programs, includ- The Senate voted 65-34 to pass the Dave Raymond following action on the ing $6.6 billion for Amtrak and $2.2 Developing a Reliable and Innovative Vision bills. “When lawmakers return from sum- billion for state rail infrastructure improve- for the Economy Act (DRIVE Act), an mer recess after Labor Day, they will try to ment grants. ACEC-supported six-year reauthorization accomplish something in about six weeks The bill transfers $45 billion from the of highway, transit and safety programs that that hasn’t been achieved in six years—agree General Fund to the Highway Trust Fund features a 12 percent increase in average on a satisfactory way to pay for a long-term to supplement existing gas and diesel taxes annual funding over current levels. The leg- bill and get it to the president’s desk.” and other transportation revenues. The islation includes a transfer to the Highway The six-year DRIVE Act provides $275 budget offsets are projected to support pro- Trust Fund that will provide funding for billion for highway programs over six years, gram funding through F.Y. 2018, at which the first three years of the bill. including $256 billion in formula funds to point additional congressional action would The Council lobbied heavily in favor of the states, $1.8 billion for TIFIA loans and be necessary. the Senate bill and is now pressuring the credit assistance, and $2.1 billion in grant The DRIVE Act also contains provi- House to deliver on vows to produce its assistance for major projects. Annual state sions recommended by ACEC to stream- own long-term transportation legislation in highway funding grows from the current line project delivery and to fund multi- September. Congress separately approved $37.8 billion to $39.6 billion in F.Y. 2016, state pilot projects to study alternative a three-month MAP-21 extension through ramping up to $45.7 billion in F.Y. 2021. financing mechanisms, such as vehicle- October 29 and transferred an additional Transit programs will receive $75 billion miles-traveled fees.
Tax Reform Focus Narrows he prospects for tage pass-through businesses mandatory tax on comprehensive tax such as S corporations and overseas earn- T reform in 2015 have partnerships, tax writers have ings, some of dimmed, but tax writers in put aside the discussion of which would help the House continue to pursue corporate and individual rates fund the federal more limited reforms designed until Congress and the admin- highway program. to improve the international istration can agree on a more Any tax pack- competitiveness of U.S. comprehensive approach to age is likely to businesses. rewrite the tax code. also include an House Ways and Means As an alternative, Rep. extension of Committee Chairman Paul Charles Boustany (R-La.) expired tax provi- Ryan (R-Wis.) and the White has released draft legislation sions. The Senate House initially sought to pur- that would create a lower tax Finance Com- sue legislation to reduce cor- rate for profits from qualified mittee approved CHARLES DHARAPAK/AP Rep. Charles Boustany (R-La.) porate tax rates in response property, such as patents or a two-year to concerns over U.S. firms inventions. Several European extension of 52 tax provi- The legislation would be in reincorporating overseas or countries have enacted similar sions that expired at the end effect for 2015, retroactive being acquired by foreign incentives—generally known as of December. These include to January 1, and 2016. The competitors. After ACEC and an “innovation box”—for firms several backed by ACEC, such House is considering similar other business organizations to perform work domestically. as the R&D tax credit, bonus approaches on tax extenders, expressed that lowering corpo- The innovation box concept depreciation, higher expensing with final action expected in rate tax rates would disadvan- would likely be paired with a levels and energy tax credits. the fall.
6 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 House, Senate Move ISSUES ON THE MOVE WHAT’S NEXT ACEC-Backed Energy Bills Surface Transportation Expected House action in Reauthorization September he Senate Energy and Natural Resources Committee Tax Legislation Action on tax extenders in adopted The Energy Policy Modernization Act, which the fall; possible international aims to boost reliability and security of the nation’s oil, T provisions natural gas and electricity infrastructure. The measure includes a number of provisions advocated by ACEC, including establish- Proposed Overtime Rules Final rule in 2016 ing an interagency committee to focus on the “energy-water nexus,” with the goal of identifying sustainability best practices. Bipartisan Energy Package House, Senate floor action in To expand and protect the power grid, the measure includes the fall ACEC-backed provisions to enhance the authority of the U.S. energy secretary to protect against cyber threats and develop new models of electricity storage, distributed generation and ACEC Reviewing Obama micro-grids. The measure also expedites exports of liquid natural Administration’s Clean gas (LNG) through a streamlined permitting process. Emphasizing renewable energy, the Act adds hydropower to Power Plan the list of renewable energy sources and supports the develop- he Obama Administration has released its final Clean ment of geothermal energy sources. Power Plan (CPP), mandating significant reductions in Similar legislation has been approved at the subcommit- TCO2 and other emissions and setting aggressive targets tee level in the House. The House bill also requires the Federal for increasing the use of renewable energy. Energy Regulatory Commission (FERC) to coordinate inter- ACEC’s Environment and Energy Committee is reviewing the agency pipeline environmental reviews, setting deadlines for new plan ahead of anticipated challenges in the courts as well as agencies and requiring that reviews take place concurrently to legislative challenges in Congress this fall. expedite the process. Leaders in both chambers say they hope to The CPP mandates a 32 percent reduction in CO2 emissions produce a bipartisan compromise bill by the end of the year. by 2030, a target that will fall most heavily on coal-dependent states such as Wyoming, North Dakota, Kentucky and West Vir- ginia. The plan envisions a portfolio of electricity generation by ACEC Responds to 2030 that consists of 27.5 percent coal, 20.7 percent renewables, 32.6 percent natural gas and 19.1 percent nuclear. Proposed Overtime Rules The CPP’s release could affect congressional efforts to move CEC has raised con- then adjust it annually based pending bipartisan energy bills. The Senate bill—which includes cerns over a proposed on growth in wages or infla- provisions to facilitate the development of new models of electric- A rule from the Depart- tion. The highly compensated ity storage, distributed generation and micro-grids, as well as the ment of Labor (DOL) that employee threshold would codification of the DOE’s Quadrennial Energy Review—aligns would significantly expand increase from $100,000 to more closely with the CPP than the House bill. mandatory overtime under approximately $122,148 and the Fair Labor Standards Act would also be adjusted annually. (FLSA). These requirements DOL did not propose changes were last updated in 2004. to the duties test for exempt Under the current rule, employees, but it requested employees who earn less than comment in this area. $455 per week or $23,660 per ACEC submitted comments year must be paid time and a on the proposed rule that half when working more than express concern about the signif- 40 hours per week. Employees icant jump in the salary thresh- who earn between $23,660 and old for nonexempt employees $100,000 per year are eligible over a period with low inflation for overtime pay unless they are and a recession. The Council exempt because their duties are also recommended updating primarily professional, executive the salary threshold every three or administrative in nature. years, instead of annually, to
The proposed rule would mitigate administrative costs. BLOOMBERG/GETTY IMAGES increase the salary thresh- DOL will review the com- For More News old from $455 per week to ments on the proposed rule and For weekly legislative news, approximately $970 per week, is expected to release the final visit ACEC’s Last Word online or $50,440 per year, and rule in 2016. at www.acec.org.
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 7 The shipwrecked Titanic was discovered by Robert Ballard on September 1, 1985.
Unlocking RALPH WHITE/CORBIS RALPH the Ocean’s est known for his 1985 discovery of the Titanic, Dr. Robert Ballard’s many achievements in oceanic exploration are legendary. Finding the German battleship Bismarck, the lost fleet of Guadalcanal, John F. Kennedy’s PT-109, Bhydrothermal vents in the Galapagos Rift and “black smokers” in the East Pacific Rise—the list of discoveries is long. As an author and historian, Ballard uses his fascinating journeys to promote science, technology, engineering and math (STEM) to students throughout the world. To honor his achievements, ACEC will present Ballard with its Distinguished Award of Merit at the upcoming 2015 Fall Conference in Boston. In this exclusive interview with Engineering Inc., Ballard discusses both his past achievements and Robert Ballard on the deck of the Nautilus future goals.>> with his underwater robot Hercules.
8 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 Secrets PROVIDED BY DR. ROBERT BALLARD ROBERT BY DR. PROVIDED
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 9 The crew of the Because of its unique chemistry, the Nautilus includes field also hosts novel life forms that live engineers, scientists and educators. in the absence of sunlight and thrive on methane and hydrogen gases given off during alteration of the rocks. It showed that life can live in much more extreme environments than we ever thought, and for many, dramatically accelerated the belief in the probability of life existing in outer space.
ACEC: Educators laud your JASON Learning project for its revolutionary approach to getting students
PROVIDED BY DR. ROBERT BALLARD ROBERT BY DR. PROVIDED engaged in STEM education. What has been the secret to that ACEC: You are widely acclaimed When we discovered the giant black program’s success? for extraordinary achievements smokers running along the entire length in undersea exploration, including of the mid-ocean ridge, we also discovered BALLARD: I am no longer associated discovering the Titanic and the that the entire volume of the world’s oceans with JASON because they drifted off in a Bismarck and making the first is flowing inside the fractures of the mid- direction different from where I wanted manned exploration of the mid-ocean ocean ridge and coming out every six to to be, which is not a problem. But it’s no ridge. At 73, what major discoveries eight millions years—a gigantic internal cir- longer live and interactive, and I think it remain on your to-do list? culation system right inside our planet, and was the live and interactive component no one knew. Those are really fundamental that turned so many kids on. In response, DR. ROBERT BALLARD: People “you got to be kidding” discoveries. we created a new program—the Ocean commonly ask me, “What do you hope So, going back to the question of what Exploration Trust, which blends education your next discovery will be?” The fact is will I find next? Who knows? But I will bet and ocean exploration to promote science, I haven’t a clue. When you look back on you it will be exciting. technology, engineering and mathematics my 55 years of mounting more than 150 fields using the excitement of exploration expeditions, it wasn’t the discovery of ACEC: What is the Lost City, and why and technological innovation. the Titanic or the Bismarck or PT-109 or was that discovery so important? I am a firm believer that children are even the Lost City. What truly has been born scientists. The first question they the most amazing thing was when I went BALLARD: That was another discovery ask is “why?” And then parents attempt looking for one thing and found some- in 2002, when my old team was moving to explain, and the child follows with thing else far more important. between segments of the mid-ocean ridge, another “why?” By the third “why?” Clearly, our 1977 discovery of the hydro- which is where the earth is creating its they’ve exhausted all the parent’s answers. thermal vents and the new life forms was outer skin caused by the tectonic plates that What we’re trying to do is make sure we really the seminal discovery of my career. are separating. Most believed those offset don’t extinguish that flame of curiosity It helped us further understand the origin fractures were pretty boring and not worth that a child is born with. of life on our planet. We did not know investigating, until one day the team was What I’ve found by doing live such a thing existed—an entirely complex exploring one area where the plates were exploration, and putting children in direct ecosystem that was not deriving its energy separating. The plan was to go to another contact with real scientists, is soon they from the sun, but energy from the earth location to look at another part of the understand that the reason scientists are out itself, and possessing the ability to process transform fault, but instead of reposition- there is because of what they don’t know. poisonous hydrogen sulfide and sulfuric ing the ship, which could take hours, and Scientists embrace the fact that they don’t acid through their body, which would kill repositioning the vehicles, which could take know. Our new community-based STEM any other creature. hours, they decided to just drive the probe program is involving millions of children in Just two years later, in 1979, we dis- over there and suddenly came upon these the interactive exploration of the Nautilus. covered the giant black smokers on the gigantic structures (90 to 200 feet high) Anyone can go to Nautiluslive.org to see Galapagos Ridge, which really aren’t that looked like a city of skyscrapers. the Nautilus in action. smokers, but a part of a hydrothermal And they were white, while everything in We receive thousands of questions from vent system. Before we made that discov- the mid-ocean ridge is black. So when they children who follow us, and we have the ery, we couldn’t explain how the ocean saw these white towering peaks, similar to technology to put them in contact with got its chemistry. We believed the logical the giant stalactites at Carlsbad Caverns, experts who provide answers in seconds. chemistry source of the ocean were the all coming from the ocean floor, they took Just like JASON, the secret is the engage- rivers such as the Nile, the Mississippi and samples and discovered it was calcium car- ment of children on the large scale in pur- the Amazon. bonate (limestone). suit of the truth.
10 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 ACEC: One of your current initiatives Right now we are treating the ocean as For me personally, you would have is called “Unknown America,” in a hunter-gatherer society. We are catching to consider the movie Avatar, and the which you are mapping the ocean wild animals in the ocean, which is a very point when the paraplegic star’s spirit was floor as far as 200 nautical miles inefficient way to capture protein. We need transferred to a Na’vi. The first thing he from U.S. shores. Why is this project to farm and herd and increase the produc- did when he woke up was run, not caring so important? tivity of the ocean. Before we can do that, about the fact he was now a different spe- we have to understand where we are going cies that now had blue skin and a tail. All BALLARD: Half of our country is under as a human race. that mattered was having the ability to feel the ocean and we own it, but we have better Consider the Malaysian flight that disap- the wind in his face again. Well, Hercu- maps of Mars than we have of those unchar- peared. If we can’t find that plane, despite les—my underwater robot—is my Na’vi. tered parts of the United States. That seems all the resources that were expended, that It carries my spirt and gives me the free- a little crazy to me. We have what we call should tell you an awful lot about how little dom to do things my human body cannot. the Corps of Exploration on the Nautilus, we know about the ocean. When I go to the Inner Space Cen- consisting of scientists, engineers, commu- ter (at the University of Rhode Island’s nicators, educators and students, who are ACEC: What do you personally enjoy Graduate School of Oceanography), I can dedicated to understanding the other 50 best about ocean exploration? go into a room, and through Hercules, percent of our country that lays unexplored. spend a day exploring off the Galapagos Why? Because it’s full of resources, it’s BALLARD: When you consider that the Islands. I can then go home, have a drink full of fisheries, it’s full of minerals and gas percentage of the oceans we actually explore with my wife and watch the sun go down and places that can be set aside as under- is so small, and that the discoveries we’ve in Connecticut. What excites me is not water Yellowstone and Yosemite parks. made have rewritten science books from just inspiring children, or exploring the But before you can enjoy those kinds of that 1 or 2 percent ocean exploration, you unknown, it’s all of that and having a role things, you have to know what you own. So get an idea of what conceivably still is wait- in preparing the next generation for a we’re committed to mapping that part of ing for us. That’s why I created the program future that today they can only imagine. America until it can be no longer classified I have now, so we can do fundamental as unknown. exploration. And the Nautilus—one of only ACEC: What was your reaction to two American ships doing exploration—is being chosen to receive ACEC’s ACEC: As an explorer, discoverer literally going places where no one has gone Distinguished Award of Merit—the and historian, why do you believe before, hoping to continue to make new Council’s highest award bestowed the world’s growing knowledge of the discoveries. upon an individual? ocean is so important? If you look at the Nautilus, most of the key intellect involved in our expeditions is not BALLARD: I’m extremely grateful. BALLARD: We’re not escaping Planet physically on the ship. The ship instead is full It’s an honor indeed, and it shows that Earth. We have a wonderful planet that we of students, teachers, educators and young rumors of my demise are greatly exagger- live on. Consider that 95 percent of the people, as we try to inspire the next genera- ated. I’ve just recently celebrated my 73rd Earth’s population lives on less than 3 per- tion. But there are very few scientists aboard birthday, but believe me, I’m just hitting cent of the planet. That’s because 72 percent because we are in an exploratory mode. my stride. ■ of the Earth is covered in water. Of the 28 percent of the Earth that is land, 40 percent is uninhabited, such as Robert Ballard’s Nautilus crew views the Gulf of the polar regions and deserts. We have no Mexico during a mission to map the ocean floor option but to move out into the ocean and along the U.S. shoreline. colonize. I still have one more trick left in me, and that will be the colonization of the world’s oceans. I’m actually working hard on the design right now. If you look at the history of the human race, it began with a hunter-gatherer cul- ture. Nomadic people had to move around because they quickly depleted fruits hanging on the trees or animals running around in the woods. But then they began to cultivate plants and greatly increase productivity of the wild land. They began to domesticate animals and develop herding skills, and all of a sudden they didn’t have to hunt deer when they could grow chickens or pigs or
cattle. BALLARD ROBERT BY DR. PROVIDED
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 11 PositiveImpressions Making presentations that win work
By Bob Violino n engineering firm might have the best skills, experience and resources to handle a particular project for a client. But without a top-notch presentation at the outset, the deal Acould easily go to a competing firm. Experts say a firm’s initial presenta- tion is extremely important in ulti-
mately winning the contract.>> FRANCESCO BONGIORNI
12 ENGINEERING INC. SEPTEMBER / OCTOBER 2015
Sutong Bridge Fred Hartman Bridge Taizhou Bridge Suzhou, China Houston, Texas Jiangsu, China
With nearly 100,000 employees serving clients in more than 150 countries around the world, AECOM is a premier, fully integrated infrastructure and support services firm. Our people are united by a shared commitment to create, enhance and sustain the world’s built, natural and social environments.
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Second Penang Bridge Penang, Malaysia www.aecom.com “It is of pinnacle impor- For example, an over- coming is the failure to clearly articu- tance to make a positive whelmed project manager late what differentiates a firm from its first impression,” says with a newborn at home competitors. Hilari Weinstein of High wants to avoid unnecessary In general, many firms are simply not Impact Communication, effort, Rogers says. “Ask well prepared for presentations, Wein- a specialist who guides yourself what you offer to stein says. “I often find this to be one of engineering firms in mak- do that for him,” he says. the most pivotal reasons people hire me ing presentations. “A first “One way might be for when they have a big client presenta- impression acts like a filter you to do it all under one tion,” she says. “Too often, presentation through which others pro- “Talking too roof and not have teaming teams, left to their own devices, spend cess everything they experi- much and partners.” most of their time playing with slides or ence after it.” Not focusing on the trying to wordsmith their talk, leaving Clients weigh initial ineffective needs of the client during a insufficient time to practice aloud as a information more heav- listening will presentation is a huge mis- group and individually.” ily than later information, guarantee take, Lefebvre says. “Talk- Weinstein says. “That failure.” ing too much and ineffec- Best Practices information involves what tive listening will guarantee Experts offer a number of suggestions MICHAEL LEFEBVRE is seen, heard and felt,” she GRAEF failure,” he says. “Regard- to counter these and other presentation says. “As communicators, less of the sophistication of errors. we deliver 1,000 signals the client, it is important to One key part of preparation is being per minute. So every contact and com- be genuine in your communications.” aware of what are the primary client munication after that can either enhance Another mistake is relying too much concerns. or diminish the first impression that was on “slideware,” Rogers says. “PowerPoint Practice responding to anticipated formed.” has been under siege for two decades, questions, Weinstein advises. “Collect Engineering firm executives under- which is a bit unfair,” he says. “There is questions from past interviews and allow stand how important it is to present well a place for it. But when misused, slides folks to practice answering them and get at the outset, especially considering how can create a barrier between you and your feedback,” she says. “For certain types of competitive the market can be. “The decision-makers.” questions, it may be worthwhile to write ability to establish rapport and a feeling Presenting in a lackluster manner can out company-preferred responses. This of trust has always been a goal in the also lead to failure. Going is not a script to be memo- procurement process,” says Michael Lefe- into “automatic” mode and rized but a guide to ensure bvre, vice president of GRAEF. presenting generic infor- clarity and consistency “Clients tend to look for reasons to mation “comes across as within the organization.” reduce the competition and make their boring, without authority Practice your presen- final decision process less complicated,” and uninterested in the cli- tation with an outline, Lefebvre says. “A bad first impression is a ent,” says Susan Murphy, Weinstein says. Use note proven way to make sure you are quickly of Murphy Motivation and cards, and then go over eliminated from consideration.” Training, a presentation and each segment in portions management skills coach. of no more than a minute Common Mistakes This kind of presenta- or two. Master one seg- Despite the importance of making a tion “is the default for most “I always ment before moving on to good first impression, many firms make nervous presenters or teams, the next, but again, do not common mistakes when presenting playing what they perceive suggest that try to memorize a script, themselves. to be safe,” Murphy says. a team wrap she says. “The biggest mistake has little to do “The client has heard it up their Gearing the presentation with the mechanics of presenting,” says many times, often in the presentation to the needs of the specific Jim Rogers, of Unbridled Revenue, Inc., same day. It is boring, client is of the utmost a consultant who helps engineering firms shows no vigor, hides per- with a segment importance. win more contracts. “It is a failure to sonalities and focuses on the that focuses “For each of your client’s understand what the client really wants. speaker, not the listener.” on the most hot buttons, match that up “Your decision-makers don’t really Along the same lines, powerful with a truly unique feature buy an ‘artifact’ such as a bridge, airport giving scripted presenta- or solution you bring to or water treatment plant,” Rogers says. tions and responses is a reasons why the the table, and underscore “People really want to either attain or bad idea, Weinstein says. client should how that will be of value avoid something. We want to attain rec- “Actors train years to select you.” to or benefit the client. ognition, or money and what it brings, or deliver the script in a natu- HILARI WEINSTEIN Then prove your ability to leave a legacy. We want to avoid trou- ral way,” she says. HIGH IMPACT to deliver that outcome,” COMMUNICATION ble, criticism and unnecessary effort.” Another common short- Weinstein says. “I always
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 15 suggest that a team wrap because most clients have up their presentation with a desire to learn about a segment that focuses on new approaches, methods the most powerful reasons or resources for project why the client should success.” select you.” It’s also important to Another way to ensure train staff in areas such as that your presentation leveraging unique experi- stands out is to leverage ence and personality, using a unique experience that “Tell a story. persuasion, creative writing showcases your personality. Stories paint and other communication “Tell a story,” Rogers says. techniques, Weinstein says. “Stories paint pictures and pictures and are “You would not expect the are easily recalled. What’s easily recalled. people within your organi- more, stories call people What’s more, zation to be proficient with to action. Think about the stories call a business tool without founders and other great extensive training to ensure leaders and sellers in your people to action. they use that tool opti- company. I’ll bet they were Think about mally,” she says. good storytellers.” the founders Also, be prepared for Presenters need to be and other great the situational interview, a effective speakers and to recent presentation trend learn the art of persuasion. leaders and that requires quick think- It’s a good idea to join an sellers in your ing. “This is where the organization such as Toast- company. I’ll bet client gives the interview masters to develop skills, they were good team a project challenge Rogers says. Memberships on the spot with 20 min- cost less than $100 a year. storytellers.” utes to come up with an JIM ROGERS “The expense is in the time UNBRIDLED REVENUE, INC. approach as a group, using and effort you devote to it,” a flip chart to record and he says. illustrate that approach,” Rogers recommends designing pre- Murphy says. sentations from scratch on paper or a This allows the client to see how the whiteboard. “Never begin with a prior team works together and how flexible presentation,” he says. and creative the members are. “Scary, Think in terms of the images that but very effective,” Murphy says. you want people to recall when they’re These newer approaches to later making a decision, Rogers adds. presentations do work, Murphy says, “Then think of all the ways—other because they show—rather than tell— than slides—to create the image; for the client who the team members are, example, a vivid story, a prop like a toy how smart they are, how experienced or flipchart.” they are, and, most important, how Firms might want to consider using devoted to the client they are. “The newer technologies to illustrate their authenticity of each member of the team capabilities, including images produced is displayed,” she says. through 3-dimensional laser scanning Regardless of what steps firms take and printing. to become better at presenting, the “Using the technology in the presenta- improvement process will take time and tion that you intend to use on the proj- effort. ect is a good approach,” Lefebvre says. “My best advice is that you cannot “That technology may be specialized take a crash course to learn to present software that will be used to identify and well; therefore, don’t wait until a big vet out possible project solutions and presentation is imminent,” Rogers says. alternatives. It could also include social “Learning to present well is a process, media and other presentation resources not an event.” ■ that would be used to communicate with the client or other project stakeholders Bob Violino is a business and technology during the project. These typically work writer based in Massapequa Park, N.Y.
16 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 Accelerate what’s possible.
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Autodesk and the Autodesk logo are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names, or trademarks belong to their respective holders. Autodesk reserves the right to alter product and services offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document. © 2014 Autodesk, Inc. All rights reserved. Low Water, Engineers are developing solutions to ease the impact of the Southwest’s great drought
Water levels at California’s Lake Oroville are nearing record lows.
By Samuel Greengard
he Southwestern United States has historically experienced periodic droughts, but over the past several years, the region has faced one of the most severe droughts ever. Lack of precipitation—particularly the diminished Tsnowpack in the Sierra Nevada Mountains— has become so severe that many reservoirs have dropped to 25 percent or less capacity, prompting California state officials to warn that water supplies could be completely depleted if current trends continue.
18 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 High Hopes
Running on Empty A starting point for understanding the Great Drought is to recognize that severe droughts aren’t entirely out of the norm for California and other portions of the Southwest. “Historically, looking at tree rings and geologic data, there are peri- ods of 10- and even 50-year droughts,” Rodrigo says. Whether human-induced global cli- mate change is responsible—and to what degree—is secondary to the fact that “an average to wet year is more the exception than the rule,” says Dave Bennett, Stan- tec’s water practice leader for the U.S. West. Adds Orth: “We’ve gone through periods of drought conditions, but the droughts have always been smaller cycles, and we’ve been able to muddle through those events.” Of course, any discussion of water in Texas also is facing increasing drought There are no simple answers. the Southwest also involves economics concerns, thanks to growing popula- Although the challenges involve a mix and politics. Bennett points out that tion centers and low reservoirs, though of political, social and environmental new water supplies have historically been parched areas of the state have received factors, the fact remains that engineers used to attract development and spawn significant rainfall recently—in some will be at the center of all solutions. growth. At the heart of the issue, he says, cases heavy rains have led to flooding. A number of existing and emerging are society’s overall goals and objectives. “The Western states are experiencing technologies could help alleviate water “The issue isn’t whether we can accom- a significant water deficit, and there is shortages, though some are extraor- modate more population. From an engi- currently no end in sight,” says Mike dinarily expensive and face formi- neering perspective, that’s entirely pos- Orth, executive managing director for dable environmental challenges. Dan sible. The question is: What do people the Americas for Black & Veatch’s water Rodrigo, senior vice president at CDM want and how much are they willing to business. “The cause and effect can be Smith, says one of the key approaches pay for water? Do people want water debated by politicians, scientists and is that “We have to change our mindset rates to go up faster than the rate of infla- others. But all of this doesn’t change the about water. Right now, we mostly use tion just so that developers can build new basic fact that we need to take steps and water one time and discard it. This is houses and add to the population?”
plan for extreme events.” not a viable long-term strategy.” Right now, the primary focus is on water IMAGES SULLIVAN/GETTY
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 19 conservation. In April, the Engineering a California Department of Wetter Future Water Resources reported the If there is a silver lining to lowest snowpack in recorded the Great Drought it’s that history, prompting California it has focused attention on Governor Jerry Brown to addressing long-term prob- order cities, towns and water lems that won’t disappear districts to reduce water use with a wet winter or miracle by 25 percent. The Califor- spring snowfall in the moun- nia State Water Resources “Right now, tains. In the past, panic over Control Board estimates that we mostly use water has ebbed and flowed this will result in 1.5 million in response to short-term acre-feet of water through the water one time droughts and precipitation. remainder of the year. That’s and discard it. This time, California and The Poseidon roughly equivalent to one This is not a other Southwestern states are Water Desalina- tion Plant in large reservoir. As a result, viable long-term beginning to earnestly study lawns are turning brown, cit- advances in engineering and Carlsbad ies are eliminating grass from strategy.” technology and reassess gov- is scheduled to medians and some residents DAN RODRIGO ernment and public policy begin operation CDM SMITH in mid to late are replacing grass and other frameworks to build more 2015. plants that require heavy watering with sustainable water supplies. DON BARTLETTI/GETTY IMAGES drought-resistant trees and shrubs. In addi- One technology attracting attention is limit to how much freshwater or wastewa- tion, the state is stepping up efforts to pro- seawater desalination. It is already used ter can be claimed and consumed. “Desali- vide rebates to replace old and inefficient extensively around the world, particularly nation will probably never become the appliances with more efficient models. in arid regions such as the Middle East. primary technology, but it is an increas- Yet, agriculture accounts for approxi- California currently has 23 desalination ingly attractive option.” In some cases, mately 90 percent of all water use in plants in use for brackish water and three desalination can also be used with brackish California. Much of this water is pumped for ocean water. A major facility open- inland water supplies, which are relatively out of the ground from aquifers and ing in late 2015 in Carlsbad will be the common in the Southwest. Yet, as Keith underground basins—and these supplies largest plant constructed in the U.S. and London, president and CEO of Kennedy/ are also heavily depleted. In many cases, is expected to supply San Diego with 50 Jenks Consultants explains, highly efficient these sources have been drained to the million gallons of water daily. Richard water management systems are needed to point where subsurface spaces have receded Mills, chief of the Water Recycling and realize the full benefits of desalination. “We by 30 feet or more, rendering the aquifer Desalination Section at the California are seeing agencies wringing out inefficien- unusable in the future. “Once they reach Department of Water Resources, says that cies and managing their demands better, the point of collapse, and there is severe desalination currently pres- but it is an ongoing process,” damage to the groundwater basin, you ents three major challenges: he says. have lost all ability to use it in the future,” high energy input required An approach that almost explains Rodrigo. for the desalination process, everyone agrees is critical is Meanwhile, Bennett says, farmers have the impact on sea life during water reclamation, through instituted some effective conservation meth- water intake and brine dis- both direct and indirect ods, but there’s a need for more technologi- posal. Unfortunately, “There potable use. Although some cally advanced systems that rely on sensors have been no breakthroughs, treated wastewater has been and iPads to deliver the right amount of but a lot of things have been used for years to water crops water for crops. These systems can reduce analyzed and tested that and golf courses, there is water usage by 25 percent or more. could change the picture,” “Desalination more widespread use of However, even if all these issues were he says. will probably filtering and treatment sys- addressed, California still wouldn’t have The high cost of desalina- never become tems, and the technology is enough water to go around during drought tion is also an obstacle. The becoming more affordable periods. Moreover, other areas of the South- Carlsbad Poseidon Desalina- the primary and efficient. “By advanc- west would continue to feel the pressure of tion Project will cost more technology, ing treatment levels, we limited water supplies. At present, Colorado than $1 billion. But, “As but it is an can begin to use reclaimed River Basin reservoirs are low due to below water costs rise and water increasingly water for drinking. Instead average snowpack in the Rocky Mountains, becomes increasingly scarce, of taking a one-and-done while desert cities such as Las Vegas and the economics look better,” attractive approach, it can be used Phoenix continue to grow. As Bennett Orth says. Particularly in option.” multiple times through the says: “We need to make some significant California—and especially MIKE ORTH same distribution system,” changes.” during a drought—there is a BLACK & VEATCH Bennett says.
20 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 High Performance Project Delivery
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“ProjectWise gives us a centralized environment for sharing information – allowing the design and permitting teams to quickly and confi dently respond to requests and direction.” Reduce Project Delivery Risk – Mark Williams, Senior Vice President with ProjectWise® Tetra Tech, Inc. Improve the accuracy, reliability, and integrity of design and construction documentation in a controlled, collaborative environment. Eliminate redesigns and reduce the risk of error. Discover how ProjectWise’s industry proven project delivery capabilities will help your team make great decisions, effectively use resources, increase productivity, and improve performance.
www.bentley.com/ProjectWise
© 2015 Bentley Systems, Incorporated. Bentley, the “B” Bentley logo, and ProjectWise are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. Other brands and product names are trademarks of their respective owners. The Orange County Groundwater Replenishment System in Fountain Valley, Calif., designed by CDM Direct potable methods typically take Smith, shows how engineering innovation can help address drought-related water supply issues. The place on the same or nearby water treat- system is one of the world’s largest facilities for transforming wastewater, previously discarded into ment system, while indirect potable meth- the ocean, into enough premium drinking water that serves more than 500,000 residents a year. The ods involve the discharge of treated waste- project received the 2009 Engineering Excellence Awards’ Grand Conceptor Award as the year’s most water into a river, lake or aquifer, allowing outstanding engineering achievement. nature to purify it further. Mills says that California reused 669,000 acre-feet of water in 2009, but the figure is expected to rise to 1 million acre-feet by 2020 and 1.3 million acre-feet by 2030. The state offers local agencies loans and incentives to move forward with water reuse projects. An advantage of indirect potable, Rodrigo says, is that during wet periods water can be deposited, injected or even diverted into aquifers and groundwater basins, and water from reservoirs and other sources can instead be used. During dry years, the water can be drawn out. Remov- ing concrete from the floor of flood control channels and creating a “soft bottom” also allows water to soak into the ground. “A to purchase water from new suppliers. In conjunctive-use approach—essentially the case of agricultural interests, the cost groundwater banking—can provide much can hit $700 per acre-foot, compared with greater flexibility and prevent underwater a near zero cost basis in the past. In the basins from collapsing,” Rodrigo says. end, three critical needs exist, according to Black & Veatch experts: to strengthen the A New Era Emerges management of water demand, develop Rodrigo and others agree that the era of more stable water sources and devise better building new dams and reservoirs is over. rate structures. “We may see a few new reservoirs built, “Watersheds do not follow geopoliti- particularly in Texas, but the political cal boundaries. We can engineer systems climate in California makes them more Above: The Donner Summit Wastewater Treat- that follow geopolitical boundaries, but difficult.” Ultimately, he says, “We ment Plant, designed by Stantec, uses tertiary then we are at odds with nature,” Rodrigo need a combination of technologies and treatment with membrane bioreactors to filter explains. In the future, “We may see the approaches used together. We need to and treat wastewater discharged into the South emergence of watershed agencies that move toward a One Water approach where Yuba River. Below: The Silicon Valley Advanced manage multiple communities and oversee everything is viewed as part of a single sys- Water Purification Center, located in northern the entire watershed, including water sup- tem.” Mary Lou Cotton, a water resources San José, uses microfiltration, reverse osmosis ply, waste treatment, watershed and envi- expert at Kennedy/Jenks, adds, “The good and ultraviolet light to purify wastewater for ronmental issues. We need to see greater news is that the water is readily available. industrial and agricultural uses. cooperation and integration so that we’re We just need to build able to manage water in the most efficient the infrastructure to cap- way possible.” ture and manage it.” London views the Great Drought as But this will also both a challenge and an opportunity. require changes in the Society and public officials must reassess way counties, cities past practices and take a more holistic and agencies approach approach to urban planning and water water management. For management, and the engineering indus- now, a huge problem try must deliver the technical knowledge is that conservation and skills to address important problems. efforts typically result “Droughts come and go,” he says, “but in higher water rates effective long-term solutions can help us for consumers, prompt- manage water without experiencing peri- ing conflict in agency odic crises.” ■ agendas. Moreover, in this changing environ- Samuel Greengard is a technology writer ment, utilities now need based in West Linn, Ore.
22 ENGINEERING INC. SEPTEMBER / OCTOBER 2015
THE THREAT OF INTERNATIONAL CORRUPTION
24 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 By Gerry Donohue orruption in overseas markets is endemic. Cases prosecuted under the Foreign Corrupt Practices Act (FCPA) by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have surged in recent years, with fines in 2014 totaling $1.56 billion and prison sentences for corner-office offenders becoming more common. Other nations have also begun to Cvigorously enforce their own anti-corruption laws. Engineering firms can be especially Defining Corrupt Practices vulnerable to corruption cases because the President Jimmy Carter signed the FCPA FCPA and similar laws in other countries into law in 1977 following a rash of high- focus broadly on illicit interactions with profile bribery scandals involving major government officials. Firms with interna- U.S. corporations, including Lockheed and tional projects often work closely with for- Chiquita. The law makes it illegal for U.S. eign officials, whether to win a contract bid companies or foreign companies trading G or secure a permit. International engineer- securities in the United States, including ing work is also often performed by teams their employees or their agents, to make that include firms from local nations, which payments of any kind to foreign govern- raises the issue that different cultures can ment officials to help obtain or retain have differing perspectives on what consti- business. tutes corruption. The U.S. was the first industrialized “Many of the largest enforcement cases country to make corruption a crime under the FCPA have been in engineering through the passage of the FCPA, says and construction,” says Mike Koehler, who Stanley Consultants Chairman Gregs is an assistant professor at Southern Illinois Thomopulos. “This Act has done much in University School of Law and publishes the preventing U.S. companies from partici- blog FCPAProfessor.com. “Seven of the top pating in corruption in the international 10 FCPA fines had links to the sector.” market.” In recent years, many firms operating Both the DOJ and the SEC enforce the overseas have developed comprehensive FCPA. The SEC is responsible for the com- Anti-Bribery and Corruption (ABC) pro- panies it regulates, and the DOJ enforces grams because they have learned that the the law for all the rest. consequences of slipping up are huge—and In the early years, the DOJ and SEC not just in terms of fines and jail sentences. brought only a handful of cases each year— “Everyone accepts that a company will in some years, one or the other brought face tort liability, contract disputes or none—but in the past 10 years, the num- other legal claims from time to time,” says ber of corporate and individual cases has Koehler. “But run afoul of the FCPA and jumped dramatically. In 2014, for example, you are immediately branded as a corrupt the two agencies pursued more than two
JAMES LAURITZ/GETTY IMAGES company.” dozen enforcement actions combined, and
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 25 at the end of the year, the French power least as the West defines it—is accountant, lawyer, contrac- company Alstom paid the largest-ever common in many markets. tor or even subsidiary. In FCPA fine: $772 million for bribing offi- “There are areas of the most cases, there is nothing cials in Indonesia, Saudi Arabia, Egypt and world where corruption is untoward about the arrange- the Bahamas. part of the cultural fabric,” ment; in others, the TPI role In 2010, the United Kingdom instituted says Nick Masucci, chair- is more nefarious. the Bribery Act of 2010, under which any man of Louis Berger, which Koehler estimates that individual or company with links to the does work in South America, “between 80 and 90 percent United Kingdom can be prosecuted for cor- Africa, Europe and Asia. “If of all FCPA actions are due rupt practices with foreign officials. you are in those markets, “There needs to either in whole or in part to “The U.K. law is more stringent than the you need to enhance com- be zero tolerance TPIs.” U.S. law and as a result has become the de pliance oversight because facto base for firms operating in interna- you are going to encounter for corruption, Internal Code of Conduct tional markets,” says David Nickols, who corruption.” and the best The realities of the interna- heads the London-based IT Power Group “In India, for example, the way to combat tional marketplace prompted and has served in high-level international only way to get a telephone corruption is a many firms doing overseas positions at Atkins, Black & Veatch and line is to pay off an official,” work to develop their own MWH Global. says Nickols. “If corruption is commitment at anti-corruption programs. The FCPA, for example, allows firms to such an integral part of their the highest levels Stanley Consultants—with give “grease payments” to foreign officials to normal life, it’s not hard to of management its decades of international expedite work they are bound to perform— make the leap to their profes- that they will not project success in countries as long as those payments are legal under sional life.” such as Liberia, Malaysia and local law—but the Bribery Act of 2010 The most common agent pay bribes to win the Philippines—created its doesn’t permit payments of any kind. for corruption in interna- a project.” own integrity management tional markets is the third- GREGS THOMOPULOS program many years ago. Culture of Corruption party intermediary (TPI), STANLEY CONSULTANTS Henry Marquard, vice One of the challenges for U.S. firms operat- which comes in many forms: president and corporate ing internationally is that corruption—at expediter, sales agent, joint venture partner, counsel at Stanley Consultants, realized
With ACEC’s Help, New FIDIC Guidelines Target Global Corruption dhering to its mis- tion and training. the major policy revision to projects, and for clients to sion of promoting Henry Marquard, vice presi- simplify its use by Member recognize those companies high standards of dent and corporate counsel at Firms who could either adapt that have developed a FIMS as ethics and integrity Stanley Consultants, notes that the anti-corruption guidelines “reliable providers” and conse- amongA all worldwide infra- several ACEC Member Firm or develop their own. quently warranting “preferen- structure development stake- leaders, in addition to mem- “For firms that have a tial treatment.” Padilla admits holders, the International Fed- bers of ACEC’s Legal Counsel high-level management com- that such a “white list” has eration of Consulting Engineers Forum, provided valuable input mitment to integrity and eth- not yet gained the anticipated (FIDIC) has established a new in the development of the new ics, FIMS has been helpful,” level of acceptance from many set of anti-corruption guide- FIDIC guidelines, which had Thomopulos says. clients, who argue such prac- lines to protect the essential been revised from a previous Jorge Diaz Padilla, CEO of tice would be “discriminatory” client-consultant relationship FIDIC anti-corruption policy. Mexico-based SYSTEC, and also on its own. from being tainted. “The previous guidelines were a former FIDIC president, said “It is FIDIC’s opinion that The FIDIC Integrity Man- developed by a lot of people FIMS is based on zero toler- ‘white lists’ of firms would agement System (FIMS) is from developing countries who ance toward bribery, extortion, be much more useful than a comprehensive guide for were trying to solve a problem coercion, fraud, collusion and the ‘black lists,’ which are FIDIC members who repre- that at its core originates from conflict of interest. “FIDIC’s currently utilized,” Padilla says. sent consulting engineering developing countries,” Mar- approach to fight corruption Marquard believes the new associations from 97 nations, quard says. and minimize integrity risks FIMS will eventually set a including ACEC in the U.S. Marquard became involved has been that of taking ‘pre- standard in the fight against FIMS establishes procedures in developing FIMS when his ventive actions,’” Padilla says. international corruption. for controlling and eliminating company chairman Gregs FIDIC also seeks to per- “This is a very, very good corruption by providing guid- Thomopulos was FIDIC suade multilateral develop- document and a good starting ance on leadership, involve- president from 2009-2011. ment banks to recognize FIMS point in what surely will be ment of staff, adoption of a It was during Thomopulos’ compliance as a consideration a long, tough fight against systems approach, documenta- term that FIDIC undertook for selection for bank-funded corruption,” he says.
26 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 delivering value
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ENGINEERING CONSULTING SERVICES GEOTECHNICAL CONSTRUCTION MATERIALS TESTING ENVIRONMENTAL FACILITIES www.ecslimited.com ™ that in writing an ethics engineering firms dealing it can be very difficult to lock them into manual, a major compo- with TPIs, T.Y. Lin Interna- a firm contract and a price that seems nent had to deal with the tional has its own cut-and- appropriate.” In that instance, he says, “my most vulnerable part of a dried solution. “Our policy preferred response is to walk away.” firm’s efforts in trying to is not to use TPIs. That’s adhere to anti-corruption the bottom line,” says Valle. Detection and Enforcement guidelines—foreign agents. “We don’t work with brokers Every firm has safeguards in place to catch “Our ethics policy has form or agents or anyone of that bad actors who are stealing from the com- contracts and minimum sort.” pany, but FCPA violations can be difficult standards for agreements “There are For companies without a for firms to detect. specifically with foreign areas of the blanket ban, there are several “In a lot of these cases, you have people agents,” Marquard says. “We indications that a TPI may who are often quite low on the corporate then police it closely through world where cause a problem. One of the ladder using corporate money—with no project audits to make sure corruption most common is that the kickbacks—to help the corporation,” says the agents are doing things is part of the agent was formerly a govern- Koehler. “They think they’re being a good exactly the way we want.” cultural fabric. ment official. employee.” In the wake of a number “If someone has to be on Valle says a centralized accounting of publicized legal proceed- If you are in your team in order for you to system, with all invoices coming into one ings involving the firm, those markets, win the job,” Masucci says, office, can eliminate a lot of potential Louis Berger embarked on you need “you need to be very careful loopholes. a three-year, $25 million to enhance that they don’t represent a To detect a bribe, according to the program to create a com- compliance risk.” accounting firm KPMG, firms should prehensive global ABC pro- compliance TPIs must be vetted very “look for insufficient or nonexistent gram. “We believe that what oversight because carefully, with their back- descriptions of the transaction, lack of we have now is, if not the you are going ground and resume checked proper support and specious business best program in the world, to encounter and researched to ensure rationales for the transaction. Special definitely in the top tier,” they are legitimate. Many attention should be paid to supplemental, Masucci says. corruption.” firms require that a senior modified, or last-issued invoices and pur- NICK MASUCCI A good ABC program LOUIS BERGER executive at the home office chase orders because many times a bribe is has three main components: make the final contracting solicited after the initial business dealing.” prevention, detection and decision, and some firms even Additionally, bribes may be disguised as enforcement. require TPIs to participate in their compli- special payments, business introduction Of the three, prevention is the most ance training program. fees, rebates, inspection fees, charitable important, and a corporate commitment Unfortunately, says Nickols, it’s not contributions, complex financing terms or to ethical behavior is its most critical ele- always that simple. “In some countries, even currency exchange calculations. ment. “You have to start with the leader- ship,” says Nickols. “If the culture at the top is not to worry too much about cor- Survey of U.S. Businesses Operating Internationally ruption, then your people won’t.” Do you anticipate the bribery and corruption risks to your company will increase, “We have a standard policy throughout remain the same or decrease over the next two to three years? the company that is founded on our cul- ture and values,” says Mariano Valle, senior Increase 51% vice president at T.Y. Lin International Remain the same 29% and director of the company’s Caribbean Decrease 10% and Latin American Division. “We expect ethical behavior from everybody within Don’t know/Not sure 10% our staff and from the companies we work with.” How effective do you believe your company’s protocols and procedures are for Louis Berger’s new 36-page Code of monitoring compliance after a relationship begins? Business Conduct details the firm’s expecta- Very Effective 9% tions of its employees and provides a blue- print for how to avoid and prevent corrupt Effective 24% practices. Additionally, it lays out a process Somewhat Effective 47% for employees who see corruption within Not Effective 13% the company to follow. All employees are required to be trained in the Code and to Not Answered 7% certify annually that they have read it. Source: Kroll/Compliance Week 2015 Anti-Bribery and Corruption Benchmarking Report of 250 companies When considering the vulnerability of in a wide variety of industries operating in foreign markets
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PaveXpressDesign.com In markets where firms have no choice but to make local disburse- ments in cash, says Masucci, SEI turns successful A/E “those need to executives into be reconciled immediately, “Run afoul forward-thinking and you must of the FCPA industry leaders. require receipts and you are for what the money was immediately SEI Class 22 begins September 2016. spent on.” branded as For details and registration, visit Ideally, if a corrupt the compli- company.” ance program sei.acec.org MIKE KOEHLER is in place and SOUTHERN ILLINOIS the detection UNIVERSITY SCHOOL OF LAW policies and “SEI was a high-water mark for me in my development personally procedures are and as an engineer.” properly designed, there would be no need to enforce the rules because no one would Paul Hirst break them. Caldwell Richards Sorensen SEI Class I But, says Koehler, “that’s not going to happen. You can be 99 percent successful, with proactive FCPA policies and proce- dures in which employees are trained and monitored, but you’re still going to have people do something wrong.” For such an eventuality, companies must have a process in place for determining that a violation has taken place, setting the appropriate punishment within the com- pany and self-reporting the incident to the appropriate enforcing government agency. Thomopulos notes that there’s still much to be done to combat corruption in the international marketplace. He pointed to how the World Bank has taken the lead with the other multilateral development banks in fighting corruption by debarring companies from participating in projects they finance. “Fortunately, this problem is not as prevalent with U.S. firms as it is with other countries that we compete against for international projects,” Thomopulos says. “There needs to be zero tolerance for corruption, and the best way to combat corruption is a commitment at the highest levels of management that they will not pay bribes to win a project.” ■
Gerry Donohue is ACEC’s senior communications writer. He can be reached at [email protected].
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For nearly 20 years, our team at Chartwell has not only done a great job of conducting our annual valuation, they have been our strategic partner as we grew our ESOP from inception in 1995 to the mature 100% ESOP ownership structure we enjoy today. Chartwell has consistently provided us with timely and valuable counsel regarding our options as our ESOP evolved, and helped us educate our employee owners along the way. Jon Carlson &(2²%UDXQ,QWHUWHF&RUSRUDWLRQ
UNCOMPROMISING VALUES INNOVATIVE SOLUTIONS PROVEN EXECUTION ADVERTISEMENT EMPLOYEE STOCK OWNERSHIP PLANS – THE PROS AND CONS dŚĞŶƵŵďĞƌŽĨ ŵƉůŽLJĞĞ^ƚŽĐŬKǁŶĞƌƐŚŝƉWůĂŶƐ; ^KWƐͿŚĂƐĞdžƉĂŶĚĞĚŐƌĞĂƚůLJƐŝŶĐĞƚŚĞLJ ǁĞƌĞĨŽƌŵĂůůLJĞƐƚĂďůŝƐŚĞĚĂƐƋƵĂůŝĮĞĚƌĞƟƌĞŵĞŶƚƉůĂŶƐŝŶƚŚĞh͘^͘ŝŶϭϵϳϰ͘dŽĚĂLJ͕ƚŚĞƌĞ ĂƌĞĂƉƉƌŽdžŝŵĂƚĞůLJϳ͕ϬϬϬĂĐƟǀĞƉůĂŶƐ͕ǁŝƚŚϭϯ͘ϱŵŝůůŝŽŶƉĂƌƟĐŝƉĂŶƚƐ͘ ^KWƐĂƌĞĨŽƵŶĚ ŝŶƉƵďůŝĐůLJƚƌĂĚĞĚĂŶĚĐůŽƐĞůLJŚĞůĚĐŽŵƉĂŶŝĞƐŽĨĞǀĞƌLJƐŝnjĞ͕ĂĐƌŽƐƐĞǀĞƌLJŝŶĚƵƐƚƌLJŽĨƚŚĞ ĞĐŽŶŽŵLJʹŝŶĨĂĐƚ͕ ^KWƐĂƌĞƉĂƌƟĐƵůĂƌůLJĐŽŵŵŽŶŝŶƚŚĞ ŝŶĚƵƐƚƌLJ͘/ƚŝƐŶŽƐƵƌƉƌŝƐĞǁŚLJ ƚŚŝƐƌĞƟƌĞŵĞŶƚƉůĂŶŚĂƐŐĂŝŶĞĚƉŽƉƵůĂƌŝƚLJĂŵŽŶŐďƵƐŝŶĞƐƐŽǁŶĞƌƐ͕ŵĂŶĂŐĞŵĞŶƚ͕ĂŶĚ ĞŵƉůŽLJĞĞƐ͘&ŽƌƐŚĂƌĞŚŽůĚĞƌƐ͕ ^KWƐĂƌĞĂǀĂůƵĂďůĞůŝƋƵŝĚŝƚLJŵĞĐŚĂŶŝƐŵƚŚĂƚŵŝŶŝŵŝnjĞƐ ďƵƐŝŶĞƐƐĚŝƐƌƵƉƟŽŶƐ͘&ŽƌĞŵƉůŽLJĞĞƐĂŶĚŵĂŶĂŐĞŵĞŶƚ͕ ^KWƉĂƌƟĐŝƉĂƟŽŶŝƐĂƌĞǁĂƌĚĨŽƌ LJĞĂƌƐŽĨĚĞĚŝĐĂƟŽŶĂŶĚŚĂƌĚǁŽƌŬĂŶĚĂŶŝŶĐĞŶƟǀĞĨŽƌĨƵƚƵƌĞďƵƐŝŶĞƐƐŐƌŽǁƚŚ͘&ƵƌƚŚĞƌ͕ ƚŚĞďĞŶĞĮƚƐŽĨ ^KWŽǁŶĞƌƐŚŝƉĐĂŶďĞĂĐĐŽŵƉůŝƐŚĞĚŽŶĂƚĂdžͲĂĚǀĂŶƚĂŐĞĚďĂƐŝƐ͘ WHAT IS AN ESOP? ĐŽŶĚŝƟŽŶƐĂƌĞŶĞŐŽƟĂƚĞĚƚŽĞŶƐƵƌĞĨĂŝƌŶĞƐƐƚŽƚŚĞ ^KWĂŶĚŝƚƐ An employee stock ownership plan allows employees to become ƉĂƌƟĐŝƉĂŶƚƐ͕ŝƚŝƐǁŝĚĞůLJƌĞĐŽŐŶŝnjĞĚƚŚĂƚĂŶ ^KWƚƌĂŶƐĂĐƟŽŶŚĂƐ ďĞŶĞĮĐŝĂů ŽǁŶĞƌƐ ŽĨ ƚŚĞ ƐƚŽĐŬ ŝŶ ƚŚĞŝƌ ĐŽŵƉĂŶLJ͘ ^KWƐ ĂƌĞ ĂŐƌĞĂƚĞƌĐĞƌƚĂŝŶƚLJŽĨĐůŽƐŝŶŐƚŚĂŶĂƐĂůĞƚŽĂƚŚŝƌĚͲƉĂƌƚLJ͘ ĚĞĮŶĞĚ ĐŽŶƚƌŝďƵƟŽŶ ƉůĂŶƐ ƚŚĂƚ ƉƌŝŵĂƌŝůLJ ŝŶǀĞƐƚ ŝŶ ĞŵƉůŽLJĞƌ ƐƚŽĐŬ͕ ĂŶĚ ĂƌĞ ŐŽǀĞƌŶĞĚ ďLJ ƚŚĞ ŵƉůŽLJĞĞ ZĞƟƌĞŵĞŶƚ /ŶĐŽŵĞ CONTINUITY OF GOVERNANCE ^ĞĐƵƌŝƚLJ Đƚ ; Z/^Ϳ ŽĨ ϭϵϳϰ͘ ^ŝŶĐĞ ƚŚĂƚ ŝŶŝƟĂů ůĞŐŝƐůĂƟŽŶ͕ DĞŵďĞƌƐ ŽĨ ŵĂŶĂŐĞŵĞŶƚ ƌĞƚĂŝŶ ƚŚĞŝƌ ƉŽƐŝƟŽŶƐ͕ ĂůůŽǁŝŶŐ ŽŶŐƌĞƐƐ ŚĂƐ ƉĂƐƐĞĚ Ă ŶƵŵďĞƌ ŽĨ ůĂǁƐ ƚŽ ĞŶĐŽƵƌĂŐĞ ďƵƐŝŶĞƐƐ ĨŽƌ Ă ƐŵŽŽƚŚ ƚƌĂŶƐŝƟŽŶ ǁŚĞŶ ĨŽƌŵŝŶŐ ĂŶ ^KW͘ ^ŚĂƌĞŚŽůĚĞƌ ŽǁŶĞƌƐƚŽĞƐƚĂďůŝƐŚ ^KWƐ͘dŚĞŝŶƚĞŶƚŽĨŽŶŐƌĞƐƐǁĂƐƚŽĐƌĞĂƚĞ ĐŽŶĮĚĞŶĐĞ ŝŶ ŵĂŶĂŐĞŵĞŶƚ͛Ɛ ĂďŝůŝƚLJ ƚŽ ŐƌŽǁ ƚŚĞ ďƵƐŝŶĞƐƐ ŝƐ ŽǁŶĞƌƐŚŝƉ ĂŶĚ ƌĞƟƌĞŵĞŶƚ ĂƐƐĞƚƐ ĨŽƌ ǁŽƌŬŝŶŐͲĐůĂƐƐ ŵĞƌŝĐĂŶƐ͕ ĐƌŝƟĐĂů ŝŶ ŽƌĚĞƌ ƚŽ ĐƌĞĂƚĞ ƚŚĞ ĐĂƐŚ ŇŽǁ ƚŽ ƉĂLJ Žī ĂĐƋƵŝƐŝƟŽŶ ĂŶĞīŽƌƚǁŚŝĐŚŚĂƐƉƌŽǀĞŶŚŝŐŚůLJƐƵĐĐĞƐƐĨƵůĨŽƌŵŽƌĞƚŚĂŶϰϬ ĚĞďƚ͘ ŶŽƚŚĞƌ ĂĚǀĂŶƚĂŐĞ ŽĨ Ă ƐŵŽŽƚŚ ƚƌĂŶƐŝƟŽŶ ŝƐ ƚŚĂƚ ůŽŶŐͲ LJĞĂƌƐ͘ ƚĞƌŵ ƐƵƉƉůŝĞƌ͕ ĚŝƐƚƌŝďƵƚŽƌ͕ ĂŶĚ ĐƵƐƚŽŵĞƌ ƌĞůĂƟŽŶƐŚŝƉƐ ƌĞŵĂŝŶ ƵŶŝŶƚĞƌƌƵƉƚĞĚ͘ ^KWƐĂƌĞƚƌƵƐƚƐƚŚĂƚĂĐƋƵŝƌĞͬŚŽůĚͬƐĞůůƚŚĞĐŽŵƉĂŶLJ͛ƐƐƚŽĐŬĨŽƌ ƚŚĞďĞŶĞĮƚŽĨƉĂƌƟĐŝƉĂŶƚƐŝŶƚŚĞ ^KW͕ƚŚĞĞŵƉůŽLJĞĞƐ͘dLJƉŝĐĂůůLJ͕ tŚŝůĞ ŽƚŚĞƌ Ğdžŝƚ ƐƚƌĂƚĞŐŝĞƐ ĐĂŶ ŚĂǀĞ Ă ŶĞŐĂƟǀĞ ŝŵƉĂĐƚ ŽŶ ƚŚĞ ĐŽŵƉĂŶLJ ďŽƌƌŽǁƐ ŵŽŶĞLJ ĨƌŽŵ ůĞŶĚĞƌƐ͕ ŝŶǀĞƐƚŽƌƐ͕ ĂŶĚͬŽƌ ĐŽŵƉĂŶLJĐƵůƚƵƌĞ͕ƚŚĞƚƌĂŶƐŝƟŽŶƚŽĞŵƉůŽLJĞĞŽǁŶĞƌƐŚŝƉĞŶƐƵƌĞƐ ƐĞůůŝŶŐ ƐŚĂƌĞŚŽůĚĞƌƐ͕ ĂŶĚ ƚŚĞŶ ůŽĂŶƐ ƚŚĞ ^KW ƚƌƵƐƚ ĨƵŶĚƐ ĨŽƌ ƚŚĞĐŽŵƉĂŶLJĐƵůƚƵƌĞƌĞŵĂŝŶƐŝŶƚĂĐƚŽƌĞǀĞŶƐƚƌĞŶŐƚŚĞŶƐ͕ĂƐƚŚĞ ƚŚĞƉƵƌƉŽƐĞŽĨĂĐƋƵŝƌŝŶŐƐŚĂƌĞƐ͘ƐƚŚĞ ^KWůŽĂŶŝƐƉĂŝĚĚŽǁŶ͕ ŝŶƚĞƌĞƐƚƐŽĨŽǁŶĞƌƐ͕ŵĂŶĂŐĞŵĞŶƚ͕ĂŶĚĞŵƉůŽLJĞĞƐĂƌĞĂůŝŐŶĞĚ͘ ƐŚĂƌĞƐĂƌĞĂůůŽĐĂƚĞĚƚŽĞŵƉůŽLJĞĞĂĐĐŽƵŶƚƐĂŶŶƵĂůůLJ͕ŐĞŶĞƌĂůůLJŝŶ ŽŶƚƌĂƌLJƚŽƉŽƉƵůĂƌďĞůŝĞĨ͕ĞŵƉůŽLJĞĞŽǁŶĞƌƐŚŝƉĚŽĞƐŶŽƚŵĞĂŶ ƉƌŽƉŽƌƟŽŶƚŽƚŚĞĞŵƉůŽLJĞĞ͛ƐĂŶŶƵĂůĐŽŵƉĞŶƐĂƟŽŶ͘ ŵƉůŽLJĞĞƐ ĞŵƉůŽLJĞĞƐ ďĞĐŽŵĞ ŵŽƌĞ ŝŶǀŽůǀĞĚ ŝŶ ĚĂLJͲƚŽͲĚĂLJ ŽƉĞƌĂƟŽŶƐ͕ ƚŚĞŶƌĞĐĞŝǀĞĐĂƐŚŝŶĞdžĐŚĂŶŐĞĨŽƌƚŚĞŝƌƐŚĂƌĞƐƵƉŽŶƌĞƟƌĞŵĞŶƚ͕ ŐŽǀĞƌŶĂŶĐĞ͕ Žƌ ƐƚƌĂƚĞŐŝĐ ĚŝƌĞĐƟŽŶ͘ dŚĞƌĞ ŝƐ ŶŽ ƌĞƋƵŝƌĞŵĞŶƚ ƚĞƌŵŝŶĂƟŽŶ͕ĚŝƐĂďŝůŝƚLJ͕ŽƌĚĞĂƚŚ͘ ƚŽ ƉƌŽǀŝĚĞ ĞŵƉůŽLJĞĞƐ ǁŝƚŚ ĮŶĂŶĐŝĂů Žƌ ƐƚƌĂƚĞŐŝĐ ŝŶĨŽƌŵĂƟŽŶ͘ ,ŽǁĞǀĞƌ͕ ^KWƉĂƌƟĐŝƉĂŶƚƐĂƌĞƉƌŽǀŝĚĞĚĂŶ ^KWƐƵŵŵĂƌLJƉůĂŶ AN EXIT STRATEGY ĚĞƐĐƌŝƉƟŽŶ ĂŶĚ ĂŶŶƵĂů ƐƚĂƚĞŵĞŶƚƐ ŽĨ ƚŚĞŝƌ ^KW ĂĐĐŽƵŶƚ͘ /Ŷ dŽĚĂLJ͕ ŵĂŶLJ ƉƌŝǀĂƚĞ ďƵƐŝŶĞƐƐ ŽǁŶĞƌƐ ƵƐĞ ^KWƐ ĂƐ ƚŚĞŝƌ Ğdžŝƚ ĐĞƌƚĂŝŶƐŝƚƵĂƟŽŶƐ͕ĞŵƉůŽLJĞĞƐĂƌĞƉƌŽǀŝĚĞĚǀŽƟŶŐƌŝŐŚƚƐ͕ŵĂŶLJ ƐƚƌĂƚĞŐLJ͘ ^KWƐ ĂƌĞ ĂŶ ĞdžĐĞůůĞŶƚ ƚŽŽů ĨŽƌ ƐƵĐĐĞƐƐŝŽŶ ƉůĂŶŶŝŶŐ͕ ŽĨǁŚŝĐŚĂƌĞƐƉĞĐŝĮĞĚŝŶƚŚĞƉůĂŶĚŽĐƵŵĞŶƚĨŽƌƚŚĞƉĂƌƟĐƵůĂƌ ďŽƚŚ ĨŽƌ ůŝƋƵŝĚŝƚLJ ĂŶĚ ƚƌĂŶƐŝƟŽŶ͘ /Ŷ ĂĚĚŝƟŽŶ ƚŽ ǀĂƌŝŽƵƐ ƚĂdž ^KWĐŽŵƉĂŶLJ͘ ďĞŶĞĮƚƐ͕ ^KWƐ ĂůƐŽ ĂůůŽǁ ďƵƐŝŶĞƐƐ ŽǁŶĞƌƐ ƚŽ ƌĞǁĂƌĚ ƚŚĞŝƌ ĞŵƉůŽLJĞĞƐĂŶĚŵĂŶĂŐĞƌƐǁŝƚŚĂƐƚĂŬĞŝŶƚŚĞďƵƐŝŶĞƐƐ͘ EMPLOYEE OWNERSHIP – EMPLOYEE BENEFITS ĞŝŶŐ ƉĂƌƚ ŽĨ ĂŶ ^KW ĐŽŵƉĂŶLJ ĐĂŶ ƉƌŽǀŝĚĞ ƵŶŝƋƵĞ ƌĞǁĂƌĚƐ FLEXIBLE TRANSACTION ĨŽƌĞŵƉůŽLJĞĞƐ͘WĂƌƟĐŝƉĂŶƚƐŝŶƚŚĞƉůĂŶĐĂŶƌĞĐĞŝǀĞƐŝŐŶŝĮĐĂŶƚ dŚĞ ŇĞdžŝďŝůŝƚLJ ŽĨ ^KW ƚƌĂŶƐĂĐƟŽŶƐ ĂůůŽǁ ŽǁŶĞƌƐ ƚŽ ǁŝƚŚĚƌĂǁ ƌĞƟƌĞŵĞŶƚ ďĞŶĞĮƚƐ Ăƚ ŶŽ ŵŽŶĞƚĂƌLJ ĐŽƐƚ ƚŽ ƚŚĞŵ͘ ZĞƐĞĂƌĐŚ ƐůŽǁůLJ ŽǀĞƌ ƟŵĞ Žƌ Ăůů Ăƚ ŽŶĐĞ͕ ĚĞƉĞŶĚŝŶŐ ƵƉŽŶ ƚŚĞŝƌ ŶĞĞĚƐ͘ ƐŚŽǁƐ ^KW ĐŽŵƉĂŶŝĞƐ ĂƌĞ ŵŽƌĞ ƉƌŽĚƵĐƟǀĞ͕ ĨĂƐƚĞƌ ŐƌŽǁŝŶŐ͕ KǁŶĞƌƐ ĐĂŶ ƐĞůů ĨƌŽŵ ϭй ƚŽ ϭϬϬй ŽĨ ƚŚĞŝƌ ƐƚŽĐŬ ƚŽ ƚŚĞ ŶĞǁůLJ ŵŽƌĞ ƉƌŽĮƚĂďůĞ ĂŶĚ ŚĂǀĞ ůŽǁĞƌ ƚƵƌŶŽǀĞƌ ʹ ďĞŶĞĮƚƐ ƚŚĂƚ ĐƌĞĂƚĞĚ ^KW͘ dŚŝƐ ŵĂŬĞƐ ŝƚ ƉŽƐƐŝďůĞ ĨŽƌ ĂŶ ŽǁŶĞƌ ƚŽ ƌĞŵĂŝŶ ĂĐĐƌƵĞƚŽĂůůƐƚĂŬĞŚŽůĚĞƌƐŝŶĐůƵĚŝŶŐƚŚĞƌĞƟƌĞŵĞŶƚĂĐĐŽƵŶƚƐŽĨ ĂĐƟǀĞ ŝŶ ƚŚĞ ďƵƐŝŶĞƐƐ ĞǀĞŶ ĂŌĞƌ ƐĞůůŝŶŐ Ăůů Žƌ ŵŽƐƚ ŽĨ ƚŚĞ ƚŚĞĞŵƉůŽLJĞĞͲŽǁŶĞƌƐ͘/ŶĂĚĚŝƟŽŶ͕ĂŶ ^KWŝƐĂŐƌĞĂƚǁĂLJƚŽ ĐŽŵƉĂŶLJ͘ ĞŶŚĂŶĐĞƚŚĞĐŽŵƉĂŶLJ͛ƐĂďŝůŝƚLJƚŽƌĞĐƌƵŝƚĂŶĚƌĞƚĂŝŶƚŽƉƚĂůĞŶƚ͘ /ŶĂĚĚŝƟŽŶƚŽŇĞdžŝďůĞƟŵŝŶŐ͕ƚŚĞ ^KWƚƌĂŶƐĂĐƟŽŶƉƌŽĐĞƐƐŽīĞƌƐ īĞĐƟǀĞĂŶĚŽŶŐŽŝŶŐĞŵƉůŽLJĞĞĐŽŵŵƵŶŝĐĂƟŽŶƐƚŽĞŶĐŽƵƌĂŐĞ ƐƵƉĞƌŝŽƌĐŽŶĮĚĞŶƟĂůŝƚLJƌĞůĂƟǀĞƚŽƚŚŝƌĚͲƉĂƌƚLJƐĂůĞƐ͘dŚĞƉƌŝǀĂƚĞ employees to think and act like owners is necessary in order to ^KW ƚƌĂŶƐĂĐƟŽŶ ĚŽĞƐ ŶŽƚ ƌĞƋƵŝƌĞ ĐŽŶĮĚĞŶƟĂů ŝŶĨŽƌŵĂƟŽŶ ƚŽ ŐĞŶĞƌĂƚĞƚŚĞƐĞďĞŶĞĮƚƐ͘ ďĞƐŚĂƌĞĚǁŝƚŚƉƌŽƐƉĞĐƟǀĞďƵLJĞƌƐ;ŽƚŚĞƌƚŚĂŶƚŚĞƉƌŽĨĞƐƐŝŽŶĂůƐ THE TAX ADVANTAGES ǁŽƌŬŝŶŐŽŶďĞŚĂůĨŽĨƚŚĞ ^KWͿ͕ǁŚŝĐŚĐŽƵůĚŚĂǀĞĂƐŝŐŶŝĮĐĂŶƚ dŚĞƚĂdžĂĚǀĂŶƚĂŐĞƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚ ^KWƐĐĂŶďĞƐŝŐŶŝĮĐĂŶƚĨŽƌ ĂĚǀĞƌƐĞŝŵƉĂĐƚŽŶƚŚĞďƵƐŝŶĞƐƐ͘tŚŝůĞƚƌĂŶƐĂĐƟŽŶƚĞƌŵƐĂŶĚ
͞KǀĞƌƚŚĞLJĞĂƌƐ͕ǁĞŚĂǀĞĨŽƵŶĚ ^KWƐƚŽďĞĂŐƌĞĂƚĮƚǁŝƚŚĂƌĐŚŝƚĞĐƚƵƌĞĂŶĚĞŶŐŝŶĞĞƌŝŶŐĮƌŵƐ͘dŚĞƐƚƌƵĐƚƵƌĞ ŝƐƉƌĞǀĂůĞŶƚƚŚƌŽƵŐŚŽƵƚƚŚĞŝŶĚƵƐƚƌLJ͕ďƵƚƉĂƌƟĐƵůĂƌůLJĂŵŽŶŐŵŝĚͲƐŝnjĞĚĮƌŵƐ͘DĂŶLJŚĂǀĞƵƟůŝnjĞĚ ^KWƐƚŽ ƉƌŽƉĞůƚŚĞŝƌŐƌŽǁƚŚ͕ƵƟůŝnjŝŶŐƚŚĞƚĂdžďĞŶĞĮƚƐƚŽĂĐƋƵŝƌĞƚĂůĞŶƚĂŶĚŵĂŝŶƚĂŝŶƐƚĂī͕ƌĞƐƵůƟŶŐŝŶĚLJŶĂŵŝĐǁŽƌŬ ĞŶǀŝƌŽŶŵĞŶƚƐĂŶĚƐŝŐŶŝĮĐĂŶƚĮŶĂŶĐŝĂůďĞŶĞĮƚƐĨŽƌĞŵƉůŽLJĞĞƐ͘/ŶĂĚĚŝƟŽŶ͕ ^KWƐĮƚǁĞůůǁŝƚŚƚŚĞĐŽŶĐĞƉƚŽĨ ďƵŝůĚŝŶŐĂůĞŐĂĐLJŽƌŐĂŶŝnjĂƟŽŶ͘/ŶĨĂĐƚ͕ĂŶƵŵďĞƌŽĨƚŚĞŵŽƐƚǁĞůůͲŬŶŽǁŶĂŶĚŽůĚĞƐƚĮƌŵƐŝŶƚŚĞĂƌĐŚŝƚĞĐƚƵƌĞ ĂŶĚĞŶŐŝŶĞĞƌŝŶŐŝŶĚƵƐƚƌLJŚĂǀĞƐƵĐĐĞƐƐĨƵůůLJƵƟůŝnjĞĚƚŚŝƐŽǁŶĞƌƐŚŝƉƐƚƌƵĐƚƵƌĞ͕ŝŶĐůƵĚŝŶŐůĂĐŬΘsĞĂƚĐŚ͕ƵƌŶƐΘ DĐŽŶŶĞůů͕'ĞŶƐůĞƌ͕,Ed͕ĂŶĚ^ds͕ƚŽŶĂŵĞĂĨĞǁ͘͟ͲŚƌŝƐ^ƚĂůŽĐŚ͕ŚĂƌƚǁĞůů&ŝŶĂŶĐŝĂůĚǀŝƐŽƌLJ ADVERTISEMENT
ESOP HISTORY EMPLOYEE RETIREMENT ~6,650 ESOPS ~7,000 ESOPS INCOME SECURITY ACT (ERISA) 6.3 MILLION PARTICIPANTS 13.5 MILLION PARTICIPANTS 1974 1996 2015
1950’s 1970’s 1990’s TODAY
1956 1974 1996 APPROXIMATELY 50% 1 ESOP ~200 ESOPS CONRGRESS PASSES OF ESOPS ARE S-CORPS UNDER 200 PARTICIPANTS 2,500 PARTICIPANTS LEGISLATION ALLOWING ESOP CONCEPT DEVELOPED ESOPS TO BE S-CORPS the selling shareholders AND for the company. For the selling tŚĞŶƵƟůŝnjŝŶŐĂŶ ^KWĂƐĂŶĞdžŝƚƐƚƌĂƚĞŐLJ͕ƚŚĞƉƌŝĐĞƚŚĂƚĂŶ ^KW ƐŚĂƌĞŚŽůĚĞƌƐ͕ ƚŚĞ ƉƌŝŵĂƌLJ ƚĂdž ďĞŶĞĮƚ ĐĂŶ ŽŶůLJ ďĞ ƌĞĂůŝnjĞĚ ŝĨ ĐĂŶŽīĞƌƉĞƌƐŚĂƌĞŝƐůŝŵŝƚĞĚƚŽƚŚĞĨĂŝƌŵĂƌŬĞƚǀĂůƵĞŽĨƚŚŽƐĞ ƚŚĞ ^KW ŝƐ ƉƵƌĐŚĂƐŝŶŐ ƐŚĂƌĞƐ ĨƌŽŵ Ă ĐŽƌƉŽƌĂƟŽŶ͕ ƚŚƌŽƵŐŚ ƐŚĂƌĞƐ͘dŚŝƐƉƌŝĐĞŵĂLJďĞůŽǁĞƌƚŚĂŶǁŚĂƚĐŽƵůĚďĞƉĂŝĚďLJĂ ƚŚĞ ƵƟůŝnjĂƟŽŶ ŽĨ ƐĞĐƟŽŶ ϭϬϰϮ ŽĨ ƚŚĞ /ŶƚĞƌŶĂů ZĞǀĞŶƵĞ ŽĚĞ͕ strategic buyer. ŽƚŚĞƌǁŝƐĞ ŬŶŽǁŶ ĂƐ Ă ͞ϭϬϰϮ ƌŽůůŽǀĞƌ͘͟ /Ŷ ƚŚŝƐ ĐŝƌĐƵŵƐƚĂŶĐĞ͕ KŶĐĞĂŶ ^KWŝƐĞƐƚĂďůŝƐŚĞĚ͕ƉƌŽƉĞƌĂĚŵŝŶŝƐƚƌĂƟŽŶŽĨƚŚĞƉůĂŶ ;ĂƐƐƵŵŝŶŐ ƚŚĞ ^KW ŽǁŶƐ ŵŽƌĞ ƚŚĂŶ ϯϬй ŽĨ ƚŚĞ ŽƵƚƐƚĂŶĚŝŶŐ ŝŶĐůƵĚĞƐ ƚŚŝƌĚ ƉĂƌƚLJ ĂĚŵŝŶŝƐƚƌĂƟŽŶ͕ ǀĂůƵĂƟŽŶ͕ ƚƌƵƐƚĞĞ͕ ůĞŐĂů ƐŚĂƌĞƐ ƉŽƐƚͲƚƌĂŶƐĂĐƟŽŶͿ͕ ƚŚĞ ƐĞůůŝŶŐ ƐŚĂƌĞŚŽůĚĞƌƐ ŚĂǀĞ ƚŚĞ costs. Business owners and management should be made aware ability to roll the proceeds from the sale of their shares into of ongoing plan costs in the feasibility phase of ESOP planning. ŽƚŚĞƌŝŶǀĞƐƚŵĞŶƚƐƚĂdžĨƌĞĞ͘dŚŝƐ͞ƌŽůůŽǀĞƌ͟ƐĞƌǀĞƐĂƐĂĚĞĨĞƌƌĂů /ĨƚŚĞĐĂƐŚŇŽǁĚĞĚŝĐĂƚĞĚƚŽƚŚĞ ^KWǁŝůůŐƌĞĂƚůLJůŝŵŝƚƚŚĞĐĂƐŚ of capital gains taxes, allowing the shareholder to defer paying ĂǀĂŝůĂďůĞƚŽƌĞŝŶǀĞƐƚŝŶƚŚĞďƵƐŝŶĞƐƐŽǀĞƌƚŚĞůŽŶŐͲƚĞƌŵ͕ĂŶ ^KW ƚŚĞƐĞƚĂdžĞƐƵŶƟůƵůƟŵĂƚĞůŝƋƵŝĚĂƟŽŶŽĨƚŚĞƌŽůůŽǀĞƌŝŶǀĞƐƚŵĞŶƚ ŝƐƵŶůŝŬĞůLJƚŽďĞĂŐŽŽĚĮƚ͘ ĂƐƐĞƚƐ͘,ŽǁĞǀĞƌ͕ƚŚĞƌĞĂƌĞůŝŵŝƚĂƟŽŶƐŽŶƚŚĞƌŽůůŽǀĞƌŝŶǀĞƐƚŵĞŶƚƐ ĂŶĚƚŚĞĂĚǀŝĐĞŽĨƐĞĂƐŽŶĞĚƚĂdžĂŶĚŝŶǀĞƐƚŵĞŶƚƉƌŽĨĞƐƐŝŽŶĂůƐŝƐ Long term planning for the sustainability of the ESOP and ĐƌŝƟĐĂůŝŶƚŚĞƵƟůŝnjĂƟŽŶŽĨƚŚŝƐƐƚƌĂƚĞŐLJ͘ ĐŽŵƉĂŶLJ ŝƐ ŽŶĞ ŽĨ ƚŚĞ ŵŽƐƚ ŝŵƉŽƌƚĂŶƚ ĐŽŶƐŝĚĞƌĂƟŽŶƐ ǁŚĞŶ ŝŵƉůĞŵĞŶƟŶŐ ĂŶ ^KW͘ dŚĞ ĐŽŵƉĂŶLJ ŚĂƐ ĂŶ ŽďůŝŐĂƟŽŶ ƚŽ dŚĞŐƌĞĂƚĞƌƚĂdžĂĚǀĂŶƚĂŐĞŝƐƚŽƚŚĞĐŽŵƉĂŶLJ͘&ŽƌĂůůĐŽŵƉĂŶŝĞƐ͕ ƌĞƉƵƌĐŚĂƐĞǀĞƐƚĞĚƐŚĂƌĞƐĨƌŽŵ ^KWƉĂƌƟĐŝƉĂŶƚƐǁŚŽƚĞƌŵŝŶĂƚĞ ƉĂLJŵĞŶƚƐŵĂĚĞƚŽƚŚĞ ^KWĂƌĞƚĂdžĚĞĚƵĐƟďůĞ͘/ŶƚŚĞĐĂƐĞŽĨ ĞŵƉůŽLJŵĞŶƚ͘dŚĞƌĞĨŽƌĞ͕ĐĂƌĞĨƵůĐĂƐŚŇŽǁƉůĂŶŶŝŶŐƐŚŽƵůĚƚĂŬĞ Ă ůĞǀĞƌĂŐĞĚ ^KW͕ƉĂLJŵĞŶƚƐ ĂƌĞ ŵĂĚĞ ƚŽ ƚŚĞ ^KW ƚŽ ƐĂƟƐĨLJ into account the funds necessary to meet ESOP repurchase ƚŚĞĚĞďƚŝŶĐƵƌƌĞĚĂƐƉĂƌƚŽĨƚŚĞƚƌĂŶƐĂĐƟŽŶ͘dŚŝƐŵĞĂŶƐďŽƚŚ ŽďůŝŐĂƟŽŶƐ͘tŝƚŚŽƵƚĂĚĞƋƵĂƚĞƉůĂŶŶŝŶŐ͕ƌĞƉƵƌĐŚĂƐĞŽďůŝŐĂƟŽŶƐ the principal and interest payments made to a bank or selling ĐĂŶ ĐŽŵƉĞƚĞ ǁŝƚŚ ŽƚŚĞƌ ĐĂƉŝƚĂů ŶĞĞĚƐ͕ ƚŚĞƌĞďLJ ůŝŵŝƟŶŐ ƚŚĞ ƐŚĂƌĞŚŽůĚĞƌƉƌŽǀŝĚĞĂƚĂdžĚĞĚƵĐƟŽŶƚŽƚŚĞĐŽƌƉŽƌĂƟŽŶ͘ ŐƌŽǁƚŚĂŶĚƉŽƚĞŶƟĂůůLJƚŚĞǀŝĂďŝůŝƚLJŽĨƚŚĞĐŽŵƉĂŶLJ͘ Furthermore, because the ESOP is a tax exempt trust, if the ESOP dŚĞ ^KW ŽŶůLJ ƉƌŽǀŝĚĞƐ ďĞŶĞĮƚƐ ƚŽ ƚŚĞ ƉĂƌƟĐŝƉĂŶƚƐ ŝĨ ƚŚĞ ŚŽůĚƐƐŚĂƌĞƐŝŶĂŶ^ĐŽƌƉŽƌĂƟŽŶ͕ƚŚĞĞĂƌŶŝŶŐƐĂƩƌŝďƵƚĂďůĞƚŽƚŚĞ ƵŶĚĞƌůLJŝŶŐƐŚĂƌĞƐĂƌĞĚĞƚĞƌŵŝŶĞĚƚŽŚĂǀĞǀĂůƵĞ͘dŚĞƌĞĨŽƌĞ͕ŐŽŽĚ ^KWŽǁŶĞĚƐŚĂƌĞƐĂƌĞŶŽƚƚĂdžĂďůĞ͘dŚĞ ^KWŵƵƐƚƌĞĐĞŝǀĞŝƚƐ ŵĂŶĂŐĞŵĞŶƚĂŶĚŽƉĞƌĂƟŽŶŽĨƚŚĞďƵƐŝŶĞƐƐŝƐĐƌŝƟĐĂůƚŽĐƌĞĂƟŶŐ ƉŽƌƟŽŶŽĨĂŶLJƚĂdžĚŝƐƚƌŝďƵƟŽŶƐŵĂĚĞƚŽƐĂƟƐĨLJƚŚĞƚĂdžŽďůŝŐĂƟŽŶƐ ĂƐƵĐĐĞƐƐĨƵů ^KWĐŽŵƉĂŶLJ͘dŚĞĨĂŝůƵƌĞŽĨĂŶ ^KWĐŽŵƉĂŶLJĐĂŶ ŽĨĂŶLJŶŽŶͲ ^KWƚĂdžƐŚĂƌĞŚŽůĚĞƌƐ͘,ŽǁĞǀĞƌ͕ƚŚĞ ^KWŐĞƚƐƚŽ ƌĞƐƵůƚŝŶƚŚĞĞŵƉůŽLJĞĞƐůŽƐŝŶŐƚŚĞŝƌũŽďƐĂƐǁĞůůĂƐĂŶLJǀĂůƵĞƚŚĂƚ ŬĞĞƉŝƚƐƉŽƌƟŽŶŽĨƚŚĞƚĂdžĚŝƐƚƌŝďƵƟŽŶƚŽƐĂƟƐĨLJĚĞďƚƉĂLJŵĞŶƚƐ ŵĂLJŚĂǀĞĂĐĐƌƵĞĚŝŶƚŚĞŝƌ ^KWĂĐĐŽƵŶƚƐ͘&ŽƌƚŚŝƐƌĞĂƐŽŶ͕ŝƚŝƐ Žƌ ƌĞƉƵƌĐŚĂƐĞƐ ŽĨ ƉĂƌƟĐŝƉĂŶƚ ƐŚĂƌĞƐ͘ dĂŬĞŶ ƚŽ ŝƚƐ ĞdžƚƌĞŵĞ͕ ŝĨ ǁŝĚĞůLJƌĞĐŽŵŵĞŶĚĞĚƚŚĂƚĐŽŵƉĂŶŝĞƐŽīĞƌƌĞƟƌĞŵĞŶƚďĞŶĞĮƚƐ ƚŚĞ ^KWŽǁŶƐϭϬϬйŽĨƚŚĞ^ĐŽƌƉŽƌĂƟŽŶƐŚĂƌĞƐ͕ƚŚĞĐŽŵƉĂŶLJ ŝŶĂĚĚŝƟŽŶƚŽƚŚĞ ^KW͘ůĂƌŐĞƉĞƌĐĞŶƚĂŐĞŽĨĐŽŵƉĂŶŝĞƐƚŚĂƚ ĐĂŶĨŽƌŐŽƚĂdžĚŝƐƚƌŝďƵƟŽŶƐĂŶĚƌĞƚĂŝŶƚŚĞĐĂƐŚŝŶƚŚĞĐŽŵƉĂŶLJ ŚĂǀĞĂŶ ^KWĂůƐŽŵĂŝŶƚĂŝŶĂϰϬϭ;ŬͿŽƌƉƌŽĮƚƐŚĂƌŝŶŐƉůĂŶ͘ ƚŽƌĞŝŶǀĞƐƚŝŶƚŚĞďƵƐŝŶĞƐƐ͘KǀĞƌƟŵĞ͕ƚŚŝƐĞŶŚĂŶĐĞĚĐĂƐŚŇŽǁ ĐĂŶƉƌŽǀŝĚĞĂĐŽŵƉĂŶLJǁŝƚŚĂƐŝŐŶŝĮĐĂŶƚĐŽŵƉĞƟƟǀĞĂĚǀĂŶƚĂŐĞ͕ CONCLUSION ĂůůŽǁŝŶŐ ĨŽƌ ĂĐĐĞůĞƌĂƚĞĚ ƌĞĚƵĐƟŽŶ ŽĨ ĚĞďƚ͕ ŐƌĞĂƚĞƌ ĐĂƉŝƚĂů dŚĞďĞŶĞĮƚƐŽĨĂŶ ^KWĐĂŶďĞƐŝŐŶŝĮĐĂŶƚĨŽƌƐĞůůŝŶŐƐŚĂƌĞŚŽůĚĞƌƐ͕ ŝŶǀĞƐƚŵĞŶƚͬĂĐƋƵŝƐŝƟŽŶƐ͕ĂŶĚĞŶŚĂŶĐĞĚĞŵƉůŽLJĞĞďĞŶĞĮƚƐ͘ ƚŚĞ ŵĂŶĂŐĞŵĞŶƚ ƚĞĂŵ͕ ĂŶĚ ƚŚĞ ĞŵƉůŽLJĞĞƐ͘ ,ŽǁĞǀĞƌ͕ ƚŚĞ tŚŝůĞƚŚĞƌĞĂƌĞŵĂŶLJĐŽŶƐŝĚĞƌĂƟŽŶƐĂďƵƐŝŶĞƐƐŽǁŶĞƌŵƵƐƚƚĂŬĞ ĨĞĚĞƌĂůƌĞŐƵůĂƟŽŶƐŐŽǀĞƌŶŝŶŐ ^KWƐĂƌĞĐŽŵƉůĞdžĂŶĚƚŚĞĐŽƐƚŽĨ into account before choosing to sell a business to an ESOP, it is establishing and maintaining a plan may be greater than other ƐĂĨĞƚŽƐĂLJƚŚĞƚĂdžĂĚǀĂŶƚĂŐĞƐĂŶĚĂƐƐŽĐŝĂƚĞĚĞŶŚĂŶĐĞŵĞŶƚŽĨ ƚLJƉĞƐŽĨƌĞƟƌĞŵĞŶƚƉůĂŶƐ͘ƐƐƵĐŚ͕ŝƚŝƐĐƌŝƟĐĂůƚŽĐŽŶƐƵůƚǁŝƚŚ ĐĂƐŚŇŽǁŽĨĂŶ ^KWŽǁŶĞĚĐŽŵƉĂŶLJĂƌĞĐŽŵƉĞůůŝŶŐ͘ ĂĚǀŝƐŽƌƐ ǁŚŽ ĂƌĞ ŬŶŽǁůĞĚŐĞĂďůĞ ĂďŽƵƚ ƚŚĞ ůĞŐĂů͕ ĂĐĐŽƵŶƟŶŐ͕ ĂŶĚ ĂĚŵŝŶŝƐƚƌĂƟǀĞ ŝƐƐƵĞƐ ƵŶŝƋƵĞ ƚŽ ^KWƐ͘ ƐƚĂďůŝƐŚŝŶŐ ĂŶĚ THE DISADVANTAGES ĂĚŵŝŶŝƐƚĞƌŝŶŐĂŶ ^KWĐĂŶďĞĐŽŵƉůŝĐĂƚĞĚ͘,ŽǁĞǀĞƌ͕ǁŝƚŚĂŶ tŚŝůĞƚŚĞĂĚǀĂŶƚĂŐĞƐŽĨ ^KWƐĂƌĞŶƵŵĞƌŽƵƐ͕ŝƚŝƐŝŵƉŽƌƚĂŶƚƚŽ ŽŶŐŽŝŶŐ ĨŽĐƵƐ ŽŶ ĞĚƵĐĂƟŶŐ ƉĂƌƟĐŝƉĂŶƚƐ ĂŶĚ ŐƵŝĚĂŶĐĞ ĨƌŽŵ ƵŶĚĞƌƐƚĂŶĚƚŚĂƚĂŶ ^KWŝƐŶŽƚĂŐŽŽĚĮƚĨŽƌĞǀĞƌLJĐŽŵƉĂŶLJŽƌ ƐĞĂƐŽŶĞĚ ƉƌŽĨĞƐƐŝŽŶĂůƐ͕ ƚŚĞ ďĞŶĞĮƚƐ ŽĨ ĂŶ ^KW ŶŽƌŵĂůůLJ ĨĂƌ ƐŝƚƵĂƟŽŶ͘'ŽŽĚĐĂŶĚŝĚĂƚĞƐĨŽƌĂŶ ^KWŚĂǀĞƐƚƌŽŶŐŵĂŶĂŐĞŵĞŶƚ ŽƵƚǁĞŝŐŚƚŚĞƐĞĐŽŵƉůĞdžŝƟĞƐ͘ ƚĞĂŵƐĂŶĚŐĞŶĞƌĂůůLJƉƌŽĚƵĐĞĐŽŶƐŝƐƚĞŶƚĂŶĚƉƌĞĚŝĐƚĂďůĞĮŶĂŶĐŝĂů &ŽƌŵŽƌĞŝŶĨŽƌŵĂƟŽŶ͕ƉůĞĂƐĞĐŽŶƚĂĐƚ͗ ƌĞƐƵůƚƐ͘ /Ŷ ĂĚĚŝƟŽŶ͕ ^KWƐ Įƚ ďĞƐƚ ǁŝƚŚ ƐĞůůŝŶŐ ƐŚĂƌĞŚŽůĚĞƌƐ Chris Staloch, ASAͮDĂŶĂŐŝŶŐŝƌĞĐƚŽƌ͕ WƌĂĐƟĐĞ>ĞĂĚĞƌ ŝŶƚĞƌĞƐƚĞĚŝŶƉƌĞƐĞƌǀŝŶŐƚŚĞůĞŐĂĐLJŽĨƚŚĞĐŽŵƉĂŶLJĂŶĚƌĞǁĂƌĚŝŶŐ ĐŚƌŝƐ͘ƐƚĂůŽĐŚΛĐŚĂƌƚǁĞůůĨĂ͘ĐŽŵͮϲϭϮͲϮϯϬͲϯϭϭϭ management and employees with ownership. While ESOPs can ƉĂLJ Ă ĐŽŵƉĞƟƟǀĞ ƉƌŝĐĞ ƚŽ ƚŚĞ ƐĞůůŝŶŐ ƐŚĂƌĞŚŽůĚĞƌƐ͕ ƚŚĞ ^KW ĐĂŶŶŽƚƉĂLJĂƐƚƌĂƚĞŐŝĐƉƌĞŵŝƵŵĨŽƌƚŚĞƐŚĂƌĞƐŝƚĂĐƋƵŝƌĞƐ͘
džĞĐƵƟǀĞŽŵƉĞŶƐĂƟŽŶ ŶŶƵĂů ^KWsĂůƵĂƟŽŶ ŶŶƵĂů ^KWsĂůƵĂƟŽŶ ŽŶƐƵůƟŶŐ ^ĂůĞŽĨŽŵƉĂŶLJƚŽ ^KW Trustee Advisor Trustee Advisor Corporate Advisor Corporate Advisor
ƵLJͲƐŝĚĞdƌĂŶƐĂĐƟŽŶ ŶŶƵĂů ^KWsĂůƵĂƟŽŶ ŽŶƐƵůƟŶŐ ^ƵƐƚĂŝŶĂďŝůŝƚLJŽŶƐƵůƟŶŐ ^ĂůĞŽĨŽŵƉĂŶLJƚŽ ^KW Trustee Advisor Trustee Advisor Trustee Advisor Corporate Advisor
UNCOMPROMISING VALUES INNOVATIVE SOLUTIONS PROVEN EXECUTION Corporate Social Responsibility LEADING THE WAY, LENDING A HAND
How Cardno’s employee- driven campaigns benefi t their communities By Calvin Hennick
ost mornings, Brian Reilly, a senior consultant in the Natural Resources and Health Sciences Division of the global engineering firm Cardno, sets out from his home office in Seal Harbor, Maine, and bikes the 27-mile Park Loop Road around Acadia National Park. MReilly used to cycle with his wife, Patti, on the crushed-rock carriage roads that crisscross the park, Cardno employee Brian traveling through idyllic forest, past peaceful ponds, Reilly trains for “Pedal for and under and over rustic stone bridges.>> Women in Science 300.”
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 35 Women in Science Reilly dreamed up the bike- ride fundraiser along with Wayne Kicklighter, a Cardno technical director who works from his home in West Vir- ginia, when they were on a rafting and canoeing trip in Zimbabwe last year. They were discussing where to take their next vacation together, and after the idea of a multi- stage bike ride came up, they decided the ride should be for charity. At that point, raising money to support women in science was a natural choice. Patti Reilly was a Cardno ornithologist, and Kicklight- er’s wife is a biologist. “It felt right to support women in science,” Kick- lighter says. “It was definitely something that is important within Reilly’s family and within my family.” Cardno will match all funds The cause aligns with Card- raised by its employees no’s corporate values, as well. participating in “Pedal For Several years ago, the com- Women in Science 300.” pany launched its “Women in Cardno” program, aimed at providing networking Their relationship was cut tragically efforts—such as this bike ride—that and career development opportunities short in 2013 when Patti died in a car actively involve employees, as opposed to for women in the company. Already, the accident. “Patti enjoyed riding,” Reilly campaigns that merely require the com- program has resulted in a comprehensive recalls. “It was something we started pany to write a check. analysis of gender pay gaps within the doing together while dating and contin- A number of offices participate in company. ued throughout our marriage.” “Movember,” for example, in which Reilly and Kicklighter’s ride, so far, has Now, more than two years later, Reilly employees grow moustaches to raise around a dozen committed riders, and is using their shared interest in cycling awareness and money for men’s health another dozen are seriously consider- to honor his wife’s memory by raising issues during the month of November. ing participating. Cardno will match all funds for something else she was passion- Others take part in “Canstruction,” build- funds raised, and the money will go to ate about: encouraging women to pursue ing elaborate structures out of canned two American Association of University careers in science. goods, which are then donated to local Women science programs, as well as a The event, named “Pedal For Women food pantries. scholarship in memory of Patti Reilly. in Science 300,” will kick off on October “I think our employees genuinely want Patti Reilly frequently spoke to young 12 in Half Moon Bay, Calif., with Reilly to give back, and they care about the girls about career opportunities in the sci- and a group of riders embarking on a communities that they live in,” says Paul ences, Brian Reilly recalls. He notes that six-day, 350-mile ride to Santa Barbara to Gardiner, president o f Cardno’s Americas women continue to be underrepresented raise money for three charities; Cardno is region. “People get really passionate, and in science and engineering and says that matching all donations. they enjoy giving back to the community. he enjoys working with women because of The ride is the firm’s latest corporate It also helps us attract and retain the right the “different perspective” they can pro- social responsibility effort, but far from people. People who have that value—who vide. When the logo for the bike ride was its first. Worldwide, Cardno has 8,200 want to give back and do some good—are being created, for example, Reilly initially employees in more than 300 offices the type of people we want. And if we preferred the dynamic image of a woman (including 240 in the U.S.), and most can help enable that, it’s a good thing pedaling downhill. But a female colleague branches participate in several charitable because we end up with a much happier noted that women in science face an endeavors each year. The firm favors workforce.” “uphill ride” and suggested that the image
36 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 of a woman struggling around 300 employees in Although the program is more popular upward might be more about 20 of the company’s with men, the company playfully tells appropriate. “None of the U.S. offices took part, with women they should “feel free” to grow men on the phone had the firm matching donations facial hair during the month if they want thought of that,” Reilly at the top three branches. But to, says Kelly Johnson, a company spokes- says. Gardiner, who usually opts to woman who also works in the Portland Lori Stone, a Cardno rock a “handlebar” moustache office. Not surprisingly, most female scientist based in Okemos, for the month, tends to raise participants opt to raise money and aware- Mich., who is partici- considerably more than most ness instead. But the men seem to relish pating in the ride, says “People who of the other participants—he the opportunity to get a little scruffy for a she’s had a “pretty great” have that brought in around $7,000 good cause. experience as a woman of the Portland, Ore., office’s “I think it’s kind of an excuse for them working in the sciences. “I value—who $10,000 haul last year. to grow the moustaches,” Johnson says. was hired to the company want to give The handlebar mous- by a very strong, indepen- back and do tache—not so out-of-place in dent woman, and my role some good— the hipster haven of Portland, model in the company is but unusual for an engineer- a woman, too,” she says. are the type ing executive, nonetheless—is “Somehow, I’ve been able of people we a conversation starter, Gar- to find women in high want.” diner says. In addition to roles to look out for me PAUL GARDINER helping him raise money, the and guide me.” Stone says CARDNO facial hair gives him a reason she plans to tap into her to talk to men about the competitive nature and “out-raise every- importance of being screened for cancer. body” on the ride to help ensure that other Early detection is one reason he was able women have similar opportunities. to overcome his own illness, he notes. “It raises awareness,” Gardiner says. “I Men’s Health tell people, ‘You need to go and get things Clients who meet with Cardno male staff- checked out.’” ers in the days after Halloween might In the last few weeks of October, notice a bit of fuzz on their upper lips. Cardno tries to get as many employees as Paul Gardiner The engineers haven’t simply gotten lazy possible on board, with kickoff gather- and his son, Billy, about shaving. Instead, they’re getting ings themed around mustachioed TV and sport moustaches a start on the moustaches they’ll grow movie characters, such as Ron Burgundy for Movember. throughout November to raise awareness (played by Will Ferrell in the Anchorman and money for men’s health issues, such movies) and Tom Selleck’s Magnum, P.I. as prostate and testicular cancer. Gardiner first partici- pated in the program in 2007, when he was diag- nosed with colon cancer (he beat it and now has a clean bill of health). “The hair on my head was fall- ing out, but I figured I could grow hair on my face,” he says. The Movember move- ment began in 2003 in Australia—where Cardno is headquartered and where Gardiner is from— and Gardiner brought the fundraiser to Cardno’s Cardno participates in Movember, an event in which American offices when employees grow moustaches to raise awareness he took on his current and money for men’s health issues. role in 2012. Last year,
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 37 Canstruction projects.
Feeding the Hungry “We participate so that Tan Tran, an engineer at Cardno Haynes employees can give back to Whaley (a Cardno subsidiary located in the community and have similar type of planning and execution.” Houston), spends most of his days work- time to interact with each other outside In 2013, Tran’s team built a “Bridge to ing on mid- and high-rise buildings, such the work environment—and have fun,” End Hunger,” which won third place in as schools, hospitals and resi- Tran says. the Houston competition. The bridge’s dential towers. But every fall, While the event may be seven pillars were made of canned tuna, he devotes a fair amount of a good time, Tran says his with a bottled-water river running time to figuring out how to team takes its structures through the grass (green-topped ramen work with cans of tuna fish seriously, meeting biweekly noodle packages) below. Last year, the and Chef Boyardee. during the fall to discuss group constructed a ship, but even with Tran is chairperson of the designs. “We actually draw the help of clear tape and thin construc- Houston office’s community out the plans of where the tion boards to stabilize the vessel, part of committee, and the branch is cans should go and figure the structure collapsed before judging. one of several Cardno offices out how many cans of food All of that food adds up. The branch across the U.S. that partici- we’re going to need,” Tran typically budgets $5,000 or more for the pates in “Canstruction.” The “We have fun, says, adding that the process canned goods, all of which are donated to international charity hosts but we do good isn’t all that different from charity. competitions and exhibitions things for the designing a real building. “We have fun,” Tran says, “but we across the world that show- “You first have to know do good things for the community, as case structures made out of community, as what you plan to build, and well.” ■ canned food, which is then well.” then you need to figure out donated to hunger relief TAN TRAN what is needed and how it Calvin Hennick is a business, technology CARDNO HAYNES WHALEY organizations. comes together. It involves a and travel writer based in Milton, Mass.
38 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 TRANSPORTATION & INFRASTRUCTURE
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Affordable Care Act: Who It Helped and Hurt he Patient Protection and jected to cut Medicare spending by $802 billion from 2016-2025. Affordable Care Act (aka ACA The report also shows that “high-income surtaxes” that were imple- mented as Medicare taxes through the ACA will generate $346 or Obamacare) was signed into billion in additional government revenue. The net result is that the law on March 23, 2010. The ACA created a $1.148 trillion swing in Medicare financing over the first five years of the ACA have next decade. included a much-criticized The health insurance coverage expansions within the ACA were primarily financed through Medicare reimbursement cuts and website launch and multiple Supreme Court Medicare taxes. Understanding this vital economic link also pro- Tbattles, but the primary experience for most vides a window into how the ACA has affected primary health care Americans has simply been confusion. stakeholders, from federal and state governments to hospitals and The ACA doesn’t just affect hospitals, doctors employers. I assign a grade to how the ACA has impacted the various stake- and insurance companies; it impacts every holders. An “A” means it has been beneficial, and an “F” signifies a business in America, including architectural and disastrous result. engineering firms and the companies they serve. This review of the first five years of the ACA is Federal Government – Grade A+ The federal government was facing the financial tsunami of an intended to clear some of the fog and forecast aging baby boomer population, decreasing labor force participation, what the next five years might hold. and health care inflation within Medicare that consistently outpaced revenues and the economy. The ACA dramatically reduced pay- This June, the Congressional Budget Office (CBO) released ments to hospitals, skilled nursing facilities and home health care The Budgetary and Economic Effects of Repealing the Affordable Care providers; added new Medicare taxes; and linked the future funding Act, which includes the CBO’s latest scoring of the financial impact of Medicare to growth in the GDP. The near-term impact has been of the ACA. According to the report, “repealing the ACA would negative net hospital inflation in Medicare since 2008. increase federal budget deficits by $137 billion from 2016 to 2025.” The per beneficiary Medicare hospital insurance cost had reached The same report shows that the ACA has added $1.658 trillion in $5,179 in 2008 and was projected to reach $6,734 by 2016. The new spending. latest Medicare estimate is that the 2016 cost will be $4,992. How can a law add this much new spending and still decrease The dramatic Medicare financing improvement through the the deficit? Let’s say the ACA dug a hole of $1.658 trillion in new Medicare reimbursement reductions and new taxes included in the spending in the yard. According to the CBO, the total effect of the ACA have significantly improved the federal government’s finances. ACA is that there is no new hole in the yard but that there is actu- ally $137 billion in dirt, or dollars, left over. Here’s how the CBO State Governments – Grade B … so far gets there. The ACA’s most significant impact on states has been the estab- • The coverage expansion spending is offset by $502 billion in lishment of Exchanges. The Supreme Court overturned the ACA new taxes, fees and penalties that create revenue to help pay for provision that forced states to expand Medicaid and gave states the the ACA. power to determine whether or not to expand Medicaid eligibility • After accounting for the revenue sources, the net impact of the according to the ACA rules. Through the ACA, the federal govern- coverage expansion is a $1.156 trillion hole in the yard. ment covers 100 percent of the costs of Medicaid expansion for • The $1.156 trillion “hole” in the deficit is filled by spending cuts 2014 through 2016, with a scheduled reduction to 90 percent from and new taxes and fees that are unrelated to the ACA health cov- 2020 forward. In spite of this financial incentive, 21 states have still erage provisions. Medicare was the primary source of spending not expanded Medicaid eligibility. cuts and new taxes. Many of the states that have resisted expansion are concerned that • After filling the “hole” with Medicare savings, the surplus comes the federal government will not always honor its commitment to from new fees on health insurance companies, pharmaceutical fund its share of the expansion costs. manufacturers and medical device companies. The ACA requires funds from nonrelated sources to cover the Hospitals – Grade B cost of the coverage expansion. The combination of Medicare cuts Hospitals have faced financing cuts through the ACA and through and new Medicare taxes is $1.148 trillion in “dirt” to fill in the ACA sequestration. The gap between what Medicare and what private financial hole. Medicare reductions included in the ACA are pro- insurance pay for hospital services has spread. According to the
40 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 Guest Column
American Hospital Association, private insurance paid 44 percent The ACA underwriting rules eliminate industry factors and more for services in 2010 than Medicare. This gap swelled to 85 claims experience as elements of insurance rate determination. percent by 2012. These eliminations will potentially punish architects and engi- neers who have a younger workforce and better claims experi- Physicians – Grade A ence. These negatively impacted employers will likely look for The American Medical Association put its support behind the solutions outside the regulated market through options such ACA in exchange for a commitment that the Medicare Sustainable as an industry trust product or self-funding. Growth Rate (SGR) reimbursement formula would be repealed. SGR called for dramatic reductions in physician reimbursements Large Employers – Grade D based on the Balanced Budget Act of 1997 cuts. The cuts were Large employers are absorbing cost shifting from Medicare never implemented, but the threat was a problem. SGR was offi- reductions, coverage and eligibility mandates, and burden- cially repealed in April 2015. some administrative and regulatory requirements included in the ACA’s more than 20,000 pages of regulations. The Insured Americans – Grade C cost and administrative requirements have created skepticism The majority of Americans who had health insurance coverage among large employers. when the ACA passed have experienced little benefit. Pre-existing According to ACEC’s Engineering Business Index, 33 per- condition limitations have been outlawed but were already outlawed cent of Member Firm leaders said the ACA has resulted in in the case of insured individuals seeking renewals. Coverage for significantly higher “per insured employee costs” since 2010, dependent children was and 41 percent said they experienced “slightly higher costs.” extended to age 26, and Additionally, a survey by the International Foundation of annual plan maximums Employee Benefit Plans found that most employers hold nega- were eliminated. These tive views of the ACA. Although many employers are still features have benefited unsure of the true impact, 10.6 percent felt the law has had a many Americans. How- positive impact on their business while 54.1 percent believed ever, private health the ACA has had a negative impact. When asked about the insurance rates, required expected future impact, the number of employers with a nega- employee contributions, tive view grew to 66 percent. and plan design cost-shar- ing features, like deduct- A Peek at the Future ibles, have continued to The future of the health insurance marketplace will be greatly increase at significant influenced by large employer actions. The financing of the rates. There has also been American health care system is largely on the backs of large ever-increasing regulatory employers. Medicare has capped its inflation rate, but large complexity. employers enjoy no such luxury. The federal government’s driving force in health care Uninsured Americans – Grade B financing is keeping Medicare, Medicaid and Exchange bud- The elimination of pre-existing condition limitations and all gets in check as enrollment in all three programs expands dra- underwriting provisions has helped many Americans gain access matically over the next five years. The intensity of this focus to health insurance. The Medicaid eligibility expansion subsidies leaves little sensitivity to the cost and complexity plight of in the Exchange have helped make coverage affordable for mil- large employers. At some point large employers will no longer lions of Americans. A recent government report showed that 87 be willing to absorb, or pass along to their employees, cost percent of plan enrollees in the Exchange received a subsidy in increases that are multiple times higher than growth in wages 2014, and the average subsidy covered 72 percent of the total or the economy. premium. Rather than fighting against the government programs, the next five years will usher in a health care “missing link” in Small Employers – Grade C which private plan reimbursement and inflation rates are more Small employers, defined by the ACA as having fewer than 50 closely aligned with the government programs. full-time employees, are exempted from ACA coverage require- The question is whether market reforms will lead us down ments, but most have seen little benefit. The law’s underwriting the path or whether the private health insurance market will rules have compressed the premium rates between older and require regulatory intervention to initiate positive change. younger employees and employee groups. Employers with a Stay tuned … the large employer’s role in health care financ- younger population are subsidizing employers with older popu- ing is not going away. lations through the ACA’s underwriting provisions. The heavily regulated underwriting market extends to companies with fewer Pat Feyen is president of the ACEC Life/Health Trust. He can be than 100 full-time employees on January 1, 2016. reached at [email protected].
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 41 BOSTONBOSTON 20152015
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WHERE OVER 1,000 FEATURED SPEAKERS A/E INDUSTRY LEADERS Doris Kearns WILL MEET THIS FALL! Goodwin World- Renowned THE WESTIN COPLEY PLACE Author and Pulitzer Prize– www.westincopleyplaceboston.com Winning Located in the Back Bay area of Presidential Boston, close to Boston Common, Historian will Beacon Hill, Fenway Park, shopping address: “Leadership and entertainment. Lessons from Room Rate and Hotel Reservations the White ACEC’s room rates are $289.00 House” single/double. Upgraded Riverview rooms are available for a higher rate.
SOCIAL EVENTS
* Local Color Night Opening Reception - Welcome to Beantown - Featuring Boston’s Irish Rock Band, “The Gobshites” (Included in Your Registration) * Boston Tea Party Museum Tour & Reenactment * “Bottoms Up” at the Sam Adams Brewery * New England Whale Watch * Historic Tour of Concord & Lexington * Edward M. Kennedy Institute for the Senate and the John F. Kennedy Library Tour REGISTER NOW! www.acec.org CHANGE AND INNOVATION IN THE A/E INDUSTRY: PEOPLE AND PRACTICES THAT BUILD SUCCESS!
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Dr. Robert Risk Management … Workforce Ballard Challenges … Alternative Delivery World-Famous Systems … Leadership & Strategic Oceanic Planning … Market Challenges & Explorer and Opportunities … Technology & Discoverer of Innovation … Financing & Procurement the Titanic, will address: “New Age of Exploration” SESSION HIGHLIGHTS Ballard will also receive ACEC’s CEO Panel - Change and Innovation Distinguished in the A/E Industry Award of Merit. Stephen Hickox Chairman & CEO, CDM Smith Eric Keen Engineering President/Vice Chair, HDR Tom Scarangello Chairman/CEO, Thornton Tomasetti
CEO Panel - People & Practices that Build Success Lisa Brothers President/CEO, Nitsch Engineering Mike Carragher President, VHB Larry Smith President/CEO, Haley & Aldrich
... and more than 30 Advanced Business Management Sessions for CEOs, CIOs, CFOs, Emerging Leaders, and other Industry Professionals. Guest Column BY DOUGLAS REED
Successful Firm Growth Starts With Cultivating Leadership or most corporate leaders, A Bigger Firm Means More Leaders The key to a firm’s successful growth starts with growing its lead- growing their businesses is a ership. Successful firms are led by visionary and self-confident perilous challenge. The landscape leaders who value their staff, understand what the staff brings to is littered with the corpses the table and foster a staff’s professional growth. of once-successful firms that This can be particularly challenging in an engineering envi- ronment. Leaders typically began their careers as engineers and overextended or pursued badly worked their way up the corporate ladder. While many go to flawed growth strategies. business school to learn how to be more effective leaders, the vast F majority learn as they go, imitating their superiors, who them- There are two ways to grow selves are often not students of business science. This approach a firm: acquisitions and organic is limiting and doesn’t necessarily foster excellence; it requires growth. leaders to have natural leadership skills rather than providing an When looking to expand their ongoing opportunity to develop them. operations, many firms immediately For firms to truly thrive, corporate leaders must be able to seek out acquisitions. They often operate at the highest level of every aspect of firm management. look for targets that are located in Too many firms struggle because, while their leaders are excel- potentially lucrative geographic lent engineers, they have a difficult time handling balance sheets, markets or that have a specialty they developing marketing strategies or mentoring the next generation don’t already have. of leaders. An acquisition is risky since a firm All too often, when managers struggle with marketing or with is essentially purchasing intellectual managing their staff or clients, they are told that they just need to capital, as opposed to a manufactur- Douglas Reed work harder. Usually, though, it’s a matter of working smarter. If ing plant. Since these are people, not a firm’s leaders aren’t operating at a higher level than their com- machines, many acquisitions fail or underperform because firms petitors, how can that firm expect to succeed? are not ready for the “people adaptation” needed. According to Harvard Business Review, 70 to 90 percent of acquisitions fail, SWOT Your Staff to Uncover and the people factor is a major cause. Tomorrow’s Leaders Since the failure rate is so high, it is critical to first know It is not uncommon for savvy firm leaders to misread the business whether acquisition thoughts are obscuring larger problems. If a landscape. Many leaders are reading the tea leaves wrong, assum- firm cannot grow with its own resources, the red flag of failure is ing their people are smarter than the competition and that, as a huge. result, they will thrive in the recovering economy. A firm I worked at for more than a decade spent 15 years But how do they know their people are smarter? By gazing gyrating between 75 and 200 employees. Along the way, the upon the engineers and managers who sit outside their offices? firm acquired five additional firms as a growth solution. All of By reviewing the firm’s designs and reveling in their excellence? those acquisitions failed and harmed the firm’s reputation. Time By talking to clients and ascertaining that they are satisfied? You spent on “fire drills” encumbered resources that might have been can’t just declare your staff smarter or better than the competition applied elsewhere. For example, one acquired firm had many and expect that declaration to bring success. Decisions need to be design issues that were discovered following the acquisition. More based on data. than 1,000 hours were spent on damage control, and the liabil- The best way to derive that data is through a SWOT analysis— ity insurance policy was paid out to its limit. The root cause of a formal review that measures each leader’s and senior manager’s this was a poorly developed leadership team that was not patient strengths, weaknesses, opportunities and threats. Firm leaders enough to wait for a qualified acquisition candidate. are then able to make a realistic and objective assessment of the Firm leaders should always ask, “Has the firm been able firm’s ability to assimilate another firm and prosper or, if growth to grow consistently without acquisitions at a rate far greater is organic, to rapidly hire new employees and remain focused on than the local market?” If not, why hasn’t the firm been able to delivering services. achieve significant growth with the staff and skills it has? Iden- The methodology of a SWOT analysis is to populate the tables tify this barrier and overcome it before considering any kind of with an assessment of the firm’s key influential leaders and man- acquisition. agers, not of their technical skills. In comparing leaders to your
44 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 Guest Column ANDY RYAN/GETTY IMAGES competitor’s equals, examine current peer firms as well as those at business seminars and provided follow-up support and coaching. the next size threshold. Leadership development is a continual process. Technology makes it easier than ever to validate this data. Firms can’t wait for management openings to start developing Select three to five competitor firms, and use Google, the com- new leaders. They need to employ people able to step into place petitors’ websites, LinkedIn and personal networking to gather when needed. That means constantly evaluating staff to identify intel on them. Combine this with a client survey, and you will those with leadership skills and putting them on a management have solid data to assess your team. track by providing ongoing training on all the business practices The data from the leadership SWOT analysis may be an eye- they will be expected to oversee in the future. opener for many principals and CEOs. The results will lead to It may sound simple, but this commitment to leadership training and hiring as well as new systems of encouragement and growth and excellence requires a great deal of discipline. It’s not rewards that position your firm for growth, whether organic or enough to pay lip service to the concept of leadership investment; through acquisitions. firms need to have formal programs in place that operate consis- A SWOT analysis can also help an executive determine a firm’s tently. These programs can provide the expertise leaders need to readiness for growth because it can specify the objective of the operate at the highest level required for a firm’s success. business venture and identify all the internal and external factors Firms that make smart acquisitions, create and maintain a that are favorable and unfavorable to achieve that objective. learning culture, and compare their leaders’ SWOT to competi- tors will have a significant competitive advantage over firms that The Power of Leadership Investment don’t. These are the firms that will rise above the rest. Of course, running a firm is time-consuming. Many leaders don’t have the time to earn a business degree or attend outside semi- Douglas Reed, P.E., is president of FosterGrowth.biz, which helps nars. But those leaders can bring in business consultants who are CEOs and executives secure their future by fine-tuning their experienced in and skilled at business management, growth, pric- company’s processes, culture and systems to achieve safe growth, ing, recruiting and marketing—all critical to growing a profes- increased profitability and a comfortable financial position. sional services firm. Reed can be reached at [email protected]. Learn more at As future leaders are identified, they should be included in blog.fostergrowth.biz.
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 45 Guest Column BY ALLEN PREGER
Digital Technology for Enhanced Quality Management System Performance uilding information modeling, points include assignments and completion dates defined and moni- tored through BDP’s project information management software. email, mobile computing and Based on the same software, the firm’s Project Handbook pro- other technologies are flooding vides a quality control “health check” across all the firm’s projects, engineering firms with data. with simple green, amber or red color-coding to signify QA com- Unless it’s managed well, that pliance. “It’s a live view that allows project directors to proactively address quality concerns before they turn critical,” Kell says. information runs the risk of As for BIM quality management, Shive-Hattery, a U.S.-based derailing existing quality management systems. architectural and engineering firm, uses a dedicated project informa- B tion management system to manage Revit sheet sets. “We publish For example, thousands of two- PDFs of our sheets and synchronize sheet information into the dimensional construction drawings document control area of our software, so the drawing informa- can be generated in minutes with tion is current and accurate as we prepare project deliverables,” says Revit compared to the hours or days Mitchell Kelchen, project delivery specialist at Shive-Hattery. it took with CAD systems. Kelchen gives an example of one way the system reduces the risk How are companies ensuring that of overlooking a detail. “The software enables us to predefine lists of revision management procedures bid package recipients. It’s a simple matter to generate a package of keep up with this increased flow drawings from Revit and issue it to all the right people, without risk of sheet sets, especially since each of someone being omitted.” revision is still a contract document The software-driven process improves quality while saving time. that needs to be logged and quality- “What once took maybe 30 minutes now takes five,” Kelchen says. checked prior to issuance? “Across multiple teams, those time savings add up.” Quality management is critical to Allen Preger Shive-Hattery’s project information management software links firms maintaining ISO 9001 credentials. fu nctions of the document quality control process, so there’s no Michael O’Toole, an associate in the Building CAD/BIM Design opportunity for tasks to slip through the cracks. “Our staff can Services group at WSP Global, is part of a team that audits quality quickly make adjustments to sheet and model information with control processes and trains groups to become ISO certified. Not more accuracy than managing multiple lists manually in separate content with legacy quality and risk management procedures that software,” Kelchen says. relied on manually maintained lists in spreadsheets, his team years The software also includes an app for viewing plans on iPads, ago adopted dedicated project information management software to which extends quality control into the field. Everyone is working manage meeting notes, drawing revisions and submittals. from the latest versions. “As far as the document controls we work with, we’ve come a Email is a prolific source of digital information, and BergerABAM long way, but I still think we’re only scratching the surface on the President and CEO M. Lee Marsh wants to be sure his employees possibilities,” O’Toole says. can quickly sift through thousands of emails to find answers. Such software offers potential for managing, tracking and logging “For many years our firm has been concerned that email could be project delivery processes. “We used to have about 20 procedures” a source of business risk if we were unable to find that one critical for some quality systems, O’Toole says, but they cut down to nine email that could resolve a dispute,” Marsh says. “Now our project by identifying unnecessary complexity. information management software provides a powerful tool that New ISO 9001 standards going into effect in 2015 require even helps mitigate that risk.” more risk management integration across a company’s quality assur- Managed well, digital information contributes to more success- ance/quality control (QA/QC) management systems. ful projects. But digital data also invites an information overload Because ISO standards are by definition international (the let- that can contribute to problems. As a result, engineering firms are ters come from “International Organization for Standardization”), responding by using digital technology to make their quality control American firms can get compliance ideas from offshore companies. and risk management systems more effective. United Kingdom-based BDP, for instance, uses a dedicated project information management system to maintain its ISO 9001 certifica- Allen Preger is a co-founder and vice president of global accounts for tion. Alistair Kell, BDP’s director of information and technology, Newforma, a U.S.-based developer of software for building and infrastructure explains: “Our standard project setup automatically generates 46 QA project information management. Follow Allen on Twitter @allenpreger or action items that link to the relevant BDP procedures.” The 46 audit his posts on Newforma’s blog at http://www.newforma.com/blog/.
46 ENGINEERING INC. SEPTEMBER / OCTOBER 2015
Business Insights
Solutions for the A/E Industry ACEC Coalitions’ Best-Selling Publications Business Management and Quality; Finance and Economics; ACEC Coalitions are dedicated communities of ACEC members Human Resources; Marketing and New Business Development; organized by practice area or firm size. Coalitions provide a wide Contracts and Risk Management; Leadership and Ethics; range of practical, day-to-day resources, best practice guidance and Project Management and Project Delivery; and Public Policy knowledge-sharing opportunities that enhance business operations and Industry Issues. and make firms more profitable. Coalition publications help firms For a complete listing of available topics, visit www.acec.org/ streamline their operations for greater efficiencies and profitability. education/on_demand_search.cfm. Best sellers for 2015 are: CAMEE Effective A/E Financial Management Quality Assurance/Quality Control Guidelines—The goals of a QA/ Financials are the lifeblood of every business organization, yet too QC program involve improving the quality of designs and docu- many A/E professionals don’t understand how their company’s ments, eliminating errors and omissions, and reducing unnecessary financials work or the vital information they contain. Gaining costs. knowledge and fluency with basic accounting tools is the key to CASE sound decision-making—and growing a successful business. A Guideline Addressing Coordination and Completeness of Structural ACEC’s Essentials of A/E Financial Management, Valuation and Construction Documents—The Structural Engineer of Record’s goal Transition Planning program, to be held in New Orleans, Nov. 5–6, should be to meet both the owner’s and the contractor’s needs by 2015, explores the impact that a still-volatile producing a complete and coordinated set of documents to mini- economy has on financial management November 5-6, 2015 • New Orleans, LA Get Real About Your Company’s Financial Metrics with Information You Can Understand and Use! mize potential costly changes. beyond revenue, profits, backlog and staff Essentials of A/E Financial Management, Valuation, and Transition Planning COPS size. Participants will learn how to extract Health and Safety Manual—This updated health, safety and train- and apply key financial measures, such as ing manual provides a basic overview of fundamental field safety breakeven overhead rate, target billing mul- procedures and includes customizable sample forms and tailgate tiplier and labor utilization percentage. safety to help firms work smart and work safe. Attendees will also examine various per-
LDC formance, liquidity and leverage ratios, and Engineers’ RCEP REGISTERED CONTINUING Establishing Financial Controls for Successful Development P rojects— how to benchmark these results with an eye EDUCATION PROGRAM Profit cannot be an option; it’s required to achieve financial toward shareholder value and the valuation’s security. relationship to internal owner transition planning. All ACEC Coalition-developed publications are available at For more information, visit the ACEC Education website at www.acec.org/bookstore. www.acec.org/education/seminars.
On-Demand Webinar “10-Packs” Bring Convenience to Professional Development FOR MORE BUSINESS INSIGHTS Most states require licensed engineers and surveyors to earn profes- sional development hours (PDHs) each year and file the credits ■ Better Business Planning with their state licensing boards. But for many professionals, the time and expense of a multiday training program is a challenge, ■ Factoring Executive Compensation especially when renewal deadlines approach. ■ Cyberattacks and Data Security As a result, practitioners increasingly are turning to ACEC On-
Demand Webinars to meet that challenge. On-Demand Webinars ■ High-Impact Proposal Writing provide quality programming on critical engineering business Go to: www.acec.org/education/webinars/ management topics, allowing professionals to earn PDHs when and where they choose. The increasingly popular 10-pack option ACEC’s Business Resources and Education makes in-house continuing education immediate, accessible and Department provides comprehensive and online- cost-effective. Instead of paying $199 per individual webinar, the accessible business management education. 10-pack rate delivers 10 webinars at just $140 per session—a $59 Visit ACEC’s online educational events calendar at savings for each selection. With no expiration date, you can choose www.acec.org/calendar/index.cfm or bookstore at webinars on the fly, and subscriptions are completely transferable www.acec.org/bookstore, or call 202-347-7474, ext. among staff and offices. Each 90-minute recording carries 1.5 324, for further information. PDHs (unless otherwise specified). Content areas include:
48 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 ACEC Congratulates Life/Health FIND Insurance Trust YOUR NEXT
as it Celebrates ENGINEER on ACEC’s Job Board . . . Since the ACEC Job Board’s inception in 50Years August of 2005, over 2,923 member fi rms have posted job openings and more than 27,000 job seekers have posted resumes. Of Outstanding Find your next new hire at: Service www.acec.org/jobs This year marks the 50th Where today’s engineering job seekers go to fi nd their next jobs. anniversary of the ACEC Life/ Health Insurance Trust in providing healthcare benefit solutions and services to more than 1,350 ACEC Member LET Engineering Inc. Firms representing over 50,000 professionals and their families. WORK FORJULY/AUGUST 2012 YOU INC. www.acec.org ENGINEERINGAWARD-WINNING BUSINESS MAGAZINE ● PUBLISHED BY AMERICAN COUNCIL OF ENGINEERING COMPANIES
With an ad in >>Innovation for International Projects >>PLI Rates Engineering Inc.. Hold Steady >>House Bid To Restrict Highway Funds you can: Defeated ReachGlobal • REACH your clients How to Succeed in Foreign Markets and colleagues. • ENHANCE business prospects. • THANK those important to your success.
Contact ACEC Assistant Director of Marketing Rachael Ng at 202-682-4337, by e-mail at [email protected], or visit the website at community.acec.org/acecmainsite/publications/advertising Members in the News
On The Move
Pasadena, Calif.-based Jacobs Engineering initiatives in the design-build market. Slade former president of ACEC/NY and chair- Group Inc., named Steven J. Demetriou is a 39-year firm veteran and has been a elect of the ACEC Engineering Excellence president and CEO. He succeeds former member of the executive leadership team Awards Committee. President and CEO Craig Martin, who since 1993. retired in December 2014. Amec Foster Wheeler appointed George Nashville, Tenn.-based Smith Seckman Hernandez president of upstream business Cardno named Richard Wankmuller CEO Reid, Inc., promoted Steve Lane to presi- development and Hannah Sesay as global and managing director. He most recently dent and COO and Susan Osterberg to head of health, safety, security and environ- served as director of GHD Group Pty Lim- chief administrative officer. Lane, who cur- ment (HSSE) and senior vice president, ited and president of GHD Americas. He rently serves as COO, succeeds Rob Barrick HSSE, for the Americas. succeeds Michael Renshaw. as president. Barrick, who served as president and CEO for 29 years, will continue as AECOM appointed Heather Rim senior Hailey, Idaho-based POWER Engineers, chairman and CEO. Lane was named an vice president and chief communica- Inc., named Bret Moffett president and, ACEC Fellow in 2011. Osterberg formerly tions officer. She is based at the firm’s Los effective in 2016, CEO. He succeeds Jack served as vice president of human resources. Angeles headquarters. Hand, who will manage the company and serve on the board of directors during the Boston-based BSC Companies, Inc., the Broomfield, Colo.-based MWH Global leadership transition. parent firm of BSC Group and Geonetics, promoted the following employees to senior appointed David N. Hayes president and vice president: Paul DeKeyser, director of Boston-based GEI Consultants, Inc., CEO. Formerly the executive vice presi- global business development, based in Fair- appointed its first woman chair, Gillian M. dent, Hayes succeeds Charles Kalauskas, fax, Va.; Paul Demit, director of Americas Gregory, who joined the firm in 1986 and who has led the firm since 2012. Kalauskas program management, based in Atlanta; was elected to the board in 2013. Gregory is assumes the role of chairman from Richard Ben Emerson, engineering design manager, a geotechnical engineer specializing in dam Long, a former president. based in London; Norm Gadzinski, direc- safety investigations and dam engineering. tor of government and infrastructure project Langan Engineering & Environmental delivery center, based in Cleveland; Julie Houston-based Walter P Moore appointed Services in Elmwood Park, N.J., named Labonte, program consultant manager for Lee Slade as the firm’s fourth chairman. He Andrew J. Ciancia chairman. He suc- the San Diego Pure Water Program, based succeeds former Chairman and CEO Ray ceeds George P. Kelley, who has served in San Diego; and Don Spiegel, director of Messer, who will lead the firm’s strategic as chairman since 2003. Ciancia is a project delivery, based in Sacramento, Calif.
Richard Wankmuller Bret Moffett Gillian M. Gregory Lee Slade Steve Lane Susan Osterberg
David N. Hayes Andrew J. Ciancia George Hernandez Hannah Sesay Heather Rim
50 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 Welcome New Member Firms Calendar of Events
ACEC/Alabama ACEC/Metro Washington SEPTEMBER GeoCon Engineering & Materials Testing, Inc., CES Consulting LLC, Chantilly, Va. Fairhope CSI Engineering, P.C., Laurel, Md. 16 Mature ESOPs: What Do We ACEC/California John J. Christie & Associates, P.C., Do Now? (webinar) Akel Engineering Group, Inc. Silver Spring, Md. , Fresno 23 Using Metrics to Identify Diamond West Engineering, Inc., Calabasas ACEC/Michigan Barriers to Success (webinar) Masson & Associates, Inc., Escondido AR Engineering, LLC, Kalamazoo McGinnis Chen Associates, Inc., San Francisco ACEC/New Jersey 24 Ownership Transition 2.0 MEA Forensic Engineers & Scientists , LS Engineering Associates Corporation, (webinar) Laguna Hills Montville SYRUSA Engineering, Inc., Brea MP Engineers, P.C., Princeton 28–29 Human Resources Forum– ACEC/Colorado ACEC/New York 2015, New Orleans Pipeline Strategies & Integrity, LLC, AKRF, Inc., New York, N.Y. 28–29 Information Technology Colorado Springs Watson Engineering, P.C., Owego Forum–2015, New Orleans ACEC/Connecticut ACEC/North Carolina Milone & MacBroom, Inc. , Cheshire Accelerate Engineering, PLLC, Cary 28–29 Finance Forum–2015, New ACEC/Florida Areté Engineers, Boone Orleans Engineering Express, Deerfield Beach CriTek Engineering Group, P.C., Greensboro Josephson Engineering Consultants, LLC, Jewell Engineering Consultants, P.C., 29 Placing Round Pegs into Tampa Kernersville Round Holes: Supercharge Metco Services Southeast, LLC, ACEC/Ohio Your Teams with Smarter Fort Lauderdale Bird+Bull Engineers + Surveyors, Columbus Assignments (webinar) Protean Design Group, Inc., Orlando the jdi group, Inc., Maumee ACEC/Georgia ACEC/Oklahoma OCTOBER Croy Engineering, LLC, Marietta Frontier Land Surveying, LLC, Edmond 1 Strategy—It’s Not Just a Duplantis Design Group SE, LLC, Duluth Myers Engineering, Consulting Engineers, Inc. , Vision Thing (webinar) ERS Materials, LLC, Woodstock Oklahoma City Greencastle Engineering, Inc., Peachtree City ACEC/Texas 6 Capture Planning to Wilburn Engineering, LLC, Newnan American Engineering Consultants, LLC, Dramatically Increase Your ACEC/Kansas Rockwall Business Development Driggs Design Group, PA, Manhattan Childress Engineers, Cleburne Efficiency and Effectiveness ACEC/Louisiana HydroLink Engineering, Addison (webinar) ECM Consultants, Inc., Metairie ACEC/Utah Marrero, Couvillon & Associates, LLC, Brier Consulting, Sandy 14–17 ACEC Fall Conference, Boston Baton Rouge NTB Associates, Inc., Shreveport 20 The Leadership Advantage— OneSource, EHS, LLC, Gonzales Producing Leaders from Within (webinar)
27 Be Memorable and Win 100-Year-Old Member Firms More Work: The Difference- Makers for Winning Proposals SCHOEL ENGINEERING n the July/August issue (webinar) of Engineering Inc., Birmingham, Ala. Founded: 1888 the cover JULY/AUGUST 2015 29 Value: The A/E/C Industry’s INC. www.acec.org SARGENTS & LUNDY Biggest Blind Spot? (webinar) I AWARD-WINNING BUSINESS MAGAZINE feature titled ENGINEERING● PUBLISHED BY AMERICAN COUNCIL OF ENGINEERING COMPANIES Chicago,C Ill. >>Member Firm “Secrets of the Innovations in Urban Renewal Founded:F 1891 NOVEMBER 100-YEAR-OLD FIRMS >>Buyer’s Market Grows for PLI Centenarians” SESECRC RETETS >>Author Promotes Engineering to MODJESKIM AND MASTERS OOFF SUCUCCEC Grade-School 3 Negotiating Better Engineering highlighted ESSSS Girls Mechanicsburg,M Pa. Contracts (webinar) ACEC Founded:F 1893 Member Firms FREESEF AND NICHOLS 5–6 2015 Emerging Leaders that have been FortF Worth, Texas Institute Session III, Port of in business for Founded:F 1894 Greater Baton Rouge at least 100 years. DespiteDi WILEY|WILSON our widespread solicitation Lynchburg, Va. To sign up for ACEC online seminars, efforts, several firms were Founded: 1901 go to www.acec.org/education. inadvertently omitted from WHITMAN, REQUARDT & ASSOCIATES receiving well-deserved Baltimore, Md. Additional information on all ACEC recognition. They are: Founded: 1915 activities is available at www.acec.org.
SEPTEMBER / OCTOBER 2015 ENGINEERING INC. 51 Mergers and Acquisitions BY NEIL CHURMAN M&A Setting Record Pace in First Half of 2015
eal making among oversight, and risk management ■ To view the most up-to-date and “live” versions of industry firms con- have been active in this space the M&A heat maps, and to see the buyers and sellers tinued to accelerate where consolidation historically D in each state, go to www.morrisseygoodale.com. through the first six months of has been limited. PM firms 2015, with 117 sales of U.S.- also offer access to lucrative ■ Watch the M&A Takeaway video that accompanies based A/E firms, up from 113 institutional relationship cli- this article, presented by Mick Morrissey, at sales during the first six months ents and long-term program www.morrisseygoodale.com/ACECMergers/SeptOct2015. of 2014. Sales of international engagements.” firms also ticked up, with 53 Firms will likely continue to ■ To see an infographic highlighting A/E/C sales of overseas firms as of June use M&A as they seek to capi- M&A activity through the first half of 2015, visit 30 versus 48 in the same period talize on the strong U.S. market. www.morrisseygoodale.com/2015-Mid-Year-Review.html. last year. Overall, global activ- The industry continues to con- ity through the first six months solidate at all levels, with mega increased nearly 6 percent. firms combining and smaller The “megadeals” we saw in firms making niche acquisitions. 2014 (such as AECOM acquir- If the pace of deal making in the ing URS) have tapered off, but second half of the year matches firms continue to look to merg- the first, we’ll see another record ers and acquisitions (M&A) to year for industry M&A. enhance and fill gaps in their current service offerings. Recent ACEC Deal-Makers In many of the deals over the JULY 2015 provides environmental, engi- wastewater disciplines. first half of 2015, buyers added ACEC Member Wantman neering, construction manage- ACEC Member G2 Con- niche capabilities, such as pro- Group (West Palm Beach, Fla.), ment and design-build services. sulting Group (Troy, Mich.) gram management (PM) and a multidisciplinary consulting CEI Architecture (Vancou- acquired Schleede-Hampton owner’s representation services, firm, acquired ACEC Member ver), one of western Canada’s Associates (Birmingham, or expanded their geographic Bridge Design Associates leading architectural practices, Mich.), specialists in geotechni- footprints. For example, in (Royal Palm Beach, Fla.), which merged with ACEC Member cal engineering services to the March, ACEC Member STV provides engineering services for HDR (Omaha, Neb.). construction industry. acquired Mass.-based Diversified buildings, bridges, ocean piers, ACEC Member WSP Global Project Management, a provider marinas, docks, seawalls and JUNE 2015 (Montreal, Canada) acquired of owner’s PM services, while pump stations. ACEC Member Tighe & Bond Faveo Group (Oslo, Norway) ACEC Member NV5 acquired ACEC Member NV5 (Westfield, Mass.) acquired and Levelton (Richmond, two PM firms—Mass.-based Jos- ( Hollywood, Fla.) acquired Waterfront Engineers Canada). Faveo provides proj- lin, Lesser & Associates in Feb- RBA Group (Parsippany, N.J.), (Stratham, N.H.), which pro- ect management services and ruary and San Francisco-based an infrastructure engineering vides specialized engineering associated specialist services in Mendoza & Associates in April. firm that provides transporta- services for shoreline challenges the areas of infrastructure and According to Anatoly Darov, tion engineering, construction and waterfront facilities. energy. Levelton offers engi- chair of the Design and Con- inspection, environmental engi- ACEC Member Terracon neering solutions in the areas struction Practice Group at neering, civil engineering, sur- Consultants (Olathe, Kan.) of environment, geotechnical, Burns & Levinson, “PM firms veying and architecture services acquired AQS Environmental building science, and materials offer specialized expertise in to public and private clients (Omaha, Neb.), an air quality engineering and testing. managing capital facility proj- throughout the East Coast. consulting firm with experience ects, an area that has become ACEC Member Stantec solving mold, asbestos, lead- Neil Churman is principal much more complex and regu- (Edmonton, Canada) acquired based paint, indoor air quality consultant of Morrissey Goodale lated over the past decade. VI Engineering (Houston), a and radon issues. LLC—a strategy, M&A and Engineering companies and power and electrical engineering ACEC Member H2M human capital solutions firm commercial real estate firms, in firm. architects + engineers serving the A/E/C industry. particular, looking to expand ACEC Member Pennoni (Melville , N.Y.) acquired Churman, who is based in client service offerings and gain Associates (Philadelphia) Riddick Associates (Suffern, the firm’s Houston office, can expertise in capital program acquired the assets of J2 Engi- N.Y.), a civil engineering be reached at nchurman@ advisory, project controls and neering (Pensacola, Fla.), which firm emphasizing water and morrisseygoodale.com.
52 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 With ACEC RT to handle your retirement planning, you can do what you do best... engineering.
With the Trust and our team of investment professionals, we’ll help you manage retirement options efficiently and responsibly, with your participants in mind. And you’ll know you’re taking full advantage of all the benefits, options and participation savings available with ACEC membership. Giving you the peace of mind to continue doing what you do best...engineering. Visit, www.acecrt.com
For more information, contact Bruce McFarland, Executive Director ACEC RT at [email protected]
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1Network statistic based on GeoAccess information and UnitedHealthcare standard network access mileage criteria, 2013. 2Renewal rate based on average year-over-year ACEC Life/Health Trust persistency metrics. The American Council of Engineering Companies (ACEC), the ACEC Life/Health Insurance Trust and UnitedHealthcare Insurance Company are three separate legal operating entities and, as such, the organizations are governed and function independently. UnitedHealthcare’s services are provided with the authorization of the ACEC Life/Health Trust. Questions related to health benefi ts offered through the Life/Health Trust should be directed to 1-800-573-0415. Must be nitedHealthcareU insurance license products; and HMO products do not apply. ACEC membership qualifi cation is determined by the association. Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affi liates. © 2015 United HealthCare Services, Inc. UHCEW733974-000