EDITORIAL Revitalization of the Firm

www.thezweigletter.com HR | FINANCE SUPPLEMENTS Pages 9 - 12

March 14, 2011, Issue 902

EDITORIAL TRENDLINES Health issues working with. Save money on consolidated overhead and $500 Revitalization joint marketing eff orts. But $450 $400 even if you don’t buy, maybe $350 $300 you can repackage something $250 $200 of the fi rm you already do in a new and $150 $100 Mark innovative way that allows $50 Zweig clients to get a taste of your $0 Do something new, hire 2006 2007 service and expertise at a low 2008 2009 smart people and do some cost. Th is “taste” could lead to a 2010 much bigger project later. cleaning. These are some It’s come to be expected (and is 2) Hire some new, experienced actually required in many states) of the ideas Mark Zweig people. Th ere is nothing like getting that fi rms provide at least some presents to get things some new people in who are known in health insurance coverage for their the fi elds and markets you serve— people employees. However, with the rolling. at the top of their game, with a solid skyrocketing cost of health insurance reputation. It can shore up your ability premiums in the last decade, some o many people today in this to get work in a soft market real fast. fi rms have chosen to pass along Sbusiness are just getting tired of the Experienced people are more willing more of the cost to their employees. grind. Th e last three years haven’t been than ever to make a move. Don’t get cast Consequently, according to the 2010 off s— get those who are still working but fun— with more competition, reduced Policies, Procedures, & Benefi ts dissatisfi ed by directly recruiting from profi tability, delayed or cancelled Survey, employee-only and employee/ your competitors. If someone does decide family health insurance contributions projects, stalled ownership transition to join your fi rm, they will be doing so reached a 10-year high last year. plans, and layoff s of good people being for the right reasons— not because they The median employee-only health the norm. HAVE to— and will last longer on the job. insurance contribution climbed to We went through the same thing here 3) Hire some smart, inexperienced $102 from $86 the previous year. recently at ZweigWhite. It’s time for people. New people, fresh out of school, Meanwhile, the median employee/ revitalization. Here are some ideas for who are smart and motivated, will family contribution climbed to $424 you: put the pressure on you to give them from $324.— Margot Suydam, 1) Come out with something new. meaningful opportunities. Th at’s good! It Survey Manager I cannot over-emphasize to all of you means they will expect you to grow your how critical this is. What services are business. Young people bring energy and FIRM INDEX you subcontracting out? Can you bring enthusiasm, and represent your future them in house? Maybe you should AECOM ...... 10 buy the fi rm or fi rms you are already See MARK ZWEIG, page 2 BCDM ...... 6 Butler, Rosenbury & Partners ...... 5 Carney Engineering Group ...... 5 Don’t get cast offs— get those who are still working but Degenkolb Engineers ...... 3 England, Thims & Miller ...... 4 dissatisfi ed by directly recruiting from your competitors. FPM Group Ltd...... 6 FRCH Design Worldwide ...... 9 If someone does decide to join your fi rm, they will be doing Gunda Corporation ...... 5 so for the right reasons— not because they HAVE to— H.T. Harvey & Associates ...... 4 JSDA ...... 5 and will last longer on the job. Manhard Consulting...... 4 McCarthy Engineering...... 4 Rippeteau Architects...... 4 SH Group ...... 5 INSIDE Strada ...... 4 Design-bid-build X-nth ...... 6 ❘❚ TOP PLAYER: Lifetime dedication to one fi rm’s meets success. Page 3 ARE YOU CONNECTED TO ZWEIGWHITE? ❘❚ PM PERSPECTIVES: Communication games http://blog.zweigwhite.com with the engineers. Page 7 the opposition www.twitter.com/ZweigWhite Page 5 www.facebook.com/ZweigWhite

THE VOICE OF REASON FOR A/E/P & ENVIRONMENTAL CONSULTING FIRMS THE ZWEIG LETTER | MARCH 14, 2011, ISSUE 902

MARK ZWEIG, from page 1 A/E BUSINESS CALENDAR stars. Plus they have no bad habits NEWS BEST PRACTICES SEMINAR: Your fi rm that you will have to undo, unlike lives and dies by projects. Strategically some experienced staff ers. Get them ABI FALLS: After showing positive and intelligently executing projects from young and mold them in your hands. momentum during the fourth quarter proposal to solution fuels growth, creates of 2010, the Architecture Billings Index 4) Move. New surroundings can be opportunities, and sustains a strong slipped almost four points in January. motivational to all. Get into a space commitment to your team and your that has more stuff close by. Everyone The American Institute of Architects clients. will appreciate it. Find a space with reported the January ABI score was 50, Effective project management is a more windows and better gathering down from a reading of 53.9 the previous business necessity— the alternative is an areas. I never understood design month. expensive way to wreak havoc on your fi rms— they should know better— This score refl ects stable demand for fi rm’s relationships and profi tability. not providing space with natural light design services (any score above 50 Project managers are the caretakers of to their employees. Gathering areas indicates an increase in billings). The new your professional service. Through training are also critical. Is there a space other projects inquiry index was 56.5, down based on best practices, they can lead than the conference room where sharply from a mark of 61.6 in December. their team to superior outcomes. employees can meet for lunch or coff ee? Th ere should be. As a leading economic indicator of That’s why you need to attend the Best construction activity, the ABI refl ects Practices in A/E/P Project Management 5) Discard archaic systems and the approximate nine- to 12-month lag seminar April 7 in Orlando, Florida. processes. Whether it is the non time between architecture billings and user-friendly accounting system, construction spending. The seminar will present strategies to the marketing database that only facilitate excellence at all levels using one person in the fi rm knows how “This slowdown is indicative of what is practical, real-world examples and best to use, or the ridiculous expense likely to be a very gradual improvement in practices used by the top fi rms in the report submission process. Dump it. business conditions at architecture fi rms industry. From principals and seasoned Ditto for meetings you have always for the better part of this year,” AIA Chief project managers to assistant PMs and had but no one wants to participate Economist Kermit Baker said in a release. technical staff— every participant will in because they have outlived their “We’ve been taking a cautiously know the role they play within a project, usefulness. Dump ‘em. Bureaucracy optimistic approach for the last several within the fi rm, and toward the vision. is a huge demotivator to busy people months and there is no reason at this Can’t make it to Orlando? Future dates who have deadlines set by external point to change that outlook. There are include May 19 in Dallas, Sept. 8 in New clients. Eliminate it everywhere you still too many fi rms that continue to York and Nov. 8 in San Diego. can. see weak market conditions to expect a dramatic increase in the demand for For more information or to register, 6) Share successes and celebrate call 800-466-6275 or log on to all victories. Whether it is a bell you services in the design and construction industry,” he said. www.zweigwhite.com/seminars/pmo/ ring when you get a new project or index.asp. a thanks that comes in from a client GREEN CITIES: The U.S. Green Building that you send on to all employees, Council has released its 2010 list of top 10 don’t underestimate the importance states for LEED-certifi ed commercial and of reinforcing successes. Share institutional green buildings per capita, company performance numbers based on 2010 Census information. also. People need to know every day The District of Columbia leads the nation, The voice of reason for A/E/P, that what they are doing makes a with 25 square feet of LEED-certifi ed and environmental consulting fi rms. diff erence AND that they are part of a space per person in 2010, with Nevada 320 Rollston Avenue, Suite 102 successful organization that bolsters being the leading state, with 10.92 square Fayetteville, AR 72701 them. feet per person in 2010. Mark Zweig | Publisher [email protected] MARK ZWEIG is the founder and CEO of Other top states include New Mexico, ZweigWhite. Contact him with questions or New Hampshire, and Oregon, with more João Ferreira | Managing Editor [email protected] comments at [email protected]. than 6 and 4 square feet of LEED-certifi ed space per person, respectively. Julie Kyle | Editor [email protected] ZWIEGWHITE DISTANCE LEARNING “Using per capita, versus the more Tel: 800-466-6275 ZweigWhite’s Distance Learning traditional numbers of projects, or pure Fax: 508-653-6522 program makes relevant knowledge square footage, is a reminder to all of E-mail: [email protected] Online: www.thezweigletter.com readily accessible for A/E/C/P industry us that the people who live and work, learn and play in buildings should be Twitter: twitter.com/zweigwhite professionals— knowledge that directly Blog: zweigwhite.blogspot.com or indirectly affects their functional what we care about most,” said Scot Horst, USGBC SVP of LEED. “2010 was Published continuously since 1992 by ZweigWhite, priorities. Our new program initiative Fayetteville, Arkansas, USA. ISSN 1068-1310. provides fl exible, engaging and a diffi cult year for most of the building industry, but in many areas, the hunger Issued weekly (48 issues/yr.). $475 for one-year on-demand eLearning to support your membership, $775 for two-year membership. business needs. for sustainable development kept the markets moving.” Article reprints: For high-quality reprints, For more information 800-466-6275 including Eprints and NXTprints, please contact The or log on to www.zweigwhite.com/ For the full list of LEED-certifi ed projects YGS Group at 717-399-1900, ext. 139, or e-mail [email protected]. zw-64-elearning.aspx. log go on www.usgbc.org/ShowFile. aspx?DocumentID=8784. © Copyright 2011, ZweigWhite. All rights reserved.

TOP PLAYER Lifetime dedication to one fi rm’s success Stacy Bartoletti started TZL: Do you remember your fi rst larger and more complex it takes much paid job? What did you learn then more than an individual make it suc- his career at Degenkolb that still infl uences the way you cessful. work today? Engineers and has helped TZL: Where do you see this indus- make it a Hot Firm. “I have always try in 10 or 20 years? What trends are infl uencing it? What about your fi ve-year itch may explain Stacy looked for new company? A Bartoletti’s rise within Degen- challenges SB: I cannot say that I can predict kolb Engineers (San Francisco, CA), where the industry will be in 10 to 20 a 170-person earthquake engineering in my career. years, but it is certain that it will be dif- and structural engineering fi rm. My wife and I ferent. He never rests quietly. Bartoletti At Degenkolb we are very proactive started as a designer right out of col- Stacy Bartoletti, joke about my with our strategic planning and this lege, and is now the president and CEO President and fi ve-year itch.“ year we are focusing our attention on of the No. 58 fi rm on Th e Zweig Letter CEO, Degenkolb a discussion about what trends are go- Engineers. 2010 Hot Firm List. ing to infl uence our business in the In this interview, Bartoletti talks next 10 years and what do we need to about his rise, the defi ning character- SB: My fi rst job as a young kid was do to adapt. One area of study that I istics of success and the challenges of doing lawn care at a local dentist offi ce believe will be very important to our raising children. near my home. It actually instilled a real business is demographics. Demograph- sense of responsibility. My brother Da- ics will drive a vast majority of the in- Th e Zweig Letter: What does it rin and I shared the job and we had to frastructure that gets built, and in the mean to be a Hot Firm? decide when lawn care was needed and next 10 to 20 years we are going to see Stacy Bartoletti: Being a Hot Firm had to go and ask the dentist for pay- some substantial changes in the demo- provides recognition of the great suc- ment after work was completed. I think graphic makeup of the U.S. and world cess that Degenkolb has experienced in working at a young age gives people a populations. the past several years and is a tribute to sense of the real value of money and an all of our employees. appreciation for working hard and feel- TZL: Do hold someone as a special ing good about hard work and the re- mentor? How did this person infl u- TZL: How did you get where you wards that come with it. ence who you are? are today? SB: I would say that my professional SB: I have basically been with Degen- TZL: What is it in your DNA that career has been infl uenced by two sig- kolb Engineers for my entire career in drives you to success? Is it audac- nifi cant mentors at Degenkolb. My ear- progressive roles of growing leadership, ity and risk-taking; a can-do at- lier career was very infl uenced by Da- and in various locations. I started as an titude and a relentless pursuit of vid Bonneville, who is one of our senior entry-level designer in our San Fran- perfection; something else more principals. David hired me and helped cisco offi ce right out of undergraduate abstract? guide me through my career all the school at Purdue University and gradu- SB: I have always looked for new chal- way to a fi rm-wide leadership position. ate school at the University of Texas. At lenges in my career. My wife and I joke Chris Poland, our past CEO and current the time, the company employed about about my fi ve-year itch. It seems like ev- chairman of the board, has also been a 50 people and only had one offi ce. After ery fi ve or so years I need a big change signifi cant mentor and I expect he will about three-and-a-half years I moved to keep me challenged and motivated. I continue to be one as I grow in the role to Portland, when we opened our sec- believe what has made me successful is of CEO. ond branch offi ce (LA was the fi rst). I my personal drive and my competitive grew as an engineer and project man- need to succeed. TZL: What’s the one trait you most ager while in Portland and saw an op- admire in people and why? portunity to run my own offi ce in 2001, TZL: In today’s diffi cult business SB: In my mind integrity has to be after the Nisqually Earthquake in Seat- climate, what does it take to suc- the most important trait for a person tle. Chris Poland, the CEO at the time, ceed? Is the spectrum of failure a and certainly one that is very impor- and I talked about a Seattle offi ce and motivator? tant to me. When I am dealing with an- decided that I should move there and SB: More than anything I believe it other person in our fi rm or elsewhere, start a new offi ce. For a period of time takes teamwork to succeed in today’s I need to know that they have high in- I ran both our Portland and Seattle of- economy and in the engineering servic- tegrity, and from that follows honesty fi ces and in late 2007 moved into a cor- es business in general. We have really and trust. porate role as COO and president. In come to learn at Degenkolb that teams 2011 I stepped into the president and succeed where individuals fail. We rec- Read complete interview in The Zweig Letter CEO role. ognize that as our business has gotten online at www.thezweigletter.com

3 THE ZWEIG LETTER | MARCH 14, 2011, ISSUE 902

EFFICIENCY Paper disappearing in the offi ce... Emergence of project checking plans, issuing permits, sched- spondence, submittals, uling inspections and tracking applica- reviews and so forth information management tions online. are done electronical- and electronic permitting Washington D.C. issued its fi rst elec- ly,” Cuteri says. tronic permit— fi ttingly— for a build- “In terms of technol- means less waste. ing to be occupied by a software com- ogy, we primarily use pany. PaperPort (document By JULIE KYLE “It is defi nitely the solution we need, management software) Editor because of the simultaneous reviews by through our copiers, Alan Cuteri, all of the various permit offi cials,” says but we also use porta- he paperless offi ce seems a little Principal, Darrel Rippeteau, president and CEO Strada. ble scanners that use Tcloser than it did 10 years ago, as of Rippeteau Architects (Washing- ScanSnap,” says Karin web-based project sites and online fi le ton, D.C.) a six-person fi rm. Hunsicker, vice presi- storage are becoming normal practices “Project managers love the process,” dent and COO of H.T. Harvey & As- in real-world A/E/P and environmen- Rippeteau says. “Th ey can see all code sociates (Los Gatos, CA), a 90-person tal consulting settings. Th e ability and offi cials’ comments and annotations on environmental consulting fi rm. means to transfer, communicate, and the master design document, hosted by A ScanSnap scanner converts all collaborate on ideas more effi ciently ProjectDox (an electronic project sub- scanned images into a searchable PDF and in a timely manner is ever increas- mission provider) on their computers, format. It’s fast, small, and powered ing, and options abound. rather than managing separate cop- through a USB cord. For England, Th ims & Miller (Jack- ies for each the mechanical, electrical, Once scanned, copies of receipts, busi- sonville, FL), a 190-person engineer- plumbing, structural, fi re, and life-safe- ness cards, or invoices are automatical- ing fi rm, Autodesk’s Buzzsaw has been ty reviewers. ly saved onto a hard drive and accessed their most favorable application for “If you calculate the weight of a 24- through an online site, EverNote. All going paperless, says Tom Fallin, vice by-36-inch permit sheet and multiply notes are stored in the cloud, and can president. by 30 sheets, times three or four sets, be accessed by any computer or smart “We use it to facilitate electronic de- you will see how much paper is saved. A phone. sign reviews by regulatory agencies, wad!” and once the conceptual design is ap- Paperless marketing. Man- proved by the regulatory agencies, it’s “Zero” paper plans. Jim Mc- hard Consulting (Vernon Hills, IL), a provided to design/build fi rms for con- Carthy, president of McCarthy Engi- 150-person full-service civil engineer- tinuation with design and the as-built neering (West Lawn, PA), a 26-person ing and surveying fi rm, has replaced record process,” Fallin says. fi rm, says his offi ce contains “zero” pa- much of its direct-mail marketing cam- Th e online collaboration tool is con- per plans, as all plans and drawings are paigns with e-mail blasts that the fi rm sidered software as a service (SaaS) that stored digitally. executes internally, says Trish Man- allows project teams to better central- “We use NomaDesk as an information hard, marketing director. ize and more securely exchange project exchange portal for our clients and col- “E-mail blasts are less expensive (in information, enhance team collabora- laborating fi rms, and all internal re- terms of postage and printing costs) tion, and support building information ports, schedules, etc., are located on and are considerably less wasteful. Th e modeling (BIM) workfl ows, according our intranet site,” McCarthy says. response is easier to track and it allows to the Buzzsaw web site. Although some clients still want pa- us to keep our database more current “It has greatly facilitated our abili- per invoices, McCarthy says the fi rm (based on e-mails that get returned due ty to ensure current design availabili- “is trying to move toward 100% (paper- to bad addresses).” ty and eff ective record keeping. All the less). We send out 50% of our invoices Replacing holiday greeting cards with clients, design/build fi rms, and regula- electronically, via e-mail.” e-cards is another “small but impor- tory agencies need is an Internet con- Strada (Pittsburgh, PA), an 18-per- tant” way in which Manhard Consult- nection— no CADD licenses, etc.,” Fal- son multidisciplinary design fi rm, has ing is going paperless, Manhard says. It lin says. embraced reducing the amount of pa- has saved the fi rm a chunk of money. per used in the design and construction “Our Atlanta offi ce used Paperless Post Electronic permitting takes process, as well as in fi rm operations, to send holiday greetings. What we hold. Very few major cities have a says Alan Jesse Cuteri, principal. particularly liked about Paperless Post clear development process that makes “We host our own FTP site that is uti- is that it still feels like you are receiving information available online or have lized by bidders, clients, and consul- an actual card because you must open online applications, but some have be- tants for electronic transmission of a virtual envelope to view your card. gun utilizing information technology documents. We use (Adobe) PDF fi les Th eir designs are beautiful, and they that allows for processes such as down- for correction documents. Typically, all allow the recipient to respond back to loading forms, submitting applications, bidding documentation, client corre- you,” Manhard says.

TRENDS Design-bid-build meets the opposition Traditional delivery method ered. Th e challenge is determining the non-governmental projects.” right delivery system for each project.” Cyrus Izzo, co-president at SH Group is falling out of grace (New York, NY), a 500-person consult- in favor of emerging Which system? Good question. ing engineering and commissioning For Geoff rey Butler, president/CEO fi rm, goes farther, arguing for IPD. collaborative alternatives. of Butler, Rosenbury & Partners “Th e integrated project delivery sys- (Springfi eld, MO), a 90-person archi- tem is defi nitely going to impact the By JOÃO FERREIRA tecture, engineering, interior design, future of our industry, and we will see Managing Editor planning and development fi rm, it’s it utilized in conjunction with the pub- not D-B-B. lic/private partnership model,” he says. esign-bid-build has long been “It is particularly relevant in the gov- the favored delivery method in “Design-bid-build has D always been problem- ernment sector, where we expect to see the construction industry, but oh, boy atic in that the success- it increase. Our corporate clients and — is it quickly losing its luster. private owners will come more slowly “Astonishingly, there are still owners ful low bidder is usually to that table; for them, the design-bid- who choose a design-bid-build model the fi rm that made the build model has been working fairly well as the best approach to their projects,” biggest mistake. Th en, and we do not see the same challeng- says Joshua Carney, president of Car- after they get the job, ing drivers for them to change as rapid- ney Engineering Group (York, PA), they spend the rest of the time trying to cov- ly. We are being particularly mindful of a nine-person structural engineering Geoffrey Butler, risks that are associated with some of fi rm. President/CEO, er their mistake and to these new procurement methodologies Indeed, D-B-B still rules. According Butler, Rosenbury protect their margins. and are tracking the legal and fi nancial to ZweigWhite’s 2010 Project Manage- & Partners. Th is creates an adver- ramifi cations as they evolve.” ment Survey, 43% of all projects are de- sarial relationship with the architect and own- livered through D-B-B. But D/B already er,” he says. A place for D-B-B. Gunda, the D- accounts for 27% of projects, accord- Plus, Butler argues, D-B-B is not team- B-B adept, argues that D-B-B has been ing to the survey. Th e Design-Build In- work-friendly. Although D/B promotes around for a long time, is well under- stitute of America also estimates that teamwork, Butler is not big on it, ei- stood by most of the public and pro- design/build now accounts for 45% of ther, because there’s still “two oppos- fessionals, and is a proven system for nonresidential construction— same as ing parties,” with the builder compet- most projects. D-B-B— in the U.S. ing with the architect for work, which “Owners of projects, Th en there’s Integrated Project Deliv- can lead to all sorts of problems. either public or private ery, the much-debated team approach, “We prefer a negotiated cost-plus con- entities, have many and other methods and variations of tract with the general contractor where factors to consider be- methods, such as construction man- we select a qualifi ed GC and negoti- fore determining the agement at risk and design-build-op- ate his fee up front during the design type of project deliv- erate-maintain, etc., all competing for phase and he works with us through ery,” he says. “Some of space in the A/E/P and environmental the design process, providing input on the key factors to con- consulting world. systems costs and the best, most cost- sider include project fi - Th e emerging trends in delivery seem Ramesh Gunda, eff ective way to put the building to- nancing, project reve- to point to a return to the primordial President, gether,” he says. “In that process, he is a nue stream, life-cycle concept of the masterbuilder, as exem- Gunda member of the project team and his fee Corporation. costs, cost of time de- plifi ed by D/B and IPD. is secure and not at risk. We all work to- lays, and owner’s capa- But no method is perfect, as practitio- gether to hit the budget and get our cli- bilities of handling al- ners will quickly point out. ent the project they want.” ternative delivery methods, etc. If proj- “I still believe in the design-bid-build Janice Stevenor Dale, president of ect funding is available in installments process for most projects. However, JSDA (Pasadena, CA), an interior de- and time value of early completion of there is no universal solution for design fi rm, favors more collaborative the project is not signifi cant, tradition- livering projects,” says Ramesh Gun- methods. al design-bid-build becomes the best da, president of Gunda Corporation “Design-bid-build has never been the delivery method.” (Houston, TX), a 29-person planning, way if teams wish to work collabora- Ultimately, Gunda believes that with engineering and management services tively and in a positive work environ- technological advances, globalization fi rm. ment where team members have mu- and fi nancial pressures, “we have to “IPD, design/build, CM at risk, guar- tual respect for one another,” she says. change how we deliver projects.” anteed maximum price (GMP), and “Negotiating with the right general con- Not so fast, however. “Just because other models are additional ways of de- tractor to add him/her to the team ear- a new idea of delivery is developed, it livering projects based on the needs of ly in the process is the far better meth- doesn’t mean it is the best way for ev- the client and the project being deliv- od and represents best practices for all ery project,” Gunda says.

5 THE ZWEIG LETTER | MARCH 14, 2011, ISSUE 902

ON THE RECORD The debate over growth vs. profi t How can you grow even doubled our profi ts. Because we were profi t route is important. in a growth mode, nobody saw the lost X-nth chooses growth— if you’re not though your size has profi t. Th e common denominators with growing then you’re shrinking rela- decreased? Read on! the losing projects were the staff and tive to your competition. Employees processes utilized. We attempted to will not be loyal to a company that is in manage change to convert to the best clear decline. recent editorial by Mark Zweig practices and develop people. As we did, (see Th e Zweig Letter, Jan. 24, Is- A we developed several metrics to make Kevin Phillips, CEO of FPM Group sue 895) elicited some interesting feed- sure there was balance in what people Ltd. (Ronkonkoma, NY), a 100-person back on the topic of profi t vs. growth. did. Th is meant watching the quality, full-service environmental and tradi- So, which is more important? We asked client satisfaction, HR, professional de- tional engineering fi rm: our readers. velopment, and business development, Obviously, they along with the typical fi nancial met- are both important. Jim Dennell, president, BCDM rics. All these were put in place to hide Growth is necessary (Omaha, NE), a 41-person full-service the dirty metric of profi t. Fortunately for the overall valid- architectural fi rm, provided a compre- the recession hit and the profi ts dis- ity, stability, and sus- hensive and eloquent answer, high- appeared, exposing all the ineffi cien- tainment of the orga- lighted here. Here are his thoughts: cies. Since we couldn’t aff ord them, we nization. If you are not Personally, I have come to the con- had to become effi cient. Now profi t is a growing, you are not clusion that profi t is the most impor- good word and it measures more than paying attention to tant. As architects, profi t seems to a Kevin Phillips, dollars. It measures the eff ects of all the changing needs of have an evil connotation. For some, CEO, the best practices we were trying to de- your clients. Growth is profi t means conceding or conform- FPM Group Ltd. velop when we were in a growth mode. also necessary for the ing to something that is contrary to I have changed philosophies from needs of your person- good design. After 30 years of prac- growth being the only way to become nel, their future, growth in responsi- tice, I see that attitude as a cop out or a great to profi t makes you great. Th is is bility, new challenges, pride in success, bush to hide behind. I feel we are avoid- because profi t becomes the measuring and new opportunities. All come with ing accountability and preserving de- stick of your design excellence, employ- growth, and without a motivated staff nial. It wasn’t until this “Great Reces- ee engagement and client satisfaction. the fi rm becomes stagnant, or worse. sion” that I was able to prove profi t is Th is being said, you must focus on the Profi ts are equally important, because good. Prior to the recession, we were al- three to achieve profi t. Knowing that profi ts mean you have paid attention to ways in a growth mode and as we were we were trying to achieve the three in the mundane business side of the orga- growing, we always saw profi ts. Th is is our growth mode, it begs the question: nization. Winning a $100 million proj- the fi rst problem. As long as the prof- What is growth? Is more profi t growth? ect is one thing, executing it on bud- its were positive we never questioned We feel we’ve grown, although our size get and on time is something quite dif- the amount of profi t. Th is gave us free has decreased. ferent. Both are necessary and require reign to do anything without being equal attention and investment. questioned about things such as the William McGuire, corporate opera- amount of fee we got, hours we took, tions offi cer of U.S. operations for X- FEDERAL MARKET OPPORTUNITIES and dollars we spent. Th e second prob- nth (Maitland, FL), 360-person con- FOR A/E/P FIRMS WEBINAR SERIES lem with a positive profi t in a growth sulting engineering fi rm now part of Many fi rms are rethinking their traditional mode, is that crisis management is ac- Trow Global (Brampton, ON): avoidance of the federal market, and want ceptable. “Hey, we’re making a profi t, Without profi t, a busi- to develop sound strategies for so things must work.” ness can’t pay bonuses developing federal customers. At the We were fortunate six years ago to and raises, so you lose same time, federal contracting have a fi nancial consultant introduce a talent in the short run. requirements are becoming more concept of accountability. You’re prob- Without growth, the complex, rendering this already ably laughing, but this was a foreign business can’t satisfy jargon-fi lled marketplace even harder thought. Over the three years that fol- career growth, so you to understand. To succeed, you need a lowed we compiled data, learned met- custom-tailored strategy to achieve your lose talent in the long rics, developed reports and tried to ed- business development goals in the federal run. Th e question that ucate people. Although we were mak- William McGuire, market. In this 12-part series presented by needs to be answered ing a 10% profi t, and people loved it, I Corporate ZweigWhite, you will learn the secrets of is: What do you want could see that half of the projects were Operations entering this market. Offi cer of U.S. your business to be? in the 20%-plus and others were losing. Operations, If the purpose of the For more information or to register, call Also, half the people were producing X-nth. company is making the 800-466-6275 or log on to the profi t. Th e truth was, if the losing www.zweigwhite.com/zw-1081.aspx. owner(s) money— the projects just broke even we would have

PM PERSPECTIVES

the arrangement and further. What a shame, because had Communication structure of a real the team shared this knowledge, they project team— and the admittedly wouldn’t have duplicated behaviors displayed are eff orts— indeed a very expensive drill. the culprits but also If principals and project managers games with share the mission at the onset of a Christine the muscle behind good project communication. new project, remarkable diff erences in Brack effi ciency and profi tability will certainly take place. the engineers In their own words, ❘❚ here are some of those discoveries: When I stepped out of the way, he was successful. I let him be the Big ideas and ah-ha ❘❚ I gave them a matrix because PM. All principals can point to the moments in 15 minutes I thought it would make their time they were full-time designers. job easier. Th e “principal” thought As a leader, it is tough to shake the or less at ACEC he was doing the team a big favor by temptation to take the reins and call of Metropolitan designing a tool they could use to solve the shots— even though we delegate the problem. What he didn’t share was that responsibility to our PMs. In this Washington event. the goal of the task with his project scenario, the principal began to gum up manager. Without the meaning behind the process but when he stepped back, CEC of Metropolitan Washington the activity, the team found the matrix the project began to roll. Th ey found a useless and mysterious and proceeded invited me to present a session solution within minutes. A to work without it. Principals take on Eff ective Communication in ❘❚ note: Serving good intentions and half- If I could do it over again, I’d February to their emerging leaders solutions on a silver platter are almost be more effi cient— then maybe and other distinguished constituents. futile exercises if not paired with a my coff ee wouldn’t have gotten Good techniques and best practices purpose. cold. How often are PMs so caught up in the fl urry that they miss out on are essential in every corner of the ❘❚ organization, but one cannot deny the I was bored. I was waiting for the fi ner things in life— or simply feel him to give me more. Everyone criticality when applied to projects. like they have aged 10 years? Projects comments on the work ethic of Although I had the podium for four aren’t supposed to make us feel awful. Millennials. On this day, I had a healthy hours that snowy and chilly morning, Applying good communication practices roomful of young engineers who ensures this isn’t the case. it took only 15 minutes to illustrate would defy most of the stereotypes. the dynamics of communication, Lower down the communication chain, I would like to again thank Mac expose the frustrations and they had even less direction and were Cannon, executive director of ACEC assumptions prolifi cally found in given far less attention. Th ey followed of Metropolitan Washington, Angela teams, and underscore the role each instructions, sat and waited for further Marchetti and Eric Rehwoldt of member plays in the success or failure word. And they waited, and they Schnabel Engineering, and Lou of the project outcome. waited. And when they asked questions, Robbins of Dewberry & Davis A session on eff ective communication the project manager was too busy to LLC for the invitation to speak would lack any real usefulness if I answer right away. So they sat there and at their emerging leader forum. did all the talking— so I unleashed waited some more. Could this be why I would also like to thank all the a little parlor game upon this large Millennials want to leave at 4:30? Can attendees for their participation and group and watched their lessons we say we know our team’s skill sets, and how we can leverage those? Are we commentary— which gave me ample learned unfold before their very material to craft this article— which eyes. I won’t go into vast detail about ignoring the potential we have sitting around us? Are we talking about it? broadly provides learning insight and how the game is facilitated, but the valuable perspective for the rest of the ❘❚ Th e note with the goal written teams are small (fi ve members), industry. the only communication allowed on it is sitting here but I guess we forgot to pass it around. Only is through written notes, and each CHRISTINE BRACK, PMP, is a principal with member is given an individual sheet the “principal” was informed about ZweigWhite specializing in strategic business of instructions. Th e task is to be the objective of the exercise, and planning and project management best for this particular team it made its practices. Contact her at completed within 15 minutes. way onto paper but it didn’t get any [email protected]. When time was called, and the quiet room fi nally fi lled with the crescendo Although I had the podium for four hours that snowy of sighs, whistles, and laughter, we discussed the phenomenon of what and chilly morning, it took only 15 minutes to illustrate just took place. We didn’t learn the dynamics of communication, expose the “something new” about the stranger or colleague next to us. We didn’t frustrations and assumptions prolifi cally found in teams, have to think on our feet about what we were going to “bring to a picnic.” and underscore the role each member plays Th is exercise intentionally mirrors in the success or failure of the project outcome.

7 THE ZWEIG LETTER | MARCH 14, 2011, ISSUE 902

GUEST SPEAKER

What is a brain to customize it to your needs. Don’t How to create dump? A brain dump is study what others are having trouble a technique used by many remembering. Instead, include what students on closed book gives you the hiccups. a PMP exam exams to create their per- Cornelius sonal mini reference table. How do I study a brain Fichtner Brain dumps are abbrevia- dump? Brain dumps are pure memo- tions of components and rization. As part of your exam prepara- brain dump concepts, which you have tion, exercises and studying, go ahead committed to memory and are then and practice committing the content spilled out on to sheets of paper before of your brain dump to memory and sheet the exam for reference. then writing it out onto a blank sheet Brain dumps contain just enough of paper on a daily basis. While there are general key concepts, theories, formulas and Every morning, practice your brain guidelines, you need content, which will jog your memory. dump until you’re satisfi ed with your By having the information on your progress. By the end of the fi rst week, to include what you Brain Dump, your mind can focus on you should be able to write out your the question at hand, instead of trying brain dump in its entirety on the fi rst need to pass. to remember the formula needed to go. answer the question. It helps you to Th en, continue dumping it on a here’s no better catalyst for be in the right frame of mind for each regular basis, going back to the daily Tself realization than taking the question. routine in the two weeks leading up to Project Management Professional your exam. (PMP)® exam. I’m kidding you, of What goes into a brain course, but there is some truth in that So what *IS* the secret of the PMP exam day will illuminate dump? Brain dumps are only as good that “you don’t know what you don’t as the quality and quantity of infor- creating my PMP exam brain know.” mation that you can spill out on the dump sheet? Creating and study- Th e PMP Exam is a ‘closed’ book piece(s) of paper just before you begin ing your very own, personalized PMP exam. Th at means the only reference your PMP Exam. Th ey contain the for- exam brain dump sheet is a means to material you are allowed to carry into mulas, theory, concepts and PMP-isms an end in itself. the testing facility has to be contained that you might otherwise forget for It all begins with creating the content in your brain. But during your exam, a moment at the very moment when that goes into it by getting to know your brain is going to be very busy you need it most. your weak areas as you prepare for the interpreting questions and trying to Here is what you can generally fi nd as exam. Th en you memorize, you dump apply all of the knowledge, skills, and part of a PMP exam brain dump: and you repeat. Pretty soon what principles you’ve accumulated in your ❘❚ Table 3-1 of the PMBOK® Guide 4th seemed too complex to remember is at studies and work experience. Edition the forefront of your knowledge. So, the secret is that you will If you haven’t already, you should ❘❚ Formulas, such as earned value, PERT, visit the local testing facility where communication channels, procurement, accelerate your studies and knowledge you’ll take your exam and confi rm probability, project selection and simply by going through the motions what to expect. Most likely, on your depreciation of creating, studying and knowing what’s on your personalized brain exam day, the exam monitor will check ❘❚ Values, such as 1, 2 and 3 sigma and dump. you into the testing facility, hand estimate ranges you six or so sheets of scratch paper Last but not least, your PMP exam ❘❚ Acronyms, such as BAC or TCPI and two pencils, then show you to brain dump is a great tool not only your seat and confi rm that your PC ❘❚ Powers of a project manager to help you bring your reference material into the testing facility, but is working. Th en you’ll have about 15 ❘❚ Confl ict resolution (best to worst) minutes to go through a tutorial that also providing stress relief knowing it’s ❘❚ Sources of confl ict (order of priority) really only takes about fi ve minutes to there as you encounter questions that do. Th en you begin your exam. ❘❚ Herzberg’s motivators require it. During the test, recalling what you do ❘❚ Project closing check list You’ll help yourself to learn the know can be daunting. Quite frankly, material as you study for your PMP some of your ability to access that Exam and give yourself an important And, of course, you must include knowledge is going to seem misplaced edge in passing. all the items that you have trouble among your grey cells. So how do you remembering during your studies and CORNELIUS FICHTNER is a noted PMP create the best opportunities to pass that you feel need to go onto your expert. He has helped over 12,000 students the PMP Exam that day? You can use prepare for the PMP Exam with sheet. Th e list above or using a brain the 10 minutes you don’t need from The Project Management PrepCast at dump that someone else created can the tutorial time to do a brain dump! www.pm-prepcast.com and The PMP Exam be a good start, but you really need Simulator at www.pm-exam-simulator.com.

8 © Copyright 2011. ZweigWhite. All rights reserved. HR A SUPPLEMENT OF THE ZWEIG LETTER MARCH 14, 2011, ISSUE 902 TRENDS Employer branding helps attract the best Making prospective rience and we believe that it is a diff er- their employer brand strategy, while entiator.” 13% do not have a strategy. employees feel valuable In today’s world, when the talent Many companies are worried about is key to future growth. pools are larger than they’ve ever been, the impact of the downturn on their Szarwark says the employment brand brand. By SUSANNAH SWEARINGEN is more critical than ever. According to a recent CareerBuilder. Correspondent “Branding defi nes com survey, 10% of employers polled the employment expe- said they are concerned about the diffi - ore and more fi rms are relying rience. It connects the culty of strengthening their company’s Mon recruiting technology to get candidates to you and employment brand after layoff s or cut- through stacks of résumés, such as au- infl uences the choices backs. tomated resumé screening and search that are made at each “Th e bottom line is your behavior tools and computer-assisted interview- touch point, because a builds your brand so all leaders need to ing. Candidates can sometimes end up brand creates an emo- be mindful of their actions and the im- feeling more like a number than a per- Donna Szarwark, tional connection.” pact on the brand to ensure that no one son. SVP of HR, An employment ever feels like a number,” she says. “If According to a survey by human re- FRCH Design brand is defi ned as the you take interest in your own personal source consulting fi rm Development Worldwide. way prospective appli- brand you also impact the employment Dimensions International and web- cants, candidates and brand. When it comes to recruiting it based recruiting resource Electronic employees perceive can be as easy as showing up in time for Recruiting Exchange (ERE), nearly half the employer. an interview, returning calls in a timely of the organizations surveyed will in- A study of more than 2,000 companies fashion, taking interest in them, being crease their use of screening and search conducted by ERE found that having a an empathic listener, being optimistic, tools in the next year and 12% will in- clearly defi ned strategy is the most im- honest, and helpful. crease their use of computer-assisted portant factor in achieving employer “To bring your brand to life you must interviewing. branding objectives. give candidates a reason to choose to As recruiting begins to pick up at ar- Th e study found that 37% of compa- work and stay working with your fi rm.” chitecture and engineering fi rms, hu- nies have begun work on developing man resource professionals are looking at ways to best align hiring practices so they attract and retain the best talent— and avoid making potential employees feel that they are nothing but just a skill set.

Employment branding. Don- na Szarwark, senior vice president of human resources at FRCH Design Worldwide (Cincinnati, OH), a 150- person architecture and design fi rm, says it’s important to use your fi rm’s brand in your hiring strategy. A company’s employment brand is what makes the diff erence in whether or not a fi rm is able to attract top talent, Szarwark says. “Our employees are our brand so it’s the association they make when they think of us,” she says. “It’s the face, voice and personality of our fi rm. It’s our reputation and the loyalty and emotional attachment people have to our fi rm. It’s our promise we make to them based on our off erings and expe-

9 THE ZWEIG LETTER | MARCH 14, 2011, ISSUE 902

GUEST SPEAKER

concern by the 2010 IBM that require travel. Additionally, Chief Human Resources being sensitive to dietary restrictions Flexing Offi cers Study entitled of colleagues who observe religious Work Beyond Borders. holidays, such as during Ramadan or Th e survey reported Passover, sends an inclusive message. cultural that companies have Teuila traditionally focused on Tips for success. Establishing Hanson operational effi ciency a company culture aimed at develop- dexterity as the core driver for ing creative, agile, culturally dexterous managing workforces. However, to leaders takes time and attention. Here Advice for leaders. make the most out of growth markets are a few diversity and inclusion tips: and unlock the potential of a global 1) Change your current culture. ichael” doesn’t fi nd much workforce, the survey identifi ed the Your senior leadership must be fully “Mvalue in giving speeches need for organizations to develop supportive of this goal. Th ey should about his commitment to diversity. leaders who have the skills and not only talk about the development As leader of a 3,000-employee ability to eff ectively lead people from of culturally dexterous leaders, but organization representing multiple diff erent cultures and generations. should be role models of the kinds of countries, disciplines, cultures, An integrated diversity and inclusion behaviors that they desire employees to generations, languages, skills, and function within an organization can demonstrate. backgrounds, he prefers to show facilitate the development of these 2) Remember that diversity is not his commitment through his daily sought-after leaders. an initiative. If diversity is valued as behaviors, and by ultimately creating a a business imperative, it should not be work environment where everyone can Diversity of thought. Today, viewed as an initiative with beginning reach their career potential. it is common for organizations to view and end dates. In order to achieve When Michael (a fi ctitious company diversity and inclusion eff orts as not long-term success, diversity should leader) forms project teams, he only “the right thing to do” but also as be integrated into key processes of thoughtfully selects members from a business imperative. Clients expect your organization— such as internal diff erent countries and viewpoints to the best solutions that stem from di- communications and training and harness their diversity of thought. He verse talent and perspectives. Emerg- development— and cultural dexterity acknowledges individual diff erences ing markets and talent pools are rap- should be seen as a valuable skill that and unique perspectives as opposed idly expanding, and companies must is evaluated as a desired attribute to denying that diff erences exist. In leverage the diversity of thought with- during performance management and succession planning. fact, he strives not to be “color blind” in their organizations to “out-inno- or “culture blind” by downplaying vate” competitors. Because diversity 3) Recruit diverse candidates. diff erences. He understands the true and inclusion are viewed as key busi- To ensure that you are harnessing the benefi ts that diversity brings to his ness drivers, companies must not sim- benefi ts of diversity, it is critical that business. He knows that harnessing ply recruit and retain employees from your organization casts a wide net to diversity provides a competitive diff erent ethnicities, religions, and attract diverse candidate pools. It is equally important to recruit candidates advantage to his organization, and lifestyles. Rather, they should look for who are inclusive thinkers and have that in order to capitalize on this ways to promote a work culture where cultural dexterity. Ask executive opportunity he has to demonstrate employees have awareness, knowledge, candidates if they have experience diverse and inclusive leadership and understanding of various cultures, leading and assisting diverse employees skills— or cultural dexterity. and who are inclusive thinkers and ex- to reach their maximum potential, hibit cultural dexterity. whether they have had success engaging Do your leaders have Culturally dexterous leaders like multi-generational staff s across borders, cultural dexterity? Is your or- Michael are confi dent they can and whether they have formed diverse ganization developing leaders who succeed in complex and multicultural teams and have leveraged diversity of can successfully navigate diff erent cul- environments. Th ese leaders thought to reach innovative solutions. tures, generations and backgrounds? understand intercultural issues 4) Educate and create awareness. Do your leaders have cultural dex- that impact global team dynamics, Cultural dexterity starts with terity— the business leadership skill such as diff erent communication understanding your own unconscious that encompasses the ability to un- styles that exist between Western biases or blind spots. Acknowledging derstand, manage, lead, connect, and and non-Western employees. Th ey your blind spots and resisting eff ectively communicate with people also recognize cultural preferences assumptions and judgments are crucial across multiple dimensions of diver- of clients, such as country-specifi c steps to becoming a culturally dexterous sity— that is critical to success in a diff erences in the art of negotiation. leader. global economy? Other everyday examples of cultural dexterity can be seen when leaders TEUILA HANSON is vice president of Th e ability to develop strong, agile Diversity & Inclusion at AECOM. She is leaders who can lead complex, global are mindful of religious holidays and responsible for overseeing the company’s organizations was identifi ed as a key cultural events as they plan meetings global diversity strategy.

10 © Copyright 2011. ZweigWhite. All rights reserved. FINANCE A SUPPLEMENT OF THE ZWEIG LETTER MARCH 14, 2011, ISSUE 902 SURVEY Consolidation heating up the A/E industry Activity expected “While infrastructure in North Ameri- before they start marketing their fi rms ca is in dire need of upgrades, the fund- to buyers, and those fi rms considering to increase among ing for large projects is very uncertain. acquisition for the fi rst time or those engineering disciplines. However, the likelihood of fi nding fund- that have been burnt on an acquisition ing sources for infrastructure is greater in the past may be cautious to buy now By JULIE KYLE than the private building market com- with all the turmoil still remaining in Editor ing back in any meaningful way. the industry, Clark says. “Th ere are certain niches in transpor- Nevertheless, Hogan believes sellers he A/E and environmental indus- tation, municipal and federal markets will begin to return to the market in Ttry is in a consolidation phase, as that will continue to have activity re- 2011, and for many, it’s not if they will the percentages of fi rms considering an gardless of budget concerns and overall sell, it’s when. acquisition or sale, both increased sig- economic activity. It is interesting that “Th e reasons are simple: demograph- nifi cantly this year, according to data many of the markets that have the best ics and competition,” Hogan says. from ZweigWhite’s 2011 Mergers & Ac- outlook for the near term, such as elec- Boomers, who represent the largest quisitions Survey. trical transmission and energy explora- single demographic in our country, also Two-thirds of fi rms (65%) report M&A tion, are also the most consolidated,” have the largest ownership stake in is in their strategic plan for the next Hogan says. A/E/P and environmental consulting fi ve years. Driving those intentions is Firms most targeted for a potential fi rms, and they are quickly coming to the eagerness to fi ll in geographic gaps acquisition include those working in the point in life where they would pre- in service coverage and enter new mar- the transportation (49%), municipal fer to slow down or to enter a diff erent kets, the survey shows. (46%), and federal (46%) markets. stage in life altogether. M&A survey “Th ere will be continued consolida- “Th e water market is and will con- data shows that among potential sell- tion as mid-sized fi rms bulk up by ac- tinue to be the area for notable activ- ers, the highest-ranked goal for the sale quiring smaller fi rms into their prac- ity, especially in areas with population is transition ownership. tices,” says Hobson Hogan, a principal growth or urban and rural areas where “Most fi rms in the A/E industry will with ZweigWhite. “Larger fi rms will there has been underinvestment,” says face a choice in the next fi ve years to continue to use M&A as a way to drive Jeff Clark, managing director and prin- either begin an internal transition of earnings growth. I think you will see cipal with ZweigWhite’s M&A team. ownership, if they have not already activity fairly evenly distributed across Clark points to solid waste as a sta- done so, or sell to a third party,” Hogan market sectors and geographies, as the ble market and notable for continued says. “From an economic standpoint, primary drivers to M&A are fairly con- M&A activity, and says federal markets holding on to your ownership rather sistent across market sectors,” Hogan are very desirable, but barriers to entry than selling is typically in your best eco- says. are still high with very few sellers. nomic interests, as you are not likely to “From a macro perspective, there is “For sizable contracts, mid-size fi rms be paid an amount that will make you still over-capacity and hyper-compe- that play in this space will be extremely want to walk away (For example, if you tition in the marketplace. Th e current sought after by the large buyers,” Clark are making $1 million a year, why sell economic environment tends to push says. “Short term, we do not see cer- today for $4 million when you can run fi rms to one end of the spectrum or the tainties for niches in transportation, the fi rm for four years make $4 million other. You either remain nimble and fo- although many large fi rms are look- and sell it then for $4 million?). cused with low overhead or you become ing to acquire in that space for the long “From a strict numbers standpoint, part of a large fi rm with broad capabili- term.” you keep your ownership until you are ties. It is getting harder to be small fi rm ready to retire and then walk away. without having a market focus.” Possible capital hiccup, but Practically, that is not the best situa- reasons to talk. Capital mar- tion for a sale, but it is the strategy of Where is the action? Firms are kets will continue to be constrained for some fi rms.” seeking the following disciplines or ser- smaller to mid-size fi rms, potentially Hogan notes that for many fi rms, an vices in a potential acquisition: civil en- hindering activity. internal sale is not an option because of gineering (41%), structural engineer- “Borrowers that provide business ser- factors such as poor second-tier man- ing (35%), transportation engineer- vices need to have in excess of $5 mil- agement, desire to maximize sale price, ing (30%), and construction manage- lion in EBITDA to get the most favor- or because the fi rm is not generating ment (30%). Hogan believes the mar- able terms on fi nancing,” Clark says. cash to aff ect a sale. In these cases, a kets fi rms are targeting must be viewed Sellers who do not have an urgent third party sale or liquidation would be relative to other investment opportu- need for liquidity are waiting for a those fi rms’ only course of action, Ho- nities. more robust economic environment gan says.

11 THE ZWEIG LETTER | MARCH 14, 2011, ISSUE 902

F&A ADVISOR

oversupply, such as airlines, likely. Nordstrom would not likely be retail, and energy. Here is able to undercut Wal-Mart on price Don’t get a sampling of how other with grand pianos and marble fl oors in industries have faced the cost structure, either. In a binary stuck in the tough times and how they world, you have to make a choice and Hobson successfully navigated the structure your fi rm around that reality. storm: If you have purchased computer Hogan ❘❚ Gained effi ciencies through hardware lately or looked at back middle consolidation offi ce software, there is very powerful ❘❚ hardware and software available to In the current economy, Aligned cost structures and strategy even the most cash-strapped start- to market realities up. Expensive accounting systems every fi rm needs to be ❘❚ Leveraged information technology to and other back offi ce support is no world-class at something. improve effi ciencies of the inputs longer a competitive advantage, as cloud computing has delivered recently attended a conference on Th e fi rst lesson can be one of the high functionality for little upfront I alternative investments for asset more powerful catalysts for change. capital. Th e cost of connectivity has managers and investors. Th e attendees In the last oil bust, several major oil also dropped dramatically. Th is can were mostly representatives from large companies merged, including Exxon- allow boutique fi rms with specialized institutional investors, endowments, Mobil, BP-Amoco and Chevron- practices the ability to compete over hedge fund managers, and corporate Texaco. Th e resulting organizations large geographies without having to bankers. Th e conference focused cut out tremendous costs from their invest tremendously in infrastructure. on the outlook for hedge funds and organizations and added additional In no way am I suggesting that real estate funds in the future. I was scale to their businesses. Th e Exxon- engineering, architecture or interested in hearing what some of Mobil merger, argued by some to be environmental consulting is like the top investors on Wall Street think one of the most successful mergers, selling an airline seat or a pair of about the overall market and real squeezed $2 billion in cost savings in shoes. However, it is becoming more estate in general. I would like to say the fi rst year alone. Th ese fi rms were evident in our economy that getting that I came away from the conference able to eliminate redundant costs in stuck in the middle is a bad thing. with some good news for the North accounting, human resources, and Every fi rm, if it wants to thrive, American market. However, that was operations, saving the shareholders needs to be world-class at something. not the case. Th e fact of the matter is billions. When properly managed, However, to be truly successful, a fi rm that many of the structural issues that scale can have immense advantages in needs to adopt the proper strategy to led to the busting of the real estate lowering costs of services per unit of fi t its market reality. Th at may mean bubble are still present and in many input. acquiring competitors and eliminating cases are worsening, not improving. Some academics have argued that costs to provide value to your clients. When it comes to real estate, the in today’s world there are only two Conversely, you may need to refocus news was dire. Fundamentals have strategies: win on price or win on on client service and stop trying to not improved and, while some asset service. Th ere is a lot of truth to that win in “commodity” type markets with values have increased due to the lack observation, especially if you look at gold-plated resources. Th ere is no one of “solid deals,” the market has become retail. Successful retailers have either prescription for success in the industry binary— simply made up of winners created highly effi cient distribution and not likely one strategy that will and losers. Binary markets are not channels to bring you goods at low lead to success for a fi rm. However, relegated to real estate properties; costs, such as Wal-Mart, Target and if you fi nd your fi rm is “stuck in the much of the economy is becoming Costco, or they have created high middle,” neither big nor small, neither characterized by fi rms making a service models, such as Nordstrom specialized nor broad, then one thing choice on how they want to compete and Neiman Marcus. Gone are the is certain, history is not on your side. on price or service, and building an days where you can succeed in the organization to fulfi ll that strategy. market by off ering mid-range products with mid-range service. Could Wal- W. HOBSON HOGAN is a ZweigWhite While business is not likely to principal specializing in mergers and improve on any broad measure, Mart attract Nordstrom shoppers acquisitions, fi nance and strategic planning. there is no need to jump off a by simply hiring a piano player? Not Contact him at [email protected]. bridge. Business will not stop; it is just going to be ultra-competitive In no way am I suggesting that engineering, architecture because demand will continue to be or environmental consulting is like selling an airline seat constrained. In an industry where there is likely too much capacity and or a pair of shoes. However, it is becoming more evident competition, it is often helpful to in our economy that getting stuck in the middle glean lessons from other industries that have dealt with bouts of is a bad thing.