Copy Success Price of Entry $70,000 $60,000 $50,000 See What More Successful Firms Than Yours Are $40,000 $30,000 Doing, Straight from Zweigwhite’S Surveys
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www.thezweigletter.com celebrating 2 0 YEARS DECEMBER 17, 2012, Issue 987 TRENDLINES Copy success Price of entry $70,000 $60,000 $50,000 See what more successful firms than yours are $40,000 $30,000 doing, straight from ZweigWhite’s surveys. $20,000 $10,000 e’re down to the end of the year now and everyone seems to be $0 Civil Engineer Structural Engineer Electrical working on their business planning. Part of that process usually Engineer Mechanical W Engineer Mark involves benchmarking how your firm compares to other, similar A/E/P Zweig or environmental firms. I can see this is happening based on sales of our survey products. We just had the biggest single-day sales of surveys 2012 2013 I have seen here in years last week. It’s crazy. Salaries for entry-level engineers at My problem with benchmarking has always been: Whom are you leading engineering firms are on the comparing yourself to? While most firms in this business seem rise this year. For example, the 2013 preoccupied with finding other firms that are their exact same size, or “Salary Survey of Northeast & South discipline, or based in Peoria like they are, the real issue in my mind Atlantic Engineering Firms” finds may be finding other firms in this business that are super successful, that the median base salaries for key and comparing yourself to them. Our “Successful Firms Survey” looks engineering titles at the entry level at companies that are growing faster (average of 20 percent or more for increased from 2012 to 2013: civil the past three years) and are more profitable (average profitability of engineers from $48,600 to $56,680, 24.5 percent of net service revenue) than the bulk of the firms in this structural engineers from $50,253 business. to $57,408, electrical engineers from $49,504 to $60,400 and mechanical EDITORIAL I like this survey. It’s one we can all learn from. Here are some engineers from $48,000 to $60,560. interesting tidbits from it: – Margot Suydam, Survey Manager z Successful firms budget more for marketing – 8.6 percent of rev- enue on marketing versus 3.5 percent for all others. I have always believed there was a relationship between marketing budget and growth and profitability. FIRM INDEX Bioengineering Group ........................................... 5 z Successful firms have higher chargeability rates – ranging from Bracken Engineering, Inc..................................... 11 64.3- to 65.6 percent versus 57.3 percent for other firms. Having Carney Engineering Group .................................... 5 principals and managers who work on jobs (instead of spending all their FPM Group............................................................. 9 time on corporate management) and less support people goes a long way Fuscoe Engineering, Inc. ....................................... 9 to help utilization rates. High utilization makes it easier to make money – Kleinfelder ........................................................... 12 plain and simple. Luckett & Farley .................................................... 5 See MARK ZWEIG, page 2 MacKay Sposito .................................................... 3 Merrick & Company ............................................ 11 The important thing for you to be thinking about is SAM, Inc................................................................ 9 Stantec ................................................................ 12 whom you are modeling yourself after. Make sure Sullivan International Group, Inc. ....................... 11 it is a company that is more successful than yours Thornton Tomasetti ............................................. 12 Wiley|Wilson....................................................... 11 is – not less! Withers & Ravenel ................................................ 9 INSIDE TO OUR SUBSCRIBERS: Due xz TOP PLAYER: Carving a path to success. Page 3 Handling to the upcoming holidays, The Zweig Letter will not be xz PM PERSPECTIVES: PM resolutions for the published on Dec. 24. We New Year. Page 7 on-the-job errors will return on Dec. 31. Happy xz HR: Hiring for potential or experience? Page 9 Holidays! xz FINANCE: Debt or cash for purchases? Page 11 Page 5 THE VOICE OF REASON FOR A/E/P & ENVIRONMENTAL CONSULTING FIRMS THE ZWEIG LETTER | DECEMBER 17, 2012, ISSUE 987 MARK ZWEIG, from page 1 A/E BUSINESS NEWS z Successful firms charge higher MODERATE RECOVERY PREDICTED: headed higher,” Basu said. “ABC predicts fees and manage their fees bet- Associated Builders and Contractors higher marginal income tax rates to reach ter. High profit firms have effective released its 2013 economic forecast pre-Bush levels, as well as an increase in tax multipliers of 3.37 versus 3.08 for for the U.S. commercial and industrial rates on capital gains and dividend income. In all other firms. Having a brand name construction industry, and it shows the addition, ABC expects the payroll tax credit to and providing high quality – along continuation of a modest recovery for sunset in the first quarter of 2013. with being willing to ASK for a better nonresidential construction next year. “The U.S. economy is presently expanding fee – all contribute to higher multipli- “ABC predicts nonresidential construction at a 2 percent rate,” Basu said. “Even in the ers. Higher multipliers make it easier spending will expand 5.2 percent in 2013,” absence of a dive off the federal precipice, to hire good people, spend money on said ABC Chief Economist Anirban Basu. the nation will struggle to achieve 2 percent I.T., and spend money on people. “Given the remarkably deep reductions growth next year as certain tax rates rise in nonresidential construction spending and as federal spending growth slows and z Successful firms employ the since the onset of the downturn, one perhaps turns sharply negative. simple tool of regular project would expect more robust growth during progress reports to all clients on “Gross domestic product (GDP) has expanded the fourth year of broader economic for 13 consecutive quarters, which has all projects. Seventy five percent to recovery. all successful firms send out periodic reduced vacancy rates in certain segments PM reports, compared with only 68 “Thanks to a handful of segments and in key metropolitan areas,” Basu said. percent of all other firms. I will never experiencing more rapid economic “ABC’s forecast for GDP growth next year know why everyone doesn’t do this. recovery, much of the construction is between 1 percent and 2 percent. If the It is cheap and easy to implement and expansion next year will be in categories nation falls off its fiscal cliff, recession will heavily associated with private financing,” follow, with GDP falling between 2 percent clients like it. It improves collections Basu said. “Due largely to constrained and 3 percent for the year. and client relationships. capital budgets at state and local “With the elections now behind us, the hope z Successful firms use continu- government levels, as well as ongoing is the White House and Congress will be able ous client feedback collected turmoil in Washington, D.C., publicly to successfully navigate the nation past its through a formal process. Sixty funded construction spending is expected fiscal cliff,” Basu said. seven to 75 percent of successful to be flat next year, and perhaps worse. firms have a process for ongoing cli- “If that happens, the latter half of 2013 “The fastest growing major U.S. industry could be surprisingly good for nonresidential ent feedback versus only 51 percent during the last year in terms of absolute activity given the large volume of construction for all other firms. Regular polling of job creation was professional and projects that were put on hold during the past, potential, and current clients business services,” Basu said. Because course of 2012. However, the baseline and then publishing the information many firms in this category use office forecast calls for only moderate expansion – good and bad – for all staff to see space, office-related construction in nonresidential construction spending next is a very powerful tool if you want to spending is expected to rise 10 percent year.” really have outstanding service. in 2013. z Successful firms have harder “Consumer confidence also has working people in their manage- progressed,” Basu said. “Accordingly, ABC ment jobs. If you can get your prin- predicts total commercial construction cipals and PMs to work more hours, will expand roughly 10 percent next everyone will work more hours and year. Other industries positioned to you increase your production capacity experience rising levels of investment include power, up 10 percent; lodging, up at no cost to the firm. 8 percent; health care, up 5 percent; and 38 West Trenton Blvd., Suite 101 Fayetteville, AR 72701 z The average work week in suc- manufacturing, up 5 percent. Mark Zweig | Publisher cessful firms for PMs is 50 hours “Nonresidential building construction [email protected] versus 45 in all other firms. It’s employment is expected to expand 2.1 João Ferreira | Managing Editor 57 hours in successful firms for prin- percent in 2013, slightly better than the 1 [email protected] cipals versus 50 in all other firms. percent performance estimated for 2012,” Christina Zweig | Contributing Editor People only work like that if they are Basu said. “Construction materials prices [email protected] happy and challenged, and not upset should rise a bit more rapidly in 2013 than Tel: 800-466-6275 with the company. Seems obvious! they did in