Monday, June 30, 2008

HDR Architecture, CUH2A complete merger

The HDR Architecture-CUH2A merger is official.

The deal, announced in early June, was made official on June 25 when executives from both companies signed off on the paperwork that finalizes the legal and financial arrangements. The combined science and technology practices of HDR and CUH2A will operate under the leadership of Scott Butler, former president of CUH2A.

According to a press release issued earlier today announcing the merger, CUH2A will now be known as "CUH2A, a division of HDR Architecture."

The firm now employs nearly 1,700 architecture, engineering, and planning staff in more than 40 locations worldwide.

HDR Architecture is an operating company within the larger HDR, Inc., with approximately 1,300 employees. The parent company, HDR, Inc., has about 7,000 people in more than 160 locations worldwide.

Outsourcing office work?

Firms are looking everywhere these days to save money. Whether it's holding off on hiring or even taking the dreaded step of letting people go, staffing represents the largest cost to a firm. But what if you could outsource some of those functions? Sure, many firms already contract with consultants for their graphic design, web site help, and IT functions. But what about other areas? Do you use a staffing agency to help answer the phones? What about your HR department?

If you are outsourcing any of these areas, or anything else, let us know! We're working on an article for an upcoming issue of PSMJ.


Lessons from a legend

Interesting tidbit in this Brantford (Ontario) Expositor article about Hillier Architecture founder Bob Hillier's speaking engagement last week at Apotex Pharmachem, Inc.

In the article, Hillier talks about his quest to find a speaker for his graduation dinner at Princeton University, where he was class president in the late 1950s after Frank Lloyd Wright, who he had secured to be the speaker, died two weeks before the ceremony. Without answering machines or e-mails to help him, Hillier picked up the phone and called Jimmy Stewart, Harry Truman, and even Winston Churchill, who was visiting the U.S., to no avail. "That's how I learned cold calling," Hillier said. He eventually landed Truman's defense secretary to be the speaker.

Hillier merged with RMJM Design last year, creating a megafirm with more than 1,200 architects in 16 locations around the world, so his methods clearly worked.

While countless articles and books have been written about the value of cold calling, Hillier's speech reinforces the value of using your inherent sales ability and entrepreneurial spirit to build your business. When times are tough, you may have to expand your network if your existing clients don't have work for you. If Bob Hillier can call on Harry Truman, you can probably get in touch with the would-be client two towns over.


I believe you have my stapler…

Most of you have seen – or at least heard about – the comedy film “Office Space”. In one scene, a pair of outside “management consultants” advise their client firm to lay off a redundant employee only to find out that the employee had been let go years before – but a glitch in the payroll system allowed the employee to continue getting a paycheck – and he continued to come to work. Rather than address the situation directly with the employee, the consultants simply “fixed the glitch” in payroll and advised that “things will just work themselves out.”

Clearly, this is an absurd example – but is it that different from what Microsoft is doing to Windows XP users as it forces them to “upgrade” to Windows Vista? While many of us face in direction of Redmond, WA and genuflect daily, we often do it with a healthy dollop of contempt because of the ham-fisted way in which the monolithic software provider gets us to jump through their hoops. After all, for most of us software is just a tool that we use to do the work we are getting paid to do. Being obliged to learn new software is often seen as a distraction from the job at hand – particularly if the new application doesn’t deliver immediate benefits.

Look at some practical examples of this from our industry: Deltek acquires Wind2 and promises to support it – but for how long? At what point does Deltek “fix the glitch” and start the “migration” to their Vision product? Autodesk has invested heavily in Revit – how long before Autocad is in their rear-view mirror and they start the forced march to their BIM application?

Unfortunately, there’s not much you can do about these kinds of changes. What you can and should do is work with your A/E industry-specific software providers to ensure that transitions occur smoothly. You also need to clearly communicate the benefits of new applications to your staff. Don’t let your vendors forget that you do have a choice in A/E specific software applications – insist that they help you through transitions.

Have a great Fourth!


Friday, June 27, 2008

Friday Funnies

As we compiled the list of resources and blogs that we read regularly for the "What we read" section of this blog (just to the right of the blog postings), we came across this blog entry on the KnowHR Blog titled "Don't hire Joe Cocker for Your HR Communication."

The video, which comes from You Tube (click the link below the screenshot) and features text that attempts to make sense of Cocker's nonsensical singing at Woodstock in 1969, is hilarious.

But the message below the screenshot is a serious one. Your communications need to be clear and concise. Make sure there is no room for misinterpretation of the message you are trying to send to your clients. This is always a good idea, but it's especially true when times are tough and clients and projects are scarce.

Now, excuse me while I kiss this guy. (Those of you who have seen the Page-a-Day calendar on misunderstood lyrics will know what I'm referring to there. If you haven't, think of a certain Jimi Hendrix song.)

Have a great weekend!


When should a board member resign?

Interesting column posted this morning in E-Commerce Times about when company board members should resign their post...and when they should stick it out.

Columnist Theodore F. di Stefano posits that board members should only resign when there are no other options, calling it a "last resort." He writes that when a company's financials head south, that's when board members need to dig in their heels and work with management to try to turn things around. But if company management resists working with the board, that's a good time to think about leaving.

For those of you who sit on the board of directors of your A/E firm or perhaps a community non-profit organization, remember that when times are tough, that's when your expertise and perspective are needed the most. Stick it out and you (and your firm) will reap the benefits of the experience!


You mean they weren't doing that before?

National Public Radio today reported that a recent study has shown that surgical procedures in the developed world are not as safe as they could be. Interestingly, it's not inferior technology or lack of medical teams' competence that's compromising patient safety.

The reason, according to the World Health Organization (WHO) is simple lack of communication. The WHO has piloted a verbal checklist program requiring surgical teams to verify that they're about to operate on the right patient, with the right procedure, in the right place. They also must verify if the patient has allergies, if he or she may need blood, if pre-op antibiotics have been administered and, finally, if any instruments or surgical sponges are unaccounted for.

At the start of the program, the hospitals were doing everything they should only a third of the time. A thousand operations later, that rate improved to two-thirds of the time, with some hospitals approaching 100 percent. Some surgical teams scoffed at the program - calling it "Mickey Mouse stuff". However, one day in the operating theater during a routine knee replacement, a verbal check with the surgical team revealed that the hospital didn't have the right size knee replacement for this patient. Mickey Mouse stuff, indeed.

Is there a lesson in here for A/E firms - you bet there is. At every phase of the project - from the proposal to presentation, contract negotiation to closeout - insist that your project managers and teams are verbally communicating on everything with a checklist that applies to each specific phase. Most of the time, you learn you have nailed everything down. Sometimes you'll avoid costly mistakes - saving enough money and headache for you and your client to make the process worthwhile a hundred times over.

Still skeptical? Pilot the process and see if it makes a difference.

Until next time,


Thursday, June 26, 2008

The decline of Western civilization (well, banking, anyway)

PSMJ Australia colleague Charles Nelson passed along this opinion piece from Australian newspaper The Age. The piece talks about the impending death of the U.S. banking system and, while the AEC industry is not mentioned specifically, the rising tide of foreign firms buying U.S. A/E firms is clearly tied into this. It's not too much of a stretch to think that the sluggish U.S. economy has opened the doors for foreign investors and firms to enter the U.S. market. And one of the leading causes for the sluggish economy is the struggles of the U.S. banking system.

Feel differently? Drop us a line.

But definitely read the piece. It's worth the five minutes it will take you to get through it.


Let me surf or watch me leave

Companies want to give their employees access to the latest and greatest technology to help them do their jobs, but one of the basic building blocks on most computers is the Internet. Yet, most firm owners panic that their employees will spend more time goofing around on the Internet than they will surf it to find information they need to do their jobs.

But, if push came to shove, would an employee walk out the door if they couldn't use the Internet for personal surfing at work? The answer is yes, according to a recent survey by Telindus, an information and communication technology company. Almost 40% of workers under 30 said they would consider looking for another job if their employer banned personal surfing.

Surprisingly, however, about half the workers surveyed said they wouldn't mind a policy restricting personal Web use to lunch breaks and time before and after normal business hours.

My view on the whole "surfing at work" issue is this: If your employees are getting their work done, letting them decompress with a little mindless Internet surfing is not worth the trouble of keeping them from doing it. Employers who give their people Blackberries and encourage them to be accessible 24 hours a day, seven days a week, need to be mindful of the work-life balance, especially when everyone is reminded constantly of the sluggish economy and rising unemployment rates.

Have any thoughts? Let us know!


Tuesday, June 24, 2008

Dealing with the downturn

Came across an internal memo one A/E firm president sent to his employees last week and it had some interesting data that many of you are likely experiencing in your firms. This firm, which will remain anonymous, has grown between 12 and 15 percent annually for many years. The firm has invested in its infrastructure over the last couple of years, but the firm is unhappy with its financial performance. To remedy that, the firm plans the following actions:

* Confirm revenue accruals on every project immediately. The firm plans to do this in the next few weeks.
* Conservatively manage overhead expenses, particularly in regard to travel, training, and conference activities. The firm will defer all training until the next fiscal year, with the exception of some internal WebEx and online continuing ed training.
* Reduce G&A costs. The specific goal here is to reduce indirect labor.
* Minimize distractions and disruptions that focus attention away from project and performance success.

If this discussion hasn't already taken place in your firm, bring it up at your next management or company-wide meeting. These action items are a good starting point on how you can tighten your belts and weather the economic storm affecting A/E firms right now.


More bad news for business travelers

This won't surprise anyone who has flown recently...or in the past year or two, for that matter...but US Airways will soon end free drink service on its flights. Soda, fruit juice, coffee, and bottled water, all of which were free, will cost $2 each when the fee goes into effect August 18. Unfortunately, there really is no shortcut around the beverage charges since you can't bring liquids (including drinks) through security. You can buy them once you get through security, but it's a lot more expensive than it would be to bring your own. Apparently, US Airways is also raising the price of alcoholic drinks as well. Of course, the price hikes are part of the airline industry's response to the rising cost of fuel and the sluggish economy. Many airlines are charging extra to check a second piece of luggage, then decided to tack on an extra charge for the first bag. This in addition to the myriad other charges flyers incur these days, including curbside check-in and meals.

My question to those of you who fly regularly to visit clients is this: Are you passing the costs on to your customers? How are you getting around the fact that it costs more to travel, either by car or by plane? Let us know!


Monday, June 23, 2008

Rough weekend for Modern Continental

Try to follow this one all the way through...

The U.S. Attorney's office in Boston brought criminal charges on Friday against Modern Continental Corp., the largest contractor for the Central Artery Tunnel project in Boston, also known as the Big Dig, saying it knew that bolts were coming loose in the ceiling of the Interstate 90 tunnel but glossed over the problem until the panels fell in 2006, killing a motorist. According to Saturday's Boston Globe, prosecutors said they brought the charges after plea negotiations wtih the company broke down. The company denied the accusations in a statement issued Friday night.

Fast-forward to earlier today, when Modern Continental filed for Chapter 11 bankruptcy protection, according to the Boston Business Journal. The company listed URS Corp. and Architectural Paving as its two largest unsecured creditors, holding claims of $9.9 million and $3.2 million, respectively. According to the article, Modern Continental listed its assets between $100 million and $500 million and its debts between $500 million and $1 billion.

The Big Dig mess continues.


Finding fish in the hiring pool

We've talked recently about A/E firms letting qualified staff go, so it was a bit surprising to pick up this week's Boston Business Journal and read a story titled, "Pool of engineers stretched thin in Boston and beyond." The story talks about the high demand in the Boston area for electrical engineers, mechanical engineers, and design engineers, mentioning Walker Parking Consultants' search for talent in its Boston office. The parking consulting and design firm has hired two engineers this year and is looking for two more. The story talks about how the firm uses its internship program to cover staffing shortfalls. The article also reveals that the firm uses local engineering societies and recruiters to find more experienced engineers.

The Boston area may not be alone in its high demand for engineers. This article in the Charlotte Business Journal talks about how many of this year's graduates of UNC Charlotte's Colleges of Architecture and Engineering had jobs lined up by the time they were juniors. In fact, according to the article, enrollment at UNC Charlotte's engineering school has grown 7% to 10% annually for the last 10 years. Charlotte architecture firm Little has seen salaries for new grads and interns rise 5% to 6% from last year. And HDR Engineering Inc. said that salaries for new graduates are rising faster than those of staffers with three or four years' experience.

If you are seeing high demand for a shortage of talent, let us know.


Friday, June 20, 2008

Odds and (week)ends

Just a few tidbits to close out the week as the calendar turns to summer:

* Engineering News-Record released its first-ever Top Green Design Firms survey earlier this week. According to the magazine, the Top 100 Green Designers generated design revenue of $1.74 billion from green projects in 2007. Green design accounted for 7.4% of the Top 100's total design revenue. But in the general building market, where green standards are more commonplace, green projects accounted for $1.56 billion in revenue out of a total of $8.68 billion, or 18%, for the Top 100. Clearly, as the headline suggests, green building is no longer a fad, but is now part of the mainstream.

* KBR, the global engineering, construction and services company, is under fire again, according to The Washington Post. The Pentagon's inspector general reported in an audit released earlier this week that KBR performed shoddy and substandard work in repairing hurricane-damaged Navy facilities while one technical advisor alleged that the federal government paid double for KBR projects due to design and workmanship deficiencies. The Naval Facilities Engineering Command gave KBR, then known as Kellogg, Brown and Root, three repair contracts worth $229 million over five years in July 2004, according to the report. At the time, KBR was a subsidiary of Halliburton, the Texas energy company whose former chief executive is Vice President Cheney. KBR does not agree with many of the conclusions contained in the report, according to a company spokeswoman, who added that KBR is working with the Navy to resolve problems with the contracts. KBR and Halliburton have been lightning rods for media scrutiny since the war in Iraq started in 2002.

* Read the Advertising Age article sent to me earlier this week in response to my posting "The sustainability of sustainability" and it contains some interesting points. The author of the article, Greg Andersen, writes about the foolishness of companies like Pizza Hut having pages on the social networking site Facebook. "Why? I mean, who wants to be friends with a pizza?" He later writes, "There are examples across the marketing universe where brands and their agencies have jumped into trendy environments to do trendy things. ... We're all guilty of it. Everyone wants to do the next new nontraditional thingy, including me. ... But the way we're doing it in many instances is not so great. 'Because everyone else is' is an unacceptable answer." The article appears in the June 2 issue of the magazine. For any marketer or firm leader who wants to "follow the trends," it is a good read.

* This one's for the CEOs and anyone else who travels regularly...Continental and United are planning a joint venture that they claim will expand flights and destinations, and improve our ability to earn miles and elite status in Mileage Plus. What they don't talk about is this: Consolidation will inevitably lead to higher prices. When combined with the effects of rising fuel costs and overall sluggishness within the airline industry, this is more bad news for frequent flyers.

Have a good weekend, everyone!


Wednesday, June 18, 2008

The sustainability of sustainability

Allison Arieff's blog in The New York Times had an interesting post on Monday night titled "How Green Is Your Brand?"

The posting talked about the Sustainable Brands '08 Conference in Monterey, California that took place earlier this month.

Specifically, Arieff says that, "During many of the presentations, she was disheartened by the degree to which eco-aspects have to be separated and called out, rather than be built-in, integral and inherent to a product, service or philosophy. It would be great to see more products and services serve a true environmental need rather than see so many emerge from companies jumping on a savvy marketing opportunity."

That quote got me thinking about some chatter I picked up on in late April while judging the Society for Marketing Professional Services (SMPS) Marketing Communications Awards entries in Boston. It seems as though many A/E marketing professionals have taken the tack of using this push toward sustainability as a crutch to tout their firm's interest in green design.

While it's all well and good to think of Mother Earth in your firm's projects, talking about how your direct-mail piece is made of recycled paper as a way of "showing our firm's commitment to sustainability" is a bit much. If you want to do good, do good. But spare us from the tired spiel in your marketing copy. After all, if every firm is pushing the concepts of green building and sustainable design in their marketing efforts, are you really differentiating yourselves from the competition?

This is one case when it's better to show, don't tell.


AIA Architecture Billings Index declines again

The AIA released its monthly Architecture Billings Index this morning and, not surprisingly, the Index showed that nonresidential construction billings continued to decline in May for the fourth straight month-- and at a faster rate than the month before-- showing continued weakness in nonresidential building.

The Index, which tracks new billing for nonresidential construction at U.S. architecture firms, fell 2.1 points in May to 43.4, according to an AIA press release issued this morning. The figure indicates new billings at architecture firms fell faster in May than the previous month. However, the reading is still up from the all-time low of 39.7 in March.

A reading below 50 means new billings fell; any score above 50 indicates an increase in billings.

The ABI shows an approximate 9- to 12-month lag time between architecture billings and construction spending, meaning the lack of billings now will result in a lack of construction spending later.

The index on inquiries for new projects also declined, giving up 7.4 points to 46.5.

The AIA also tracks other sectors, most of which still indicated a downturn in billings. The index for commercial/industrial projects, which account for 60 percent of all billings, lost 0.8 points to 39.7, while the reading for mixed facilities rose 1.4 points to 45.3. Only the reading on institutional construction came in above 50, rising 3.1 points to 53.9, meaning there has been more work on government buildings, schools, and hospitals.

"We've seen a dramatic contraction in design activity in recent months," said AIA Chief Economist Kermit Baker in a release announcing the May results. "The weakness in design activity can be expected to produce a contraction in these construction later this year and into 2009."

Regionally, the Index breaks down as follows in May: Midwest (51.9), South (47.0), Northeast (41.7), and West (36.3), so there is more work in the Midwest while the rest of the country is struggling.

When will this downturn end? No one can say for sure, but the continued decline in architecture billing is an ominous sign as we head into the second half of 2008.


Tuesday, June 17, 2008

Cubellis takes another

It wasn't surprising to anyone with an eye on M&A deals within the A/E industry to see that Cubellis had merged with Dougherty + Design Group, according to a press release issued last night by the Boston-based Cubellis.

The merger with the Atlanta-based Dougherty + Design Group is the initial step in Cubellis strategy to expand into Central America and South America. Dougherty + Design Group's clients include General Growth Properties, CBL & Associates Properties, and Jones Lang LaSalle.

Cubellis says the merger, the sixth in the last year with one partnership, according to its web site, will strengthen its retail practice group.


QBS takes a hit

This morning's Times-Picayune newspaper of New Orleans had this troubling headline: "St. Charles does away with quality-based engineer selection."

The story talks about The St. Charles Parish Council last night voting to do away with the QBS process for choosing engineers and architects, saying "the process was too cumbersome and was delaying necessary public works projects." The new measure allows the Parish president to select engineers for projects with fees of more than $20K, provided he gets councli approval.

This is bad news for the A/E industry, as everyone reading this knows.

I can't tell you the number of times I've had a conversation with a marketing professional or A/E firm leader that didn't include the following: "If the A/E industry ever loses QBS, we're all screwed."

Well, that reality is one step closer than it was yesterday.


Monday, June 16, 2008

How do you set non-management salaries?

June…a month for barbeques, brides, and PSMJ trying to figure out how to help our clients determine reasonable and appropriate salaries for non-management level employees at A/E firms.

Benchmarking management salaries is extremely important - both to the managers themselves and to clients of A/E firms. It's a pretty straightforward process and it's best to benchmark management salaries by peer group and the type of services you provide.

Benchmarking non-management salaries is much harder. Sometimes we get calls that go like this: "what is the median salary for a CAD operator in San Francisco 5 years after receiving a degree in a 30-person architecture firm?" How could any firm realistically collect and report this sort of data with any degree of credibility?

There is some data being collected by the associations, but I don't think it's terribly useful because if it were I wouldn't get the number of calls I get for non-management salary data. Other than wage indicies that are available in the public domain (not very robust and probably not really useful to A/E firms) and job search Web sites like (these figures are ALWAYS skewed in favor of the job seeker) there is very little out there.

My question is, how are you determining salary levels for your non-management employees? Are you using formal data derived from surveys of A/E firms? Association data? Let me know at


In case you missed it

Two more big M&A deals have gone down this month...

HDR Architecture merged with CUH2A in a deal announced two weeks ago. The deal brings together one of the world's leading healthcare design firms (HDR Architecture) and the world's largest science and technology design firm (CUH2A), according to a press release announcing the merger.

The firm now employs nearly 1,700 architecture, engineering, and planning staff in more than 40 locations worldwide. The press release claims that the merger will allow each firm to fast forward its company's strategic development by at least 10 years.

According to the release, the merger should be finalized by the end of this month.

A point worth noting: HDR Architecture is an operating company within the larger HDR, Inc., with approximately 1,300 employees. The parent company, HDR, Inc., has about 7,000 people in more than 160 locations worldwide.

In the other deal, 22,000-person international engineering and project management company AMEC has agreed to acquire Geomatrix Consultants, Inc., for $85 million.

Geomatrix, a 500-person diversified technical consulting and engineering firm, has 18 offices in the United States and one in Canada. AMEC has offices in more than 30 countries around the world. Its shares are traded on the London Stock Exchange. According to a press release announcing the deal, AMEC paid three-quarters of the purchase price ($63.75 million) at closing, with the balance to be paid over the next two years.

Regardless of the uneven economy, A/E firms continue to play the M&A game. Don't look for it to stop anytime soon.


How I spent my summer vacation

For many CEOs, the upcoming July 4 holiday usually means a week or two away from the office.

Some firms close for the week while other firm leaders use the summer doldrums to catch up on tasks that have slipped under the radar, whether that's reading industry newsletters (like Professional Services Management Journal), writing thank-you notes to friends, or opening the mail that stacks up in your inbox.

But if you choose to be out of the office and take that much-deserved summer vacation, chances are you also choose to bring your cell phone, BlackBerry, and maybe even your laptop, regardless of the impact it will have on your family. After all, the work never goes away, even if you do, right?

That said, try to limit your cell phone and BlackBerry time to an hour or so a day, preferably when your spouse and children are eating, showering, or sleeping. A proper work/life balance can go a long way toward making you a happy, healthy, and productive CEO.

How are you spending your summer vacation? How much time are you taking off? And what are you bringing with you in terms of cell phone, BlackBerry, etc.? Drop me a line and let me know!


Friday, June 13, 2008

Hiring in a down economy

We talked earlier about A/E firms who are hiring while their competitors are letting people go.

Here’s what you can do to make this a reality in your firm:

· Take a look at your workforce. Are there things that could be redistributed if you found the right candidate?
· Check out your competition. Are they letting people go? Have they instituted a hiring freeze?
· Use your network. The candidates you seek are out there. You just need to find them.

The AEC industry is built on relationships. People know people in this business. If you hear that your competition is laying people off, ask your “in the trenches” professionals if they know of anyone at XYZ Architects who lost their job. Ask them if they would be an asset to your firm. Encourage your staff to let you know when they hear of a competing firm laying people off or an industry colleague looking for work.

Linked In and the Society for Marketing Professional Services are two more resources you can use. SMPS is a great place to find out who’s hiring, who’s laying people off, and why. Linked In allows people to update their employment status instantly and sends out an e-mail to each of your contacts, letting them know immediately of any changes.

And if you know someone who is on the street and you’d love to have working for you, by all means, do whatever it takes to get them!

Fact is, you can wait for your clients to find money to put projects out to bid, submit an RFP, go through the dog-and-pony presentation, and land the job before hiring people. Or you can bring them on staff now, take a hit to your margins, but with the knowledge that when things turn around and the talent war resumes, you’ll be several steps ahead of the competition.

Good luck!

Ed Hannan

Strike while the iron is cold

Some A/E firms can make chicken salad out of, well, you know the expression.

We spoke with a client the other day who told us that they are aggressively hiring right now, in spite of the uneven economy.

Sounds counterintuitive, right? After all, most A/E firms are struggling to keep their head above water, with the AIA’s Architectural Billings Index only rebounding in April from its all-time low in March, while the national unemployment rate posted its largest monthly jump since 1986 in May, meaning companies are letting people go, not adding resources.

Here’s an example. Upon joining PSMJ earlier this week, I renewed acquaintances with many colleagues I met while working at Zweig White Information Services the past five years. I heard from the CEO of a 200-plus-person engineering firm in California who told me, “We’re hanging in there, Ed. Stock was up a little in 2007, net revenues and profits are ahead in 2008 so far, but we have scaled back some staff, so less costs. We’re just waiting out the storm and converting staff involved in private work to more public agency projects.”

So while this firm puts people on the street, his competitors could be snapping them up.

Think about it.

If your competitors are letting people go, all of a sudden, the talent pool that seemed nonexistent just 18 months ago is flush with candidates.

We’ll talk later about how you can capitalize on a down economy.

Ed Hannan
Follow @PSMJ_Resources