Do you know your A-B-Cs?

I saw an e-mail the other day from a principal of an A/E firm that contained an egregious spelling error. I won't repeat it here, since it was widely distributed, but let's just say that the e-mail did the sender no favors. It infuriates me to no end to see this. Maybe it's because I'm a professional writer/editor who, if nothing else, takes the five seconds necessary to spell-check all outbound communications. But it's not difficult, people. This blog has a spell-check feature. My Microsoft Outlook has a spell-check feature. My Microsoft Word has a spell-check feature. To not use it EVERY time is lazy at best, unprofessional at worst.

Oh, and for those of you who like to take shots at the marketing department and question the ROI you get from it, let me remind you that this came from a principal. You know, the guy who signs the paychecks for that marketing department. If the principal can't spell correctly, it's sort of unfair (sadly, not unexpected, however) for the same principal to put the marketing department under the microscope.

Ed

Schoor DePalma founder pleads guilty to federal corruption charges

Howard Schoor, who helped found the prominent engineering firm Schoor DePalma in 1969, told a U.S. District Court judge Monday that he paid two Ocean Township, New Jersey sewerage authority officials $15,000 in 2000 and 2001, according to the Newark Star-Ledger.

"I am guilty," the 69-year-old engineer said during a hearing in federal court in Newark, New Jersey.

Schoor said the payments were a reward for the officials' supporting efforts by the firm, then known as Schoor DePalma, to win contracts with the agency. The firm has been involved in high-profile projects throughout New Jersey and has donated millions of dollars to the campaigns of numerous state politicians, according to the Star-Ledger article.

Schoor stepped down as CEO of the firm in 1992, according to the article. He began selling his shares in 1996 and then started working as a consultant for the firm. Schoor left the firm in 2005 and was indicted in 2006. The firm changed its name to CMX in September 2007.

According to Schoor's attorney, he "accepts responsibility" for his crime, but stressed the payments were solicited by the two officials. "The government and Mr. Schoor agree that all services were performed by Schoor DePalma in a 'professional and proper manner," said Schoor's attorney, Justin Walder, in a statement, quoting language he negotiated with prosecutors for the plea agreement.

Schoor could face between 8 and 14 months in prison under federal sentencing guidelines, Assistant U.S. Attorney James Nobile said, according to the article.

CMX issued a statement saying the firm was "disappointed and saddened" by Schoor's guilty plea because "he was clearly an important figure in the founding of Schoor DePalma." But the statement added that "it is important to note that this action in no way involves CMX," according to the Star-Ledger article.

The firm and its employees have donated nearly $3 million to New Jersey politicians and political parties at the state and county levels over the past quarter-century, mostly to Democrats, according to the article. It ceased giving donations several years ago amid criticism of pay-to-play, the practice of awarding government contracts to campaign contributors, and the corruption investigation into Schoor.

The firm's government clients--which account for about half of its work-- have included the New Jersey Turnpike Authority, the Port Authority of New York and New Jersey, and more than five dozen local governments. CMX says it is the region's premier engineering firm, with more than 1,000 employees in 25 offices from New York to Mexico.

Ed

CH2M Hill announces CEO succession

Big news out of Denver last week with the announcement that Chairman and CEO Ralph Peterson will step down as CEO effective January 1, 2009. Lee McIntire, who is currently the firm's president and chief operating officer, will become the firm's CEO at that time.

Peterson, who has served as CEO since 1991 and has been employed with CH2M Hill since 1965, will continue to serve as the firm's chairman through the completion of his current term, and will retire in October 2009.

During Peterson's tenure as CEO, the firm has grown from just over $400 million in revenues to $5.8 billion, according to a press release announcing the transition. Peterson was the 148th person hired in a firm that now has more than 25,000 employees and was named this year by Fortune magazine as one of the 100 Best Companies to Work For.

McIntire, who joined CH2M Hill in 2006 as president and CEO has more than 30 years of experience in the engineering and construction industry.

Ed

Sad news to report

I hate to end the week on a down note, but I just found out that Stephen Kliment passed away. Kliment, the former editor in chief of Architectural Record, died on September 10 while visiting Germany. According to an obituary posted on the Architectural Record web site, his wife said Kliment died of cancer.

Kliment worked as a magazine and book editor, an architect, and a teacher. He also served as a judge for the Best of Show competition at the Society for Marketing Professional Services' annual Build Business conference on multiple occasions.

I met him at the SMPS conference in New York in 2004, where I was judging the Best of Show entries for the first time (he had done it before that on multiple occasions) and we bonded immediately. He was not shy about offering a contrasting opinion on a marketing piece that the other judges in the room liked. But he was always charming and personable, with his forever tousled hair and dry British accent (he was born in the former Czechoslovakia and grew up in England, emigrating to the United States in 1950, according to the Architectural Record obituary).

Kliment was friends both with PSMJ founder Frank Stasiowski and ZweigWhite founder Mark Zweig. In fact, I don't know of a single person who didn't like and respect Kliment. He was a tireless advocate for the value of marketing and the importance of writing (he was editorial director for the New York chapter of the AIA's Oculus magazine, editor of the Principal's Report newsletter, and author of multiple editions of Writing for Design Professionals). He was editor of Architectural Record from 1990 to 1996.

I could go on, but the Architectural Record obit does a good job of explaining the diverse career and great impact Kliment had on the AEC industry. Check it out and then feel free to e-mail me your thoughts and remembrances of a great man. We'll post them here early next week.

Ed

AIA Architecture Billings Index improves slightly, but remains negative

The American Institute of Architects' Architecture Billings Index (ABI) posted its third consecutive month of improved activity, but still represented the seventh consecutive month with negative scores, indicating that the economic outlook for U.S. architecture firms remains dire.

As a leading economic indicator of construction activity, the ABI shows an approximate 9- to 12-month lag time between architecture billings and construction spending.

The AIA reported the August ABI rating was 47.6, up slightly from the 46.8 mark in July (any score above 50 indicates an increase in billings) and the 46.1 mark in June. The inquiries for new projects score was 52.4, down from 54.6 in July, but still up from 51.8 in June and 46.5 in May.

"The recent figures over the last quarter are no real surprise given the overall state of the economy," said AIA Chief Economist Kermit Baker. "The news for industries affected by the construction industry is that looking back 12 to 18 months, the numbers were extremely healthy. That means many of those projects are currently in or entering the construction phase so there should still be demand for labor and building materials, and later on interiors, computer equipment and the like."

The ABI breaks down by sector as follows: Institutional construction (52.2, down from 53.6 in July), commercial/industrial projects (47.5, down from 48.8 in July), mixed practice (44.8, down from 45.6 in July).

Clearly, things remain bleak for the AEC industry as we enter the fourth quarter of 2008. The uncertainty surrounding the presidential election and the U.S. economy only makes things more unsteady.

Ed

More on the Cardno-TBE deal

Just wanted to make a quick point that the acquisition of TBE Group by Australian-based Cardno Limited (the press release called it a merger, but let's call a spade a spade here) is a continuation of Cardno's expansion into the United States.

I had lunch with Cardno USA President Michael Renshaw last year at a conference on (surprise, surprise) mergers and acquisitions. He told me that he likes to look for US-based firms that can add to his company's profile.

I found him to be very engaging and personable, chatting up others at the table with a smoothness and ease that made it very easy for me to see how successful he's been at acquiring and integrating US-based firms to his foreign profile. Reminds me a lot of Malcolm Paul at WSP Group in that way. I wrote a lengthy profile on Paul about a year ago and he talked about how he liked a diverse worldwide portfolio to insulate his company from economic struggles in any one country.

Likewise, the TBE acquisition means about one-third of Cardno's 3,400 employees will work in the United States. And because TBE has seen annual growth of about 14% per year for the past 10 years, it's likely that TBE got a good price in the deal, even though the U.S. economy has not necessarily been favorable for firms working in infrastructure like TBE. Expect that to change, however, next year as it is likely that priorities will shift toward fixing America's infrastructure with the new presidency, regardless of whom wins the November election. This will only improve Cardno's ability to generate a healthy return on its investment.

Ed

TBE Group merges with Aussie firm Cardno Limited

PSMJ's Mergers & Acquisitions Division has learned that Florida based TBE Group announced it has joined forces with Australian-based Cardno Limited in a merger that took effect Sept 15, 2008.

The merger with Cardno means that TBE, a 450-person engineering, environment and planning firm becomes a key part of an international industry leader with a combined resource base of 3,400 staff working on projects in more than 60 countries.

Patrick Beyer, President of TBE explained that the benefits of the merger include providing clients with a wider range of services and locations, providing staff with additional opportunities for career development, and to accelerate the growth of TBE across the US and overseas.

TBE has achieved approximately 14% percent annual revenue growth for the last 10 years and has also expanded into Canada, the United Kingdom and Asia in recent years.

TBE brings to Cardno a core competency in coordination of major infrastructure projects - particularly in the areas of utility mapping, utilities coordination, right-of-way acquisition and relocation, transportation engineering, construction engineering, and civil and environmental engineering. Recent projects include construction of the new I-35 Mississippi River Bridge in Minnesota and the Metro Parkway - State Route 739 project in Florida.

Cardno brings to TBE a broader range of civil and structural engineering, international development assistance, environmental, project management and planning services across many countries including Australia, New Zealand, United States, United Kingdom, Indonesia, Kenya, Sri Lanka, China and United Arab Emirates.

With the addition of TBE, staff reporting to Cardno’s U.S. operations now comprise 1,150 staff across 39 offices and a further four branch offices in the United Kingdom, Belgium and Canada. Cardno’s other U.S. businesses include WRG Design, Emerging Markets Group and XP Software.

President of Cardno USA, Michael Renshaw, said TBE offers tremendous potential to cross-sell capabilities with Cardno’s existing US based businesses and also with its operations in other countries and continues Cardno’s strategy of diversifying its skills base and markets.

TBE’s key management will become Cardno shareholders and remain active in the company. Pat Beyer the founder of TBE will remain as President.

For more information, go to http://www.tbegroup.com/

Early impressions of PSMJ Quarterly Economic Indicator Survey

Looking at the third quarter Quarterly Economic Indicator Survey at the midpoint of the month(150 responses) here is my key read on our profession:

• The usual areas are still going strong - health care, education, environmental, water/wastewater, energy/utilities. Water has slowed a bit, but is still strongly positive. Even Telecom is now positive and it was a drag on this sector the past couple of years.
• The housing market is still in its steep rate of decline, we have not slowed the descent as yet. I think we are still over a year out from any decent work in this sector.
• Commercial for both developers and owners has declined further since the last quarter. Clearly this sector is headed for a marked slow down over the next year.
• Transportation has taken a surprising downturn. There are an increasing number of states that are stopping projects due to higher construction costs and the effects of lower gas tax revenues on programs. Last week's drain of the federal trust fund didn't help the mood, either. I think we will be down in this sector until someone decides how funds are going to be increased (then it will take off like a rocket).
• Overall, we are negative in backlogs, and also in revenue growth quarter over quarter. Proposals have also turned negative overall.

Not much change, but what change there is is not positive, so I think we will see slower economic activity in our sector over the next year at least.

Bill Fanning, PSMJ Director of Research

Federal Highway Fund Crisis Averted!

Stop the presses! (I just can't let the opportunity to use an old movie line go by)

House and Senate passed refinancing, President will sign tomorrow, crises over! No contractors or A/Es will be deprived of timely payment, other than through the usual lack of administrative speed of the DOTs.

Bill Fanning

US DOT slows highway payments

Ken Simonson, Chief Economist at The Associated General Contractors of America reports this week that the federal Highway Trust Fund would not have enough money to make full payments to states for highway construction expenditures they had already incurred and submitted for reimbursement. DOT Secretary Mary Peters called on Congress to immediately pass a bill transferring $8 billion from the general fund. When the House passed such a bill in July, the White House had issued a veto threat. The New York Times reported on Sept. 6 that DOT “expects to have enough money to make all payments to the states for the second week of September but enough for only about 64% of the payments the third week, said Brian Turmail, an agency spokesman. Then, with a regular infusion of two weeks’ worth of gasoline-tax revenue from the Treasury, [DOT] will have enough money to make 88% of its payments in the fourth week of September—except that it will have to first make up payments it could not meet earlier in the month. Thus, as states wind down the busy summer construction season, their transportation officials can anticipate longer and longer delays in getting payments from Washington, Mr. Turmail said. State transportation officials expressed alarm. The money shortage will have ‘grave repercussions for the states, for hundreds of thousands of workers in the construction industry and the driving public,’ said John Horsley, executive director of the American Association of State Highway and Transportation Officials. Some AGC chapters reported that their state DOTs have already delayed contract awards.

State revenue shortfalls are leading some states to cut highway construction and other spending. The Washington Post reported this week, “Maryland transportation officials plan to announce today the deferral of about $1.1 billion in transportation [projects] in a $10.5 billion capital plan for the next six years. The announcement…is prompted by lagging revenues in a separate fund for transportation projects. Two of those revenue sources, the gas and titling taxes, have slowed considerably because of higher gas prices and slumping car sales.” In addition, “Budget Secretary T. Eloise Foster said she plans to recommend at least $250 million in spending cuts next month” to the Board of Public Works. “Just weeks after more than half of the states closed shortfalls in their 2009 budgets totaling $48 billion, the budgets in 13 of those states have fallen out of balance again,” the Center on Budget and Policy Priorities reported on Monday. “In the six of these 13 states that have made specific estimates, the new gaps total $4.4 billion, or 4% of their budgets….The 13 states facing new, mid-year shortfalls for fiscal year 2009 (which began on July 1 in most states) are Arizona, Connecticut, Florida, Georgia, Illinois, Massachusetts, Nevada, New Hampshire, New York, Ohio, South Carolina, Vermont, and Virginia.”

PSMJ Research Director Bill Fanning told me this week that the FHWA program pays bills due to states on a first in-first out basis, but only up to the amount of the cash balance in the trust fund.

This means delays in payments to contractors and A/Es will be a snowball slowdown as FHWA cumulatively delays from $0 to the $8 billion shortage.

We should begin to hear about this from A/Es about the end of November as the slowdown becomes noticeable. And the contractors (who have bigger bills) will start screaming long before the A/Es.

Fanning went on to say that Congress could fix the problem with the $8 billion transfer internally within DOT, but counting on Congress to do anything responsible is probably wishful thinking.

Bruce

Do you know a seagull manager? Are you one yourself?

The online resource changingminds.org defines seagull management as a management style whereby a manager “flies in, poops on you and then flies away again”.

Seagull managers typically give criticism and direction in equal quantities often without any real understanding of what the job entails. Then before you can object or ask what they really want, they have something more urgent to do. The experience of having a seagull manager is not positive. The best thing that can be said is that they are typically there not very often and you can largely get on with the job by yourself.

Seagull management happens when the manager doesn’t really know that much and fears being exposed by questions or debate. They consequently grab the talking stick and do not stop until they can excuse themselves and leave. It is possible that they really are busy, but what they miss is the importance of person-management. They are likely to be strongly task-based and consider the 'soft stuff' as fluffy and unnecessary. Their approach is thus highly transactional, based on the simple premise 'do as I say and you'll continue to get paid'.

What you need to do about seagull managers depends largely on your job. If you can work independently, then the best approach is to listen patiently then ignore them. As long as you are delivering value, they may not actually be too concerned about how you get there. Unlike the micromanager, they are not that interested in control over you.

If, however, their approach is damaging to your career and health, then you need to address the issue. Book a meeting with them (if you can) to discuss your work. Write down what your objectives are and what you are doing and give it to them. They may ignore it but this will give you tacit ammunition if you need it later. If things are particularly bad, this is a definite case for assertiveness (which is probably good anyway). Talk to them about what they are doing and the effect they are having. Worst case, look for another position with a better manager who knows how to lead.

A novel approach is to deliberately 'chase' them with complex detail for which they have 'no time'. As they retreat or waffle, offer a simpler alternative that is easy for them to accept. You can also always reframe what they said, casting it into a more sensible light.

Because the most important thing in the seagull manager's life is the seagull manager, if you can deliver results, then they may well leave you to your own devices or give moderate support. Deliver regular short messages that show you are making good progress. Also work to make them look good to the rest of the organization (despite temptations to the contrary!). If they think you are acting contrary to their interests, they will just fly by more often and poop on you even more.

If you are a manager, then seagull management is something to avoid. It is a trap that will alienate and demotivate your staff. If there are wiser people above you, then they also will find out what is happening and your advancement will halt or regress.

The real lesson here is to sustain a good relationship with your people. Respect them and communicate regularly and with integrity. And don’t forget to listen.

Bruce

How to Factor Gas Prices in Recruiting and Retention

The online recruiting community ere.net reports that employers offering transportation subsidies, telecommuting options, and virtual office arrangements may be wooing the best and the brightest candidates right now, even without the highest salaries and biggest relocation budgets in the marketplace.

Today it isn’t unusual to find employees spending $5,000 a year just in gas to commute. Many firms are using telecommuting to increase the pool of prospective candidates. If you have a policy like this, you may be able to offer less salary because the employee will no longer need to absorb the daily commute cost.

ere.net also reports that even firm management who commute 30 miles or more to work are turning over at higher rates because of high gas prices and it will only get worse when the job market and the economy rebound. Fuel prices are also affecting the cost of relocation. Candidates are scrutinizing the cost of living in prospective urban areas and more are either turning down offers or negotiating for higher salaries. Firms too, are responding differently – many now require relocating managers to sign repayment agreements, obligating them to repay the relocation costs if they quit before completing one year of employment. You need to factor these realities into your management recruitment and retention strategy.

Bruce