Monday, October 31, 2011

Do your potential successors fit this bill? If not, move on!

The retirement wave has officially begun in the A/E industry. Since 2007, the percentage of employee turnover attributable to retirement or health issues has almost doubled. Yet the number of principals who have prepared ownership or leadership transition plans has actually dropped since 2007. If you are one of the 60 percent of principals who have no plans, you need to start evaluating your potential successors to ensure they will carry on the name and reputation of your firm long after you’ve retired.

Think about the people who are your obvious successors and decide whether these criteria describe them:

• Vision. Leaders create a vision for the firm and the future that inspires and motivates others.

• Focus. Leaders spend their energy in the few directions that will really make a difference to clients and to the firm over the long term.

• Values. Leaders embody the personal and professional values that you want to perpetuate in your firm.

• Client relations. Leaders understand what matters to clients and they motivate staff to excel in those areas. They inspire confidence in clients and potential clients.

• Empowerment. Leaders coach employees, help them grow personally and professionally, and encourage them to think and act like entrepreneurs within the boundaries of their responsibilities.

• Achievement. Leaders get things done, maximizing their own performance and constantly looking for ways to maximize the performance of the firm.

• Quality. Leaders strive to continuously improve the quality of their own work and the work of others in the firm, to satisfy and delight clients.

• Optimism. Leaders are positive about the future, and they don’t let obstacles deter them from accomplishing their goals. Their optimism is contagious.

• Teamwork. Leaders enjoy working with, and through, people. They look for opportunities to praise the efforts of others on the team. People like to work with them, and choose them as role models.

• Flexibility. Leaders perceive when their style or approach is not working in a particular situation and they’re not afraid to change to get the results they desire.

• Management. Leaders understand the systems and procedures that make your firm operate as a business. They know how to use these systems to maximize your performance and your profitability.

These traits are a great starting point, but you can take your evaluation of potential successors beyond this step. Come to PSMJ’s Ownership Transition Roundtable, November 8-9, in San Diego, CA for more advice on how to select your future successors and successfully turn your firm over to their capable hands.

Thursday, October 27, 2011

Residential Construction Continues to Struggle

A sluggish economy, a soft job market, a large inventory of foreclosed homes, the threat of additional foreclosures, and difficulty in obtaining financing for both potential homebuyers and for builders continue to act as a drag on the housing market. In spite of these factors, some glimmers of hope have appeared recently. Housing starts rose 15% in September from August. Much of that gain was due to ever volatile multifamily starts. Single-family starts at worst are bouncing around a bottom of about 420,000 units. Meanwhile, single-family permits are holding their own at 417,000. The National Association of Home Builders (NAHB) October Housing Market Index (HMI) rose from 14 to 18, the highest it has been since a reading of 22 in May of last year. Particularly heartening was that the HMI for the West jumped from 12 to 21, its highest reading since August 2007. The HMI for the South was up from 15 to 19. Together, the West and the South account for roughly three-quarters of national housing starts.

Lower long-term interest rates from the Federal Reserve’s Operation Twist will provide a mild lift to the housing market, although tight lending standards remain a problem. If the national economy produces at least 100,000 net new jobs per month (at an annual rate) as we fully expect, the housing market will begin to trend upward and build some positive momentum. Regardless, the outlook for multifamily housing projects looks bright in the near term as vacancy rates fall and rents rise.

New residential construction spending has been inching upward for the past three months. In August, it advanced 1.3% to $128.7 billion, its highest level since February. The forecast is for residential construction spending to fall 6.0% in 2011 and then rise 2.1% in 2012 and 7.3% in 2013.

Wednesday, October 26, 2011

Clinard Engineering Associates merges with Alfred Benesch & Company

PSMJ initiates transaction and advises Clinard Engineering Associates

As of October 3, 2011, Clinard Engineering Associates of Nashville, Tennessee has joined forces with Alfred Benesch & Company, a leading multi-discipline design firm serving a wide range of client markets. With offices in Nashville and Chattanooga, Clinard is a transportation engineering firm that specializes in civil, structural, and environmental engineering services.

By merging with Benesch, Clinard is now part of a multi-faceted engineering team with a network of offices from Pennsylvania to Colorado. The combined firm now has more than 380 employees located throughout ten states including Colorado, Illinois, Iowa, Kansas, Michigan, Nebraska, Ohio, Pennsylvania, Tennessee and Wisconsin.

“When you have the right firms merging together for the right reasons, you will realize growth opportunities that neither firm would have accomplished on their own” states PSMJ Consultant Bradford Wilson, CMA. Wilson, the lead consultant on this engagement, went on to state “Geographic expansion is the top reason that firms choose to grow through acquisition and we’re confident that this transaction will reap rewards for years to come.”

This transaction is one of many that have made 2011 a year of significant transaction activity in the A/E industry. According to PSMJ’s transaction tracking, there have been 156 mergers or acquisitions in the industry in the first three quarters of the year and PSMJ is forecasting that pace to continue bringing the year’s total to pre-recession levels of 200+ transactions. “But, the number of transactions doesn’t tell the entire story.” stated Gregory Hart, PSMJ Consultant, when discussing M&A transaction activity. “The size and nature of deals today is quite different from what we saw before the economic meltdown. This is still a very risk-averse environment and the transactions reflect that.”

To keep tabs on the latest M&A news from the A/E industry and transactions like this one, subscribe to the M&A Insider— PSMJ’s free weekly e-news on the latest transactions and the tips you need for successful M&A strategy. Learn more by visiting

Tuesday, October 25, 2011

After Upturn, Architecture Billings Fall Again

The American Institute of Architects’ Architecture Billings Index once again showed decline in the month of September. While there was a slight improvement in August, the trend proved to be short-lived and it seems the industry is back to the decline we saw for the four months prior to that. Not only was there a drop in billings at architecture firms around the country, there was a decrease in average backlog.

The Architecture Billings Index (ABI) serves as the leading economic indicator of construction activity, and reflects the approximate 9-12 month lag time between architecture billings, and actual construction spending. The monthly ABI scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline.

The ABI registered a score of 46.9 for the month of September, a significant drop from the 51.4 posted in August. While the average number of billings declined on a national level overall, there were some regions that did show increase in firm activity. Regional billings scores are computed as rolling three-month moving averages, and recent numbers showed enough strength to boost scores for firms in the Northeast and Midwest into positive territory. Scores for firms in the South and West continued to show relatively steep declines.

Billings levels by firms’ specialization were also mixed last month. Commercial/Industrial firms reported reasonable improvement in September; the ninth straight month of billings gains from mid-2010 through the first quarter of 2011. However, residential and institutional firms once again reported a decline.

Unfortunately, backlogs at architecture firms around the country took a slight hit as well. They decreased from 4.4 months at the end of the second quarter, to 4.2 months in the third quarter. This means that firms can keep current employees working for an average of 4.2 months now without signing onto any new projects. While it might seem like a safety net, a continued decline in backlog and billings could be very detrimental to firms’ revenue stream in just a few months.

Economy remains in slow gear

The broader economy continues to show only modest growth. Just over 100,000 jobs were added in September, bringing the total added for the first nine months of the year to just over one million. That is well below the number required to generate healthy growth in the economy, and, as such, the national unemployment rate is up from 9.0 percent in January to 9.1 percent in September.

Construction employment saw an increase of 26,000 positions in September, the second strongest number of the year. However, only 53,000 positions in this sector have been added since the beginning of the year, or fewer than 6,000 per month. Architecture firms have added only 1,200 positions since January, to a current workforce of just over 153,000 in August, the most recent figures available.


By region, the ABI breaks down as follows from July* to September: Northeast is up 50.8 from 46.4, South is up 47.3 from 46.9, West is up 46.7 from 46.6, and Midwest is up 51.0 from 44.9.

By market sector: Commercial/Industrial is up 52.4 from 47.9, Residential is up 46.4 from 44.7, Institutional is up 48.0 from 47.2, and Mixed is up 50.0 from 47.1.

*Data was not available for the month of August

This month, participants in the AIA Work-on-the-Boards panel were asked to comment on the current status of these downsized architectural staff:

• We specialize in residential and have stayed in business doing multifamily, as the single-family residential market is dead. Firms that held on with government work are now slowing down significantly.
—7-person firm in the West, residential specialization

• RFPs have dropped to first-quarter levels. Some projects already under contract have been slow to get the owner to agree to finalize and send out to bid.
—4-person firm in the Northeast, mixed specialization

• Our office interiors and retail work for large corporate clients are strong, but government, education, etc., are very weak.
—60-person firm in the South, commercial/industrial specialization

• Larger companies are going after local work instead of their typical national work, so smaller companies are having a struggle to get work. We typically have been doing 90 percent national work and 10 percent local. It is now 90 percent local and 10 percent national.
—50-person firm in the Midwest, commercial/industrial specialization

Monday, October 24, 2011

Stop Being Too Busy to Market! How to gain more exposure for yourself and your firm

We work in a unique industry – selling services is completely different from selling products. When consumers buy products, they consider the reputation of the manufacturer, but, most likely, have no knowledge of the individuals who are employed by that company.

Yet, when a client commissions us for professional services, our firm’s reputation gets us to the short-list, and the personalities and the reputations of our people win us the work.

Unlike products that can be sampled before purchasing, services cannot be tested, leaving clients to imagine what it would be like to work with the person/firm who delivers the service. This is where you come in!

Sooner or later, all professionals must market, if you want to advance your careers – there is no such thing as being too busy serving one client to market to another. Here are some ways you can gain exposure for your firm and promote the success of your own career:

- Write an article and get it placed in a local media outlet
- Speak at your local business association, chamber of commerce, or networking meeting
- Create a client-oriented monthly e-newsletter or webinar series
- Hold seminars and workshops for clients in your office (i.e. lunch-and-learns)
- Create a client-resource web site
- Get involved in social networking: create a blog or Facebook page for your firm to share firm information and news with clients
- E-mail relevant news and information to clients
- Collect and harness the power of client testimonials

Just remember that lack of time is not a valid reason to pass on career and business development activities. The small things you can do every day will yield positive results, if you make the time investment to do them well.

To learn more about how to raise the reputations and industry presence of your firm’s best assets (its people!), join PSMJ this fall for our Winning Proposals and Presentations seminar, coming to 5 locations across North America. Get the tools and confidence you need to succeed in bringing in more work for the firm – register today!

Monday, October 17, 2011

How to Gain Your Client’s Trust

In the present economy, clients only do business with firms they trust. And, with overhead dollars so tightly controlled, you must leverage every dollar you spend developing new business. So, here’s the challenge: what can you do to gain a client’s trust in the most cost-effective way?

Here are six of the most important qualities to demonstrate to build trust with your client:

1. You must prove your skill, competence, and experience in being part of a team.
2. You must prove you have “bench strength,” overall resources, an easily understandable organizational structure, and financial stability.
3. You must prove you have a solid reputation with other client partners who have collaborated with you.
4. You must take the time to understand your clients’ overall financial constraints on each project.
5. You must commit to building relationships with all client stakeholders that are integral to project success.
6. You must thoroughly consider all alternatives, and achieve results in a timely manner.

In contrast, here are six ways to quickly sink the relationship:

1. Be late on a deliverable
2. Give an excuse for being late on a deliverable
3. Be slow to return their call
4. Give an excuse why you were slow to return their call
5. Ask for an unexpected change order
6. Give an excuse for waiting to ask for additional money

Get the picture? Remember, excuses only satisfy those who make them. Don’t do it. If you make a mistake, own it. The game is trust. It’s hard to gain it. It’s easy to lose it.

For more tips on how to mitigate risks with great project management skills, attend PSMJ's A/E/C Project Management Bootcamp, the world's most successful PM training program in the industry! This Bootcamp is a revolutionary training like no other--through interactive case-studies, real-world examples, and proven solutions, you will foster innovation, elevate communications, increase productivity, and improve your firm's bottom line.

PSMJ's A/E/C Project Management Bootcamp can instantly and dramatically improve your ability to manage projects for quality, speed, and profitability. Click here to order or contact PSMJ Education Department at or (800) 537-7765.

Monday, October 10, 2011

Focus on Your Clients’ Real Issues

When people begin to strategize about proposal opportunities, they tend to focus on their own firm’s strengths and how they can sell those strengths to the client.

In other words, they end up making a great case for features for which the client has little interest while ignoring the client’s most important issues. This is a formula for spending lots of money on a losing proposal.

The first step in developing a winning proposal strategy is to find out what the clients’ real issues are. Fortunately, it isn’t hard to do. During your pre-proposal interview with the client, just ask these two questions:

1. What is your vision for a successful project?

2. What are your greatest fears about this project?

Also, remember that most clients aren’t a single person. So you need to ask those two questions of each individual on the selection committee or, if they don’t have a formal selection committee, each individual who is influential in making the buying decision.

Once you have figured out the clients’ real issues, your next step is to develop a strategy that will convince the client representatives that your firm will address their hopes and fears better than anyone else. And if you can’t convince yourself that you are the best choice to address those issues, you should probably save your time and money and pass on the opportunity.

To learn more about how to make a more targeted proposal that accurately addresses your clients’ true concerns and increase your proposal hit rate, join PSMJ this fall for our Winning Proposals and Presentations seminar, coming to 5 locations across North America. Get the tools and confidence you need to succeed in bringing in more work for the firm – register today!

Thursday, October 6, 2011

PSMJ Resources Inc. Announces 2011 Award Winners at Breakthrough 2012 Conference in Chicago

Awards were given to 54 top A/E industry firms for outstanding financial and customer service performance

PSMJ Resources, Inc., the premier management consulting firm for the A/E/C (architecture/engineering/construction) industries, distributed its annual PSMJ Circle of Excellence and Premier Award for Client Satisfaction Awards for 2011. PSMJ Resources will formally recognize these 2011 Award Winners at its Breakthrough 2012 Conference in Chicago, Illinois.

2011 Circle of Excellence
The 2011 PSMJ Circle of Excellence is determined by weighting each firm’s ranking in the overall 2011 PSMJ A/E Financial Performance Benchmark Survey with respect to 13 individual benchmarks. These benchmarks are indicative of performance in the various aspects of business operations, including cash flow, overhead control, business development, project performance, staff utilization, and overall profitability. The 2011 PSMJ Circle of Excellence reflects the performance of 48 participating design firms, 45 of which have agreed to have their names published:

A/R/C Associates, Inc.
Alfred Benesch & Company
Atlantic Coast Consulting, Inc.
Aviation Alliance Inc
Bison Engineering Inc
Callidus Engineering
Clark Dietz Inc
Commonwealth Engineers Inc
Cooper Zietz Engineers, Inc.
Design Engineers
Dietz & Company Architects Inc
Drake Haglan & Associates
Environmental Standards
Falk PLI Engineering & Surveying
FEH Associates, Inc.
Fentress Architects
Freese and Nichols, Inc.
GBBN Architects
Geosyntec Consultants, Inc.
Greeley and Hansen, LLC.
Hart Design Group Ltd
Hunt Engineers, Architects & Land Surveyors, P.C.
Johnson Braund Design Group Inc
Jones & DeMille Engineering
K S Ware & Associates LLC (KSWA)
Kadrmas, Lee & Jackson, Inc
Kleinschmidt Associates
Klohn Crippen Berger Ltd.
Larson Design Group
MPE Engineering Ltd
P2S Engineering Inc
Robert Peccia & Associates
Rogers Ford LC
Rowland & Broughton Architecture
SPEC Services Inc
Stelling Engineers, INC
Straticom Planning Associates Inc
Tectonic Engineering & Surveying Consultants P.C.
Thomas Miller & Partners, LLC
TSP Inc.
Ward Scott Veron Architects Inc
Wightman Jones, Inc.
Wright-Pierce Engineers

Premier Award for Client Satisfaction
The Premier Award for Client Satisfaction, presented in partnership with DesignFacilitator, honors A/E/C firms that provide their clients with top quality communications, impressive performance, and cost effective solutions. In its second year, the Premier Award participants included several dozen firms from the United States and Canada, many with international offices, making this a truly global competition. The firms ranged in size from 15 to over 3,000 employees, and included architects, engineers, geo-scientists, environmental consultants, and others - creating a diverse cross-section of professional services. Eight firms were selected as stand-out winners:

Albert A. Webb Associates
Atlantic Coast Consulting, Inc.
Burns & McDonnell
Eramosa Engineering Inc.
Fentress Architects
NTM Engineering, Inc.
Site Solutions, Inc.

Sunrise Engineering, Inc.

Three of these firms, Burns & McDonnell, Eramosa Engineering, Inc., and Sunrise Engineering, Inc., also won the Premier Award last year, making them back-to-back repeat winners. In addition, seven honorable mention awards were given to those firms who were ranked at the top of each individual category. In addition to winning the Premier Award, Fentress Architects was recognized at the top of the Most Helpful category, while Atlantic Coast Consulting, Inc. was recognized as having the Best Overall Value. Furthermore, Burns & McDonnell took home top honors in both the Most Responsive and Best at Managing Budgets categories. The remaining three honorable mentions were awarded to:

Geo-Hydro Engineers, Inc.: Highest Quality category
Hart & Hickman PC: Most Accurate category
Petra Geotechnical: Best at Managing Schedules category

The Trinity Award
One firm, Atlantic Coast Consulting, was awarded PSMJ’s 1st Annual Trinity Award, given to the firm(s) that win all three of PSMJ’s awards in the same year: Circle of Excellence, Premier Award for Client Satisfaction, and the A/E/C Best Employer to Work For. The Trinity Award celebrates the extraordinary achievement of excelling at the triple threat of success: highly profitable financial performance, high marks for client satisfaction, and having engaged and fulfilled employees – all leading to a truly successful A/E/C firm in the industry.

Breakthrough 2012
Breakthrough 2012 is an annual conference where A/E/C firm leaders learn directly from their colleagues who have proven their success by triumphantly guiding their firms through the worst economic times our industry has seen in decades. In addition, Frank A. Stasiowski, FAIA, and Dave Burstein, P.E., PSMJ’s resident experts possessing a combined 80+ years of industry and firm management experience, give statistics and advice to these leaders and let the audience know where the A/E/C industry is headed. For more information on future conferences, go to

Tuesday, October 4, 2011

Architecture Firm Billings Rebound Modestly in August

The American Institute of Architects’ Architecture Billings Index showed a modest rebound in firm billings in August. Although business conditions remain mostly mixed around the country, this sudden increase comes as a welcome surprise after four consecutive months of steady decline. While the majority of firms are still reporting a decrease in actual contracts signed, inquiries into new projects continue to grow and more firms reported an increase contracts in August than in the month of July.

The Architecture Billings Index (ABI) serves as the leading economic indicator of construction activity, and reflects the approximate 9-12 month lag time between architecture billings, and actual construction spending. The monthly ABI scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline.

The ABI registered a score of 51.4 in August, a significant improvement over the 45.1 registered in July. Business conditions are still fairly weak in all regions of the country, but those located in the Northeast reported the sharpest downturn in firm billings for the second month in a row. Conditions also continued to deteriorate at firms with a residential specialization, in spite of moderate growth reported by those firms earlier this year.

The economy as a whole remains pretty weak, and unemployment has remained unchanged in August. This marks the first month with no employment growth since 2010, and only the second time ever that unemployment has had a net change of zero. Construction employment was essentially flat for the month, while architecture services employment increased modestly for the fifth consecutive month in July (the most current data available). The Conference Board’s Consumer Confidence Index declined sharply in August, falling to a score of 44.5 (1985=100), the lowest in more than two years, as consumers became more negative about the future outlook.

Stalled projects remain a major issue for architecture firms

Nearly two-thirds of firms (65%) report having at least one design project under contract that is currently stalled, but likely to eventually proceed to construction. Three-quarters of these stalled projects are delayed due to difficulties obtaining financing. Firms report that all project types have been impacted by financing issues, with 40% of these projects being in the institutional sector: 16.3% education, 9.3% healthcare, and 15.7% other institutional projects. Multifamily residential projects also account for a significant share (15.1%) of projects stalled due to problems obtaining financing. In contrast, industrial, single-family residential, and office projects each account for less than 8% of projects stalled with financing issues.

This month, Work on the Boards participants are saying:

• We are seeing an increase in industrial activity, although we have heard from other firms that multifamily housing has slowed down again. However, a large home builder has announced a new development, and they have recently begun to complete a development that has been on hold since 2009.
- 25-person firm in the South, commercial/industrial specialization

• We are busy and getting busier. Have hired two full-time and two part-time employees in the last two months.
- Five-person firm in the Northeast, institutional specialization

• In the last six months, inquiries and initial feasibility analysis work have dramatically picked up. In the last week, our office has had one stalled project released from a three-month hold, and signed contracts for a new single-family home, and a residential renovation project. With the market soft, construction costs have seen a substantial reduction, leading to a small surge of clients seizing an opportunity.
- One-person firm in the West, residential specialization

• Owners are taking longer to begin contracts. Most clients are renovating existing facilities instead of [starting] ground-up new construction. Work from non-profit entities is virtually nonexistent.
- Eight-person firm in the Midwest, commercial/industrial specialization

Monday, October 3, 2011

10 Strategies to Stay Connected With Your Clients

Though most of us went to school because we love to design or build things or engineer them, we are in a “people business.” Relationships are the foundation of successful projects. But, do we really understand what it takes to form a real connection with our clients?

A previous survey of 200 buyers of professional services indicated that 85 percent encountered at least one major problem with a service provider during the sales process, including: “Did not listen to me” “Did not understand my needs” “Did not respond to my requests and correspondences in a timely manner.”

The following 10 strategies can vault you past the less proactive and unsuspecting competition:

1. Have a plan. Determine your client targets and include action items that will be meaningful to your client. Include costs and timetables. Monitor your progress periodically.

2. Know their business. It’s impossible to understand a client’s needs if you don’t understand their business. Start by finding out what they read and which organizations they belong to. Read those publications and attend applicable functions and become familiar with their concerns and needs.

3. Know them personally. Figure out ways to get to know their interests outside of work. You’d be surprised how much you can learn from just a quick visit to their office. You are not trying to become their best friend. That’s not a reasonable approach. You just want them to feel comfortable around you. Clients are going to work with those they feel comfortable with.

4. Listen with your ears and your eyes. You can tell when someone isn’t really listening to you. So can your clients. While they are speaking, look at them and listen with your eyes. They’ll pick up on your nonverbal communication. Don’t look at your watch, your blackberry, or any other distraction. The only time you look away is to take a brief note on an important item that will need to be followed up.

5. Make the most of meetings and phone calls. An occasional “how are you” call is certainly okay. As a general rule, have an agenda for each client communication. Leave the meeting or end the call with action items and next steps. Action items and next steps make the next contact easier. And, you will gain the reputation as a dependable “closer” when you follow-up.

6. Expand your network within the client organization. Sure, there’s usually one ultimate decision maker in each company. But, don’t exclude the influentials. They can be extremely valuable in your information gathering. Plus, they often influence the decision maker. Get to know as many people as you can within the organization.

7. Share leads. Find ways to help your client be successful in their industry, such as sharing information about industry trends or passing on business leads to them.

8. Confidentiality is critical. A breach of trust is the quickest way to sever a relationship— client or otherwise. Don’t do it. And, don’t pretend to give them information that was given to you in confidence. That only shows you break confidences.

9. Give and give again. It’s not going to happen overnight. Don’t expect to get awarded a project after the first face-to-face meeting.

10. Stay focused. Again, it’s all about your plan. Use it and refer to it often. Revise it as necessary. Keeping track of your progress will ultimately enhance your existing relationships and help you form new ones.

Maintaining a great relationship with your clients will ultimately benefit you and your firm’s bottom line. As a PM, make strengthening your client connections a priority.

For more project management tips, come to PSMJ's A/E/C Project Management Bootcamp, the world's most successful PM training program in the industry! This Bootcamp is a revolutionary training like no other--through interactive case-studies, real-world examples, and proven solutions, you will foster innovation, elevate communications, increase productivity, and improve your firm's bottom line.

PSMJ's A/E/C Project Management Bootcamp can instantly and dramatically improve your ability to manage projects for quality, speed, and profitability. Contact PSMJ Education Department at or (800) 537-7765.
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