Power Shift. And What It Means for Our Industry. Effective Project Management Competition Drives PLI Rates Lower. Game Changers.

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1 engineering Inc. January/February 2011 Te Award-Winning Business magazine Power Sift >> >> >> Effective Project Management Competition Drives PLI Rates Lower M&A Game Cangers And Wat It Means for Our Industry

2 Te Key to Your Financial Future Guaranteed Income to protect your DC plan against market declines You and your plan participants need to know teir retirement income is guaranteed. Prudential s innovative fund option, Prudential IncomeFlex Target SM, combines te desired features of defined contribution and defined benefit plans: Simplicity of a target-date fund Protection against market downturns for retirement income A pension-like guaranteed lifetime income stream Access to principal THE ACEC RETIREMENT TRUST Oversigt by te ACEC Board of Trustees Strong client satisfaction and retention rates Simplified investing solution troug te GoalMaker asset allocation program offered by Prudential Retirement Guaranteed lifetime income option troug Prudential IncomeFlex Prudential IncomeFlex Target will be available to ACEC Retirement Trust Plans early To learn more about te benefits of te ACEC Retirement Trust, contact Nancy Barrette of Wells Fargo Advisors, LLC at or via at nancy.barrette@ wellsfargoadvisors.com Please keep in mind tat application of asset allocation and diversification concepts does not ensure safety of principal and interest. It is possible to lose money by investing in securities. Securities products and services are offered by Prudential Investment Management Services LLC (PIMS), Tree Gateway Center, 14t Floor, Newark, NJ Prudential Retirement s group annuity contracts are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, a Prudential Financial company. PIMS and PRIAC are Prudential Financial companies. Prudential IncomeFlex Target SM funds are investment options available under group variable annuity contracts issued by PRIAC. PRIAC does not provide any guarantee of te investment performance or return of contributions to tose separate accounts. PRIAC s guarantee of certain witdrawals is supported by PRIAC s general account and is contingent on its claims-paying ability. You sould consider te objectives, risks, carges and expenses of te funds and guarantee features before purcasing tis product. You sould carefully review te Prudential IncomeFlex Target Important Considerations before purcasing tis product. Product availability and terms may vary by jurisdiction. Subject to regulatory approvals. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping tem in force. Contract form # GA-2020-TGWB or state variation tereof. Prudential, te Prudential logo, and te Rock symbol are service marks of Te Prudential Insurance Company of America, Newark, NJ, and its related entities, registered in many jurisdictions worldwide ACF /2010 Printed 12/2010

3 engineering Inc. JANUARY/FEBRUARY 2011 Vol. 22, No. 1 8 Cover Feature Political Sift 8 Wat will te new Congress mean for engineers? Industry insiders andicap some of te most critical legislative issues. Departments 4 20 Features From ACEC to You 2 Te new Congress and our industry s agenda. News and Notes 4 Survey: Americans willing to pay more to fix crumbling water infrastructure; Iraq partners wit Oregon officials to advance sustainability. Market Watc 5 Industry projections: look beyond 2011 for construction rebound. Legislative Action 6 President s fiscal commission identifies needed measures; critical infrastructure initiatives to carry over to 2011; Congressional action urged on 3 percent witolding. COVER PHOTO: credit Randy Santos/DC Stock Images, Jon A. Boener; Scott J. Ferrell/Congressional Quarterly/Getty Images, Nancy Pelosi; JEWEL SAMAD/AFP/Getty Images, Mitc McConnell; Ann Heisenfelt/Getty Images, Harry Reid; Tom Williams/Roll Call/Getty Images Engineering Inc. promotes te advocacy and business interests of ACEC by offering news, legislative analysis and business practice information to member firms, clients, opinion leaders and policy makers. Te articles and editorials appearing in tis magazine do not represent an official ACEC position or policy unless specifically identified as doing so Professional Liability Insurance Survey of Carriers 15 Competition is keeping rates competitive, but firms sould place a premium on vigilance. All in te Delivery 20 Effective communication is te key to successful project management Annual Convention Preview 24 Join your colleagues to address industry callenges and opportunities at ACEC s Annual Convention and Legislative Summit in Wasington, D.C. Business Insigts 26 Know te legal risk exposures tat could arm your firm; prospecting for good government projects; new professional designations MgtEng, ExecEng, MgtPro. Members in te News 28 Micael Kesler appointed cief operating officer at Kleinfelder; Barry J. Sculz appointed PBS&J Transportation Group president. Mergers and Acquisitions 32 New feature looks at past and future M&A activity.

4 From ACEC to Youengineering Inc. Te New Congress and Our Industry s Agenda Te new Congress will bring a more business-friendly approac to a number of key industry issues, but also a degree of uncertainty as budget-cutting pressures conflict wit a need to boost critical infrastructure investments. Bipartisan agreement in te closing days of December averted major tax increases tat could ave affected engineering firms and created furter drag on te economy, an indication tat despite te partisan divide bot sides are capable of coming togeter to pass meaningful initiatives and promote economic growt. Our message to Congress and te Wite House is very simple: More needs to be done to spur te economy and put America s engineers back to work. ACEC will be working closely wit lawmakers in te coming monts to ensure tat te nation s recovery agenda includes a new six-year igway and transit program, multiyear aviation and water bills, and new bipartisan energy initiatives. Te future olds some toug callenges, but ACEC is going to stay on offense and look for every opening to move your interests forward. Tis issue of Engineering Inc. considers te opportunities and callenges we face in acieving meaningful progress wit te new Congress. See page 8. A new Mergers & Acquisitions column by Mick Morrissey, managing principal of Morrissey Goodale, also debuts in tis issue. See page 32. And don t forget to plan now for te upcoming 2011 Annual Convention and Legislative Summit, Marc 30 April 2, in Wasington, D.C. Te industry s largest and most influential legislative advocacy event comes at a critical time. Your participation can elp acieve significant legislative wins for our industry and our country. See page 24. Gerald Stump ACEC Cairman David A. Raymond ACEC President & CEO THE OFFICIAL PUBLICATION OF THE AMERICAN COUNCIL OF ENGINEERING COMPANIES AMERICAN COUNCIL OF ENGINEERING COMPANIES CHAIRMAN Gerald Stump PRESIDENT & CEO David A. Raymond VICE PRESIDENT, Mary Ann Emely OPERATIONS VICE PRESIDENT, Steven Hall GOVERNMENT AFFAIRS VICE PRESIDENT, Jeffrey L. Beard INSTITUTE FOR BUSINESS MANAGEMENT DIRECTOR, Communications Alan D. Crockett and MEDIA STAFF EDITOR Andrea Keeney akeeney@acec.org Senior communications Gerry Donoue WRITER ACEC PUBLIC RELATIONS AND EDITORIAL ADVISORY COMMITTEE CHAIRMAN Cyntia K. Allen TMG MANAGING EDITOR ART DIRECTOR PROJECT MANAGER Advertising Sales Corey Murray Jeff Kibler Katie Mason Nina Goldman Director, Sales and M.O. Services ACEC t Street, NW, 8t Floor Wasington, D.C ngoldman@acec.org Engineering Inc., Volume 22, Number 1 (ISSN ), is publised bi-montly by te American Council of Engineering Companies (ACEC), t Street, NW, 8t Floor, Wasington, D.C Periodicals postage paid at Wasington, D.C., and at additional mailing offices. Annual subscriptions are $24 for members (included in dues as a non-deductible amount); $45 for U.S. non-members; $65 for institutional subscriptions. Back issues are $15. POSTMASTER: Send address canges to Engineering Inc., c/o ACEC, t Street, NW, 8t Floor, Wasington, D.C American Council of Engineering Companies. All rigts reserved. Tis publication may be copied, downloaded from te ACEC website, stored in electronic or ard-copy format, and disseminated to tird parties for educational and information purposes. ACEC expressly disclaims any liability for damages of any kind in connection wit suc copying, downloading, storage, and/or dissemination. By copying, downloading, storing and/or disseminating tis publication, te recipient of tis publication expressly agrees to defend, indemnify, and old ACEC, its officers, directors, employees, volunteers and agents armless from and against any and all losses, damages, claims, causes of action and liabilities, including reasonable attorneys fees and costs, arising out of or resulting from te recipient s use of tis publication. Notwitstanding te above, no part of tis publication may be altered, resold, licensed, or used for any oter commercial purposes witout te prior written permission of ACEC. Recipients may opt out of receiving te electronic version of tis publication from ACEC by sending an wit te subject line Unsubscribe to ACEC at magazine@acec.org. Engineering Inc. subscribers: If you ave a mailing address correction or need to add or remove an employee from te Engineering Inc. mailing list, please contact te ACEC Membersip Department at memberservice@acec.org or call and ask for Member Records.

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6 News&Notes Survey: Americans Willing to Pay More To Fix Crumbling Water Infrastructure A majority of Americans say tey are willing to pay significantly more in water bills to elp repair te nation s deteriorating water infrastructure, a new survey by te ITT Corporation sows. Te nationwide survey of 1,003 registered voters revealed tat 63 percent of Americans are willing to pay an average of 11 percent more on teir water bills eac mont to ensure consistent access to clean water. An additional survey of 502 industrial and agricultural businesses sowed tat 57 percent are willing to pay an average of 7 percent more per mont for adequate supplies of water. Applied across all American ouseolds, tis increase is equal to $5.4 billion or four times te F.Y federal investment in our nation s drinking water systems, according to ITT. Water is one critical issue missing from te national infrastructure debate, said Gretcen McClain, president of ITT Corporation s Fluid and Motion Control business. Yet, wen presented wit te facts, Americans recognize a looming crisis and are willing to pay teir sare to properly maintain te systems tat bring clean water into teir omes. Te survey also found tat: An overwelming 95 percent of Americans rate water as extremely important, more tan any oter service tey receive, including eat and electricity. Tree in four voters (74 percent) and two in tree businesses (68 percent) are concerned about te state of U.S. water infrastructure. 80 percent of voters say water infrastructure needs reform, and about 40 percent say major reform is necessary. 85 percent of voters and 83 percent of businesses agree tat federal, state or local governments sould invest money in upgrading water pipes and systems. McClain said survey respondents recognize tat te nation s water distribution and Sara L. Voisin/Getty Images treatment system is worsening under te combined pressures of population growt, urbanization and cronic underinvestment. Some realities of te current state of te nation s water infrastructure include: Te U.S. population as more tan doubled since muc of te water infrastructure system was first put in place, and in many areas, systems struggle to keep up wit increasing demand. Every day in America, 650 water mains break one every two minutes. Tese breaks and oter leaks result in te loss of rougly 1.7 trillion gallons of water every year enoug to supply water to 68 million Americans, according to te U.S. Geological Survey. According to te Congressional Budget Office, te gap between wat is needed to invest and wat is actually invested in te nation s water infrastructure is about $19 billion eac year. We all ave a role to play, starting wit more efficient use and conservation of water, McClain said. Citizens and businesses need to understand tat te delivery of clean water comes at a price, and we need to value tat clean water accordingly. Government can enact environmentally effective, economically sustainable and fair water policies tat ensure proper investment in te infrastructure for future generations. Iraq Partners Wit Oregon Officials to Advance Sustainability Iraq as secured te assistance of te Oregon state government and Oregon State University (OSU) to implement sustainability in te reconstruction of its war-torn infrastructure. In a Memorandum of Understanding signed in November by Oregon Gov. Ted Kulongoski and Iraq Ministry of Higer Education and Scientific Researc officials, te Middle East nation confirmed its opes for new infrastructure, along wit development of sustainable engineering curricula and expanded researc labs at Iraq s 23 public colleges of engineering. Te agreement te first of its type between te Iraqi government and any U.S. state government or university was initiated by Iraq and also involves OSU and te Micael Scott Mater Foundation (MSMF), a nonprofit organization dedicated to building relationsips between te United States and foreign nations. Iraq is one of many Middle East countries callenged wit water, agriculture and infrastructure problems and wat is applied in one nation can be expanded for application in surrounding nations, Kulongoski said. Equally important in tis partnersip is tat Oregon engineering students will get andson experience in learning ow to apply sustainable engineering design in geograpic places and in conditions tey normally would not ave te opportunity to learn about. Te agreement builds on efforts by OSU and te MSMF to enance Iraq s infrastructure reconstruction efforts, suc as coordinating Iraq engineering scool faculty participation in several previous OSU-sponsored green building worksops. Te agreement includes a five-year implementation plan designed to meet te goals of te Iraq Ministry s new National Education Program in Sustainable Engineering to implement te enanced sustainable engineering education, researc and outreac into all aspects of te nation s rebuilding efforts. 4 ENGINEERING INC. JANUARY / FEBRUARY 2011

7 By Joe Salimando Industry Projections: Look Beyond 2011 for Construction Rebound Construction spending was down 11 percent in te first 10 monts of 2010, wit te nonresidential component plunging 26 percent, te U.S. Commerce Department reports. Contracts for new construction a key indicator of future activity fell 3 percent overall (11 percent in nonresidential building) in te year s first nine monts, according to McGraw-Hill Construction (MHC). Wat s clear is (a) economic forecasting is more difficult tan it was a few years ago; (b) construction is in an actual depression, not a recession; and (c) wile everyone (forecasters, engineers, contractors and developers) suspects tat te nation as already seen its construction bottom, no one is willing to project a full-bore recovery anytime soon. If indicators of a construction turnaround are wat you are after, you ll want to look more closely at available data on te years beyond McGraw-Hill Construction As sown in Table 1, MHC s economists recorded strong business from 2005 to 2007 and mediocre business from 2009 to MHC includes te Dodge unit, wic tracks construction starts were actual numbers for past years closely reflect reality. In its 2011 outlook, MHC drew a dividing line between its starts forecast and wat s likely to sow up in te Commerce Department s 2011 forecasts. Toug tere s an 8 percent Table 1 Construction Start $ Values, (Dollars in billions) Year Total Construction Public Works Commercial Buildings 2005 $670.2 $95.9 $ $689.3 $112.5 $ $641.7 $121.3 $ $555.2 $121.0 $ $420.7 $121.6 $ E $411.3 $123.6 $ F $445.5 $122.3 $44.6 Source: McGraw-Hill Construction E = estimated, F = forecast Table 2 Construction Outlook (Dollars in billions) Year Total Construction Residential uptick in te dollar value of 2011 construction starts, Commerce s put-in-place (spending) number is likely to be down 3 percent tis year, MHC says. Te report notes tat for te closely watced nonresidential building sector in 2011, te construction start series as a 4 percent gain, wile construction put in place will be down anoter 6 percent. In sort, wat s expected to be a slow and extended recovery for construction starts will be even more so for construction putin-place. MHC s montly Forecast & Trends piece can be accessed (free) at snipurl.com/1gi9yk. Reed Construction Data In a recent presentation, Jim Haugey, cief economist for Reed Construction Data (RCD), attempted to project 2011 Commerce Department numbers. RCD predicts more positive signs for 2011, toug not big gains. More compelling are Haugey s projections for 2012, wic indicate a gain of 12.8 percent in residential construction and a 13.4 percent surge in nonresidential construction. Sectors tat RCD believes will do particularly well in te next two years include: Nonresidential 2010 $ $268.7 $360.3 $ $ $297.9 $357.1 $ $ $342.7 $377.4 $ $1,044.4 $376.3 $407.2 $ $1,135.3 $406.7 $444.8 $283.8 Source: FMI Corp., Q3 Construction Outlook Nonbuilding Structures MarketWatc Healt care construction, up 7 percent in 2011 and 13 percent in Higway construction, up 7 percent in eac of te next two years. Water/sewer, up 8 percent and 6 percent, respectively (after a 4 percent increase in 2010). After recent down years and mediocre numbers for 2011, RCD projects tat 2012 will be a great year for retail construction (up 12 percent), office construction (up 19 percent) and otel construction (up 22 percent). Associated General Contractors of America Ken Simonson, cief economist for te Associated General Contractors of America, cimed in wit 2011 forecast numbers during an RCD-sponsored webcast. His projections included: Nonresidential spending, flat to up 5 percent. Residential spending, up 5 percent to 10 percent. Total construction spending, up 3 percent to 8 percent. FMI Corp. Eac quarter, FMI Corp. posts a Construction Outlook to its website, Not known as an economic sop, it projects four years aead (see Table 2). FMI believes total construction for 2014 will reac $1.135 trillion. Construction last exceeded $1.1 trillion in 2005, 2006 and Joe Salimando writes on construction at com. Reac im at ecdotcom@ gmail.com. JANUARY / FEBRUARY 2011 ENGINEERING INC. 5

8 Legislative Action Sandro Di Carlo Darsa/Getty Imaged President s Fiscal Commission Report; Gas Tax Hike, Oter Options Could Influence Future Budget Debate Wile te cairs of President Obama s National Commission on Fiscal Responsibility and Reform failed to acieve te super majority vote needed to force congressional action, options identified to reduce te deficit could be resurrected during te budget debate tis year. ACEC strongly endorsed elements of te plan tat singled out infrastructure as critical investments in an era of constrained budgets. Transportation spending would be buoyed by a 15-cent increase in te gas tax, beginning in 2013, dedicated solely to transportation and eliminating te need for general fund bailouts. Even in a document tat lays out very toug coices to cut spending and balance te budget, infrastructure investment is set aside as essential to future economic growt and competitiveness, said ACEC President Dave Raymond. Congress as eard tis message many times already we need to restore te solvency of te Higway Trust Fund and embark on a major building effort tat will create jobs and economic growt, bot now and for years to come. Consensus Energy Package Could Emerge in 2011 Energy supply and sustainability migt be an area were te Wite House and te Republican-led U.S. House of Representatives can find common ground in te new legislative session. One or more consensus energy bills could contain key provisions backed by ACEC, including: incentives for nuclear plant expansion; preventing burdensome restrictions on offsore drilling permits and fracturing of sale for natural gas; preemption of state autority over location of interstate transmission lines; incentives for renewable energy projects, including te potential adoption of a renewable or clean energy standard mandating tat utilities obtain at least a portion of teir energy supply from renewable sources (or clean sources, wic could include nuclear energy and clean coal). Congress Continues Effort to Repeal 1099 Filing Mandate U.S. Senate efforts fell sort in te closing days of te last session for te ACEC-backed repeal of a new federal IRS Form 1099 filing mandate, but congressional supporters ave vowed to continue te repeal effort to prevent it from taking effect in Under te new law, business purcases of goods and services valued at more tan $600 annually from any vendor must be reported to te IRS. Late last year, Senate Finance Committee Cairman Max Baucus (D-Mont.) announced is intent to repeal te mandate. His repeal legislation, as well as a similar effort led by Sen. Mike Joanns (R-Neb.), faltered in December over differences in ow to pay for te repeal. ACEC and coalition allies will continue working wit Baucus and oter lawmakers in te coming weeks to include a repeal provision in oter legislation. Daniel Acker/Bloomberg via Getty Images 6 ENGINEERING INC. JANUARY / FEBRUARY 2011

9 Critical Infrastructure Initiatives Carry Over To 2011 Despite progress in 2010, te major elements of ACEC s infrastructure agenda including passage of multiyear surface transportation, aviation and water infrastructure initiatives will carry over into Revenue sortfalls and financing options continue to be primary obstacles to a new six-year igway and transit program to replace SAFETEA-LU. Despite an endorsement of te president s deficit commission, boosting te gas tax may not be politically viable, requiring Congress to turn to alternative proposals to supplement te Higway Trust Fund, suc as te adoption of a National Infrastructure Bank, Public-Private Partnersips (P3s), tolling and oter financing metods. A reautorization is also expected to include pilot projects to facilitate te transition from te gas tax to a veicle-milestraveled fee for funding transportation programs. Congress came close to passing a new multiyear aviation program prior to adjournment last year, wic migt clear te way for early passage in ACEC is seeking increased funding for te Airport Improvement Program, raising te $4.50 cap on Passenger Facility Carges (PFCs) and applying Qualifications- Based Selection (QBS) to projects funded troug PFCs. Congress also made significant progress on major water infrastructure legislation in 2010, setting te stage for final approval tis year. ACEC s agenda in te water sector is treefold: Secure passage of multiyear legislation to autorize significant funding increases for water and wastewater projects under te Safe Drinking Water and Clean Water Act State Revolving Fund (SRF) programs, and apply a QBS requirement to projects funded under te SRF program; Continue working wit coalition partners to pass legislation tat supports P3s for water infrastructure, including lifting te private activity bond cap for water projects, te creation of a water infrastructure bank and removal of regulatory barriers; Seek passage of a new Water Resources Development Act tat provides new funding autorizations for U.S. Army Corps of Engineers water projects. Robert Nickelsberg/Getty Images Congress came close to passing a new multiyear aviation program prior to adjournment last year, wic may clear te way for early passage in MIKE SEGAR/AFP/Getty Images IssuEs on te move Consensus energy legislation Higway, aviation and water bills For More News For weekly legislative news, visit ACEC s Last Word online at Wat s Next Possible action on one or multiple bills by te summer Aviation likely to move first 3 percent, 1099 repeal effort Add repeal legislation to coming budget/tax legislation in te spring 9/11 Bill Passed ACEC and major contractor organizations succeeded in gaining final passage of key 9/11 liability reform legislation prior to adjournment in December. Te bill provides liability relief for engineering firms and contractors involved in te response and cleanup of te Ground Zero site following te 9/11 attack on te World Trade Center. Separately, more tan 95 percent of first responders wo sued te city and Ground Zero contractors approved a settlement tat provides compensation for teir illnesses. Plaintiffs wo agreed to te settlement must drop teir lawsuits, and passage of te reform legislation will elp resolve te remaining lawsuits. ACEC, AGC Urge Congressional Action On 3% Witolding ACEC and te Associated General Contractors (AGC) want congressional leaders to eiter repeal or delay implementation of te 3 percent witolding mandate as part of upcoming budget and tax bills expected to move troug Congress. Te witolding mandate, wic takes effect in 2012, will affect all contracts wit federal, state and larger city governments, requiring tose clients to witold 3 percent of payments owed to engineering firms and oter contractors. ACEC and AGC ad urged Congress to address te witolding problem in a larger tax package tat extended te expiring tax-rate cuts on individual income, capital gains and dividends in te closing days of te last session. Congress opted to extend all of te tax rates for two years, but failed to address te 3 percent issue. ACEC and its business allies will continue to press for action early in JANUARY / FEBRUARY 2011 ENGINEERING INC. 7

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11 Political Sift Wat will te new Congress mean for engineers? Industry insiders andicap some of te most critical legislative issues. By Alan Joc Randy Santos/DC Stock Images Takeaways >> As a new, presumably more business-friendly Congress convenes in Wasington, several important infrastructure measures including passage of multiyear surface transportation, aviation and water infrastructure initiatives are under consideration, and billions wort of projects ang in te balance. >> ACEC is backing a new six-year surface transportation program to replace SAFETEA-LU, wic expired in Multiple sort-term extensions ave kept money flowing, but don t address te revenue sortfalls tat ave stunted improvements to te nation s transportation systems. >> Te House and Senate ave adopted separate plans for a multiyear expansion of te Clean Water Act and Safe Drinking Water State Revolving Fund programs, wic total $54 billion for water and wastewater infrastructure. November s midterm elections may ave sifted te gavel of congressional power from one side of te political aisle to te oter, but many of te same critical legislative initiatives for engineering tat stalled in te previous legislative session remain on te docket for te new Congress. Several important infrastructure measures including passage of multiyear surface transportation, aviation and water infrastructure initiatives are on te table in 2011, and billions wort of projects ang in te balance. Myriad tax issues wit implications for firms financial ealt are expected to receive priority consideration. Te question for te engineering industry is tis: Will a new, presumably more businessfriendly Congress open te door for mucneeded increased infrastructure funding? >> JANUARY / FEBRUARY 2011 ENGINEERING INC. 9

12 Or will contentious political warfare and a persistent outcry to reduce federal spending by any means necessary continue to impede legislative progress? Te outcome as te potential to affect more tan te flow of federal dollars. We as an industry trive on knowing wat te playing field is; wen we don t know tat, some of our clients old back on new spending until we can figure out wat s going to appen, says Edward Mortimer, director of government affairs at URS Corp. Over te last year, tere s been a lot of uncertainty. A divided Congress and Wite House certainly create te recipe for inaction over te next two years, says Steve Hall, ACEC s vice president for government affairs. At te same time, bot sides need to sow tat tey can move an agenda forward and govern effectively, wic means coming togeter on certain issues. It s tat dynamic tat may present opportunities for our industry. Te following scorecards sow ow some engineering leaders are andicapping te legislative outcome of several issues vital to te industry. Scorecard #1: Te Deficit and Taxes Were Tings Stand Te spiraling federal deficit and important business tax measures remain important topics for te engineering industry. Te cairs of a Wite House-commissioned panel to study ways to reduce te federal deficit issued formal recommendations We as an industry trive on knowing wat te playing field is; wen we don t know tat, some of our clients old back on new spending until we can figure out wat s going to appen. Over te last year, tere s been a lot of uncertainty. Edward Mortimer URS CORP. Rater tan pass a compreensive and sensible budget for te year, tere will be anoter tree-mont stopgap measure. Tat migt mean a wole year of tis constant brinksmansip. GREG IP THE ECONOMIST in December, advocating a mix of spending cuts and tax increases tat drew support and criticism from Republicans and Democrats alike. Te commission also recognized te need to make substantial investments in te nation s critical transportation infrastructure, and urged a pased-in, 15-cent gas tax increase, beginning in 2013, to be dedicated solely to transportation. Oter t a x i s s u e s include te Form 1099 provision in te new ealt care reform act wic various business groups, including ACEC, oppose tat would require businesses to report any purcases of goods or services wort more tan $600 to te IRS. Also in te legislative crossairs is repeal of a 3 percent witolding mandate tat in 2012 would require federal, state and big-city governments to set aside payments on contracts wit engineering firms and oter service providers. New members of te 112t Congress pose on te steps of te U.S. Capitol. Possible Outcomes Efforts to repeal te Form 1099 requirement failed in December 2010, but congressional supporters ave vowed to continue te repeal effort and to prevent it from taking effect in ACEC and te Associated General Contractors are urging Congress to eiter repeal or delay implementation of te 3 percent witolding mandate as part of upcoming budget and tax bills expected to move troug Congress tis year. Greg Ip, U.S. economics editor at Te Economist and autor of Te Little Book of Economics: How te Economy Works in te Real World, outlined two possible outcomes on te overall tax debate. He notes tat te best-case scenario is a compreensive policy tat provides additional stimulus funds for 2011 (added wit) te extension of te Bus tax cuts to elp te economy in te near term. Ten, over te next five to 10 years, bring in a serious deficit-reduction plan tat addresses a mix of spending and taxes, e says. Most Imposing Hurdle Political infigting. Elements of te deficit-reduction plan and revisions to te tax rates in teory ougt to be supportable by bot parties, but tey re not getting muc traction, says Ip. Rater tan pass a compreensive and sensible budget for te year, tere will be anoter tree-mont stopgap measure. Tat migt mean a wole year of tis constant brinksmansip. Scorecard #2 Energy Legislation Were Tings Stand Energy supply and sustainability migt be an area were te Wite House and congressional Republicans find common ground. A decision by Congress to abandon controversial cap-and-trade legislation and oter sweeping energy 10 ENGINEERING INC. JANUARY / FEBRUARY 2011

13 packages could open te door for more limited energy proposals in te coming year. President Obama as publicly acknowledged tat reducing carbon emissions could be done in bite-sized pieces. Possible Outcomes Bipartisan support migt emerge for expanding incentives for nuclear energy and fossil fuel development, as well as domestic natural gas, balanced wit additional incentives for renewable energy, including a possible requirement for utilities to derive a minimum percentage of teir energy from renewable sources. Oter proposals could include energy efficiency in buildings, support for electric-car manufacturing and overturning EPA s Greenouse Gas emissions regulations, along wit expanding incentives for nuclear energy and fossil fuel development, and domestic natural gas in particular. Tere could be several opportunities for Republicans and Democrats to form coalitions tat encompass regional and national energy issues. One would expect less direct federal financial incentives for wind, solar and oter alternative energy projects, says David Cobb, HDR Engineering s national director of civic affairs. I believe tere will be a muc greater empasis on clearing te pat for faster development of transmission and distribution systems since tis is emerging as a significant impediment to te development of alternative-energy projects. ACEC promotes an all of te above approac tat supports expansion of all domestic energy resources, including oil, gas, nuclear, coal, renewables and oter resources, as well as modernizing te nation s electricity transmission grid and deploying new tecnologies and efficiency practices. Most Imposing Hurdle Energy legislation could fall victim to a lack of bipartisan cooperation or te expected pus to cut federal spending. Scorecard #3: Roads and Transit Systems Were Tings Stand ACEC is backing a new six-year surface transportation program to replace SAF- ETEA-LU, wic expired in Multiple sort-term extensions ave kept money flowing but don t address te revenue sortfalls tat ave stunted improvements to te nation s transportation systems. In December, Congress approved an extension to fund federal igway and transit programs at current levels troug Marc 4, Possible Outcomes As an industry, we would muc rater see a six- or 12-mont extension versus a twomont extension, Mortimer says. Wen Mark Wilson/Getty Images state DOTs see only a two-mont extension, tey are very reluctant to move forward wit teir full-year transportation plans. Beyond tat, te prospects for a longterm autorization are muddied, at best, says Larry Sockley, vice president of government relations for Parsons Corp. Te overall economic environment at te federal level and state and local levels raises serious concerns about te availability of funding for a new long-term bill, e says. Rep. Jon Mica (R-Fla.), te new cairman of te House Committee on Transportation and Infrastructure, gave ope to te possibility of a longer reautorization recently wen e called a multiyear transportation bill a top priority. Te Obama administration is also expected to include a reautorization proposal in its F.Y budget outline in February. Because a gas-tax increase or oter new financing is viewed as essential to passing a long-term transportation bill, ACEC is calling for bipartisan support to get an increase approved. At tis point, I tink te best ope for a user fee increase will be in te context of a larger tax and/or budget deal, part of a Grand Bargain between Democrats and Republicans, says ACEC President David Raymond. Plans to increase gas taxes garnered furter support in December wen co-cairs of a deficit-reduction commission recommended a 15-cent increase in te gas tax by 2015 to fund transportation projects. JANUARY / FEBRUARY 2011 ENGINEERING INC. 11

14 Sockley, owever, remains unconvinced. He cites a new Republican majority in te House tat opposes fuel-tax increases and a lack of administration support as urdles potentially too ig to overcome. Given tose conditions, te best we may get is a sorter-term reautorization (two years) at a reduced level of project spending, e says. Most Imposing Hurdle Legislators must come to grips wit ow to adequately fund a multiyear bill. A key sticking point is weter te new Congress will raise user fees to support increased investments or opt for a scaleddown federal program under an austere budget. Scorecard #4: Aviation Infrastructure Were Tings Stand Since 2007, no multiyear spending program as been in place to fund airports and improvement projects for runways and oter facilities. Instead, Congress as autorized a series of sort-term extensions. Te House and Senate ave voted to expand federal Airport Improvement Program grants for aviation infrastructure, leading some observers to believe Congress is close to passing a final bill. Final urdles include disputed provisions on labor laws covering FedEx, and te number of long-aul fligts between Wasington Reagan National Airport and te West Coast. Follow te Money Funding multiyear legislation for transportation and water projects as widespread implications for engineers and te economy as a wole. n $1 billion invested in transportation infrastructure = 34,000 jobs n $1 invested in igway and transit construction = $1.80 of near-term GDP n $1 billion invested in water and wastewater infrastructure = 20,000+ jobs Source: ACEC Fact Seet Possible Outcomes Te prospects are good, given ow far Congress as already come wit te FAA reautorization language, says Robin Black, director of government relations at CDM. Tere are some minor issues tat we tink can be resolved. Republican control of Congress could speed te resolution of tese lingering issues. Te Republicans strongly supported FedEx and its ability to stay union-free, so my guess is te issue is going to go away, Mortimer says. Tere s a very good possibility tat fairly early in 2011, an FAA bill will get done. Te prospects are good, given ow far Congress as already come wit te FAA reautorization language. Tere are some minor issues tat we tink can be resolved. Robin BlacK CDM It all comes down to timing. I tink te best ope for a multiyear reautorization was to conclude te current conference and pass te existing bill in te lame-duck session, Sockley says. Tat was very doable, but in te new session of Congress, I would expect it to be a muc lower item on te priority scale. ACEC will continue to advocate for increased funding for te Airport Improvement Program and raising te cap on passenger fees collected for airport projects. Most Imposing Hurdle Te lingering disagreements over te number of cross-country fligts in and out of Reagan National Airport and weter cargo carrier FedEx can continue to avoid being unionized unlike its competitor UPS. Scorecard #5: Water Infrastructure Were Tings Stand In 2010, te House and Senate adopted separate plans for a multiyear expansion of te Clean Water Act and Safe Drinking Water State Revolving Fund (SRF) programs, wic total $54 billion for water and wastewater infrastructure. Possible Outcomes Prospects for extending te SRF are good, but CDM s Black doubts engineers will see funding increases in 2011 and says te political climate is too unpredictable to gauge weter te new Congress will pass a multiyear spending plan. Black expects no action on te House and Senate autorization bills until te Wite House releases its F.Y budget proposal. Congress will ave its own ideas, but we don t know quite were te House will be next year given te new leadersip, se says. Given te nearly alftrillion-dollar funding gap between current investments and need over te next 20 years, ACEC continues to support a multiyear water program tat includes reautorization of te SRFs, a robust new Water Resources Development Act bill and public-private water funding alternatives. On te question of earmarks, URS Mortimer doesn t rule tem out in practice, but tinks tey could go under a different name, suc as congressionally directed spending. If Congress doesn t allow earmarks, ten te administration, troug its budget requests, will be te one putting all te earmarks in, e says. Maybe I m just crusty after doing tis for 20 years, but I find it ard to believe tat a Republican House would allow a Democratic administration to fund programs only te way it sees fit. Most Imposing Hurdle Earmarks. Te term became a ligtning rod during te midterm elections, wit some politicians and voters considering earmarks to be synonymous wit government waste. Black says te ability of Congress to autorize spending for individual projects is at te eart of many large-scale water projects, including U.S. Army Corps of Engineers programs. Te organizations tat will be adversely affected by a blanket earmark ban will be te state and local infrastructure organizations, explains Sockley. n Alan Joc is a business and tecnology writer based in Francestown, N.H. 12 ENGINEERING INC. JANUARY / FEBRUARY 2011

15 To find te PLAN agent in your area, go to or write Toll-free, call PLAN. 2011, Te Professional Liability Agents Network

16

17 2010 Professional Liability Insurance Survey of Carriers Weiging Your By Maureen Conley Options Competition is keeping rates competitive, but firms sould place a premium on vigilance Takeaways >> As many as 30 new insurance carriers entered te U.S. PLI market in 2010, bringing te total to more tan 50. Wile a andful of firms continue to dominate te market, several smaller providers ave joined te fray, offering price breaks and oter incentives not consistently available troug more establised carriers. >> New competition in te marketplace is keeping PLI rates low, toug experts caution firms to torougly researc te stability and reputation of prospective PLI carriers, and not to coose a policy based solely on price. >> PLI carriers urge designers to adere to core risk management principles carefully selected clients, managed expectations, well-written contracts and accurate, well-managed accounts. T e weak economy as led to lower Professional Liability Insurance (PLI) rates. According to te 2010 ACEC/NSPE/AIA Survey of PLI Carriers, new coices and competitive rates ave elped firms better protect teir interests in te midst of an uncertain business climate. As many as 30 new insurance carriers entered te U.S. PLI market in 2010, bringing te total to more tan 50. Wile a andful of firms continue to dominate te landscape, several smaller providers ave entered te fray, offering price breaks and oter incentives not consistently available troug more establised carriers. >> JANUARY / FEBRUARY 2011 ENGINEERING INC. 15

18 Bob Coleman, president of a/e ProNet and Professional Underwriters, Inc., says some newer carriers many of wic migt buy teir way into te market wit low premiums also offer wellseasoned underwriters and claims andlers, and make for an attractive alternative for firms looking for discounts or tose priced out of more expensive plans. In addition to lower costs, carriers ave added flexibility on a range of issues, from deductibles to billings Wit all te PLI coices out tere, it s wort at least exploring wat options are available. Tom Bongi Catlin Design Professional rates to project insurance. Wat s more, few issues ave cropped up as a result of te economic downturn to potentially drive rates iger, explains Jon Farrar, vice president of Clark Dietz, wo elped oversee te survey. Tom Bongi, president of Catlin Design Professional, says wit all te PLI coices out tere, it s wort at least exploring wat options are available. Business Picking Up? Not tat firms need to be in too big of a urry. Wit so many carriers vying for market sare, industry watcers say rates likely will stay low at least for te near term. Dan Bradsaw, president of te Professional Liability Agents Network (PLAN) and owner of te Bencmark Insurance agency in Uta, says many carriers consider offering PLI to design firms to be attractive because tey can collect income on premiums witout aving to pay client claims for one to two years. Tat s good news, especially as designers look for work to begin picking up again in Wile some firms weatered te downturn wit federal stimulus funds or large project backlogs, oters are in urgent need of new contracts. Jeff Connelly, a vice president wit Mars and te sales leader of te ACEC Business Insurance Trust (BIT), is seeing lots of requests for iger limits on projects, especially public ones, and coverage requests from startup engineering firms. ACEC BIT is also fielding more requests from firms tat ad previously dropped teir PLI policies. More Flexibility Some PLI carriers ave canged ow tey calculate premiums. Victor O. Scinnerer & Co., for example, examines current rater tan past billings, says Kate Enos Frownfelter, senior vice president and construction program manager. Scinnerer as also lowered its standard premiums, and most firms ave lower deductibles, keeping in line wit lower revenues. Te carrier as also reduced its tresold for allowing firms to pay premiums troug a no-interest installment plan and will consider lowering limits to elp maintain coverage, se says. But wit added flexibility may come risk. Carriers occasionally offer deductibles tat are too low, leaving te designer witout skin in te game, suc tat te focus gets taken off risk management, explains Bongi. Te deductible sould give te design professional pause and encourage error prevention, rater tan be accepted as a cost of doing business, e says. Under writer Dana Huges of Beazley, wic uses a tree-year average of fees to determine its rates, says er firm considered te possibility of a more flexible rate base, but found troug a survey tat 80 percent of claims are made a year after a project gets under way, confirming its use of te fee-average approac. Travelers also decided against deviating from its weigted tree-year average of billings. Managing director Jon Rapp says today s billings generate tomorrow s claims. Most PLI carriers report Look ard at a prospective carrier s attributes and use Qualifications-Based Selection to coose a provider. Homer Sandridge Travelers a stable and steady frequency of claims, but caution tat claims are developing more quickly and wit increasing severity. Al Rabasca, director of industry relations for XL Design Professional, says as long as finance and credit markets remain tigt, claimants will make larger demands more quickly in order to salvage projects. Were it used to take tree to five years for claims to develop, claims now develop in two to four years on average, e says. Tim Corbett, founder and president of SmartRisk, a risk management consultancy, conducted a survey last year of 20 law firms representing 292 lawyers specializing in design and construction litigation, wic sows tat te frequency and severity of claims is on its way up. Plaintiffs reportedly are muc more aggressive over smaller amounts, Corbett says, and filing claims sooner tan tey used to. Corbett sees downsizing as one factor in tese canges. Beazley s Huges says tecnical errors and omissions are on te rise a potential consequence of fewer eyes to review projects. Suc errors can be costly, se says, particularly wen te insurer admits tat its client is responsible. Problem Areas One of te largest and potentially most troublesome concerns is te propensity for some design firms to go bare, or cancel teir PLI, says Farrar of Clark Dietz. Suc a decision could result in a gap in coverage, leaving firms unprotected for certain projects. It s an incredibly significant issue, says Scinnerer s Frownfelter and one tat is increasingly affecting larger firms. Troug vicarious liability, subcontractors witout PLI transfer teir liability upstream to contractors and designers tat do. To limit vicarious liability, Scinnerer offers an underwriting credit to firms tat request certificates of insurance from contractors. Building construction, particularly ousing, 16 ENGINEERING INC. JANUARY / FEBRUARY 2011

19 Caracteristics in te Premium Determination Process (1 is te igest level of influence, 8 is te lowest) avreco Beazley Catlin Euclid Hanover Insigt Lexington Liberty RA&MCO State Farm Travelers VOSCO XL Zuric Location of firm Location of projects Type of practice Type of projects Annual billings Claims istory Firm experience Oter Source: 2010 ACEC/ NSPE/ AIA Professional Liability Insurance Survey of Carriers continues to generate te most claims. Claims involving ig-end custom omes are rising, wile claims on condos and scools continue to be ig. XL s Rabasca says residential owners tend not to be as experienced and to ave iger, more unrealistic expectations tan tose involved in commercial projects. Geotecnical and structural engineers are often targeted for claims. PLAN s Bradsaw says geotecnical engineers get blamed for any crack tat develops in a building. Rater tan simply provide a report, Bradsaw recommends tat geotecnical engineers insist tat tey be paid to do te full scope of services, including overseeing excavation and backfill to ensure contractors follow teir recommendations. Some carriers also voiced concerns Particular Exposures Tat Migt Lead to Higer Rate Increases Tan in Recent Years Source: 2010 ACEC/ NSPE/ AIA Professional Liability Insurance Survey of Carriers about te steady erosion of PLI rates. As new competition drives rates lower, Huges says carriers ave a responsibility to balance te need for market sare against knowing wen to walk away from a potentially risky client. Green, BIM, IPD Carriers ave not seen te increase in claims tey expected from integrated project delivery (IPD), Building Information Modeling (BIM) or sustainable design. Still, tey caution designers to carefully manage client expectations on green projects and avoid providing guarantees. Bongi says Catlin is embracing green design by providing premium credits to firms tat provide it. Toug te firm still monitors green products for potential problems, e says, sustainable designs are 7% Combination of Volatile Exposures 7% Structural, HVAC and Mecanical Engineering 36% No New Exposures 21% Economic Uncertainty 29% Residential Homes and Condominiums not te wildcard tey once were in te minds of insurers. Rabasca urges designers to get involved in building code development, particularly as sustainable concepts are worked into mandatory federal and local standards. Te International Green Construction Code wic Rabasca expects will become mandatory on many building sites once it is finalized is under development at te same time tat te U.S. Green Building Council is reviewing its popular LEED certification program, California is developing its own sustainable design code, and ACEC is collaborating wit te American Public Works Association and te American Society of Civil Engineers on a new voluntary tool to rate te sustainability of an infrastructure project. Most carriers offer tecnology coverage as part of teir basic policies or as an inexpensive endorsement to suc policies. XL, for instance, includes BIM in its definition of professional services, wic is covered under its standard policy. Travelers offers cyberliability coverage, wic covers liability for computer viruses, denial of access and unautorized access to networks and computer systems, and te failure to protect confidential information. IPD, owever, is more callenging, says Rabasca, largely because of te partnersip it necessitates between owner, designer and contractor. He urges designers to work wit an insurance professional to determine weter an IPD project is covered. IPD can blur traditional lines between design and construction recognized by existing contracts and case law, so traditional insurance products do not necessar- JANUARY / FEBRUARY 2011 ENGINEERING INC. 17

20 ily address all te risks, adds Bongi. Education Pays. Awarding $14M annually in premium credits proves we re serious about proactive risk management. Te Design Professional group of XL Insurance offers more tan professional liability coverage tailored for arcitects & engineers. Our Risk Management Program elps reduce te cost of loss troug free courses, loss prevention worksops and tools to improve business practices. Delivering more value more quickly. Our online Learning Management System (LMS) provides customers wit 24/7 access to loss prevention courses and to Te XL Insurance Contract Guide one of te industry s most complete resources for up-to-date information about contract language and negotiation. Learn & Earn. Successfully complete an approved program eac policy year to earn a 10% premium credit for te first $5M in coverage. All courses offer Professional Development Hours (PDHs) and many are HSW qualified. Our programs are registered wit te national AIA. Not all states and licensing boards accept tese programs for learning units. "XL Insurance" is te global brand used by XL Group plc s (NYSE: XL) insurance companies. Coverages underwritten by Greenwic Insurance Company, Indian Harbor Insurance Company, XL Specialty Insurance Company and XL Insurance Company Limited Canadian Branc. Coverages not available in all jurisdictions. FREE: Earn 1 PDH today: go to xldp.com/tools Looking Aead Carriers say te current PLI market isn t likely to cange until engineering and design firms get more work. But tey urge designers to prepare for tat eventuality. Like most markets, tey say, te PLI market is cyclical. Firms wit a really good loss istory will be able to maintain a stable program, explains Beazley s Huges, wile tose wit claims and losses will be affected more in te next few years. Carriers interviewed for te survey ranked client selection and well-written contracts as te most important ways to Firms wit a really good loss istory will be able to maintain a stable program, wile tose wit claims and losses will be affected more in te next few years. Dana Huges Beazley manage risk. Were contracts used to focus on wo does wat and ow companies get paid, Bongi says clients now use tese documents as a wolesale risk-sifting mecanism written to put as muc onus as possible on te designer. PLI experts advise engineering firms to stay on top of billings, especially for cost overruns and cange orders on projects wit tigt budgets or low-bid contractors. Tink twice before filing a fee claim, tey say and if you do, expect a counterclaim alleging negligence. SmartRisk s Corbett advises designers to be cautious and to forge a long-term partnersip wit a carrier wit experienced product line managers and underwriters. Homer Sandridge, vice president of Travelers, counsels engineers to look ard at a prospective carriers attributes and use Qualifications-Based Selection to coose a provider. Wit so many new carriers entering te PLI market, Bradsaw says caos could result from a sudden contraction, especially if smaller providers cannot sustain current rates. Carriers will usually exit te market systematically wit advance notice, but design firms could find temselves suddenly witout PLI if teir carrier becomes insolvent. In eiter case, e says, firms looking for new coverage will face an insurance sellers market, not te buyers market tat exists today. To best prepare for te future, PLI carriers also urge designers to adere to core risk management principles: carefully selected clients, managed expectations, well-written contracts and accurate, well-managed accounts. As design work picks up in te coming monts, tese and oter time-tested principles sould elp minimize te risk tat often accompanies iger revenues. Te results of te 2010 ACEC/NSPE/AIA Professional Liability Insurance Survey of Carriers are available on te Risk Management page of te ACEC website. n Maureen Conley is a business writer based outside Wasington, D.C. 18 ENGINEERING INC. JANUARY / FEBRUARY 2011

21 Engineering Innovative Solutions Since 1983 Take control of your future... wit Professional Liability Insurance troug te ACEC Business Insurance Trust. Wat will appen to your future if you face a lawsuit today? Regardless of te safeguards you put in place, claims and lawsuits can appen. Not only can tese risks be financially devastating, tey can severely disrupt your firm and your future. Te ACEC Business Insurance Trust elps you take control of tese risks wit affordable professional liability insurance. Te ACEC Business Insurance Trust Professional Liability Program provides you: Solutions and insurance options guided by practicing engineers wo understand te issues you face every day in te management of your practice Competitive premiums troug access to multiple markets Compreensive coverage tailored to your firm s needs Expert legal counsel and defense of claims and lawsuits Plus Your participation in te ACEC Business Insurance Trust Program benefits bot ACEC and your State Member Organization Mars Sales Team Take control of your future wit te ACEC Business Insurance Trust. Call for more information and a quote today: AR Ins. Lic. # CA Ins. lic. # Brokered and/or administered by Mars U.S. Consumer, a service of Seabury & Smit, Inc., d/b/a in CA Seabury & Smit Insurance Program Management Te ACEC Business Insurance Trust (BIT) as autorized Mars U.S. Consumer to make engineer s professional liability insurance available to member firms. Neiter ACEC nor Te BIT endorses any one professional liability provider. It is te objective of Mars USA Inc. to offer a coice of providers for PLI coverage. Te selection of underwriters may cange from time to time I12989 (1/11) Seabury & Smit, Inc., 2011

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23 All in te elivery Effective communication is te key to successful project management By Gerry Donoue Randy Lyus Takeaways >> Good project managers are competent in every pase of te project process: planning, estimating, design, finance and client management. >> Communication is key to effective project management. Te best managers integrate input from te client and from different team members to keep te project moving forward on time and on scedule. >> One consequence of a project manager s inability to effectively communicate is scope creep, or a gradual increase in te project s scope because of client canges witout increases in te budget. Te summary of required skills for a project manager at an engineering firm reads like a wis list for te perfect employee. Project managers must be competent in every pase of te project process: planning, estimating, design, finance and client management. Managers need to foresee potential problems and respond quickly to unanticipated callenges. And tey ave to keep teir eyes on te big picture, even wile managing minute details. >> JANUARY / FEBRUARY 2011 ENGINEERING INC. 21

24 As if it weren t already difficult enoug to be a project manager in today s market, increasingly complex designs, narrower margins, tigter regulations and progressively more demanding clients make te job ever more callenging. Expectations are ig across te board. It s not a question of weter we want our project managers to beat te budget or meet te scedule or it some quality level, says Bill Howard, executive vice president of CDM in Cambridge, Mass., and a former ACEC cairman. We want it all. It s a daunting job, says William Ramrot, autor of Project Management for Design Professionals. Project managers ave to know enoug about arcitecture, structural, civil, mecanical, electrical engineering, etc., to know ow te different disciplines are interrelated, and ow eac logically plays off te work of te oters. But te best project managers are also masters of anoter fundamental skill. It all comes down to communication, says Jon Langans, project manager at MSA Professional Services, a 270-person firm wit a dozen offices in te Upper Midwest. It is te critical component in successful project management. We put te financial ealt of te firm in te ands of project managers. If tey are delivering projects on time, on budget and to te satisfaction of customers, we ave a very successful firm. Bill Howard CDM Delivering te Project If sales and marketing teams generate te work, project managers are te life force tat keeps firms strong and clients coming back. We put te financial ealt of te firm in te ands of project managers, says Howard. If tey are delivering projects on time, on budget and to te satisfaction of our customers, we ave a very successful firm. And if not I wouldn t want to tink of te consequences. Delivering a design on time, on budget and wit satisfied customers requires exceptional planning, adept execution and te ability to tink on your feet. Project managers are in carge of planning and sceduling projects; budgeting and billing; creating and leading design teams; interacting wit clients, officials and te public; selecting and contracting consultants; inspecting potential project sites; obtaining insurance for projects; making presentations to clients and oter stakeolders; cost estimating; value engineering; and maintaining quality control. You also ave to be able to identify te critical pat items on te project and anticipate, early on, any potential roadblocks, says Langans. Tings will go wrong, and it s up to te project manager to figure out ow to get everyting back on track. Meeting Expectations Most recruiters do not rank communication ig on teir must-ave list of qualities wen looking for a new project manager. In is consulting work wit numerous engineering firms, Steve Isaacs says communication often doesn t even make te list. Firms looking to promote someone to project manager tend to coose a PE wo is really terrific at solving tecnical problems, says Isaacs, a division manager of arcitecture & engineering services at FMI Corporation, wo works out of Walnut Creek, Calif. But wen you draw a relationsip cart for a project, te project manager is at te center. Tey ave to communicate wit everyone te team, senior management, client, subcontractors, regulators, zoning people, code people yet, we commonly put people in tat position wo are muc more Firms looking to promote someone to project manager tend to coose a PE wo is really terrific at solving tecnical problems. Steve Isaacs FMI corporation comfortable sitting in front of a screen doing tecnical work. If project success were determined by project completion alone, tat would make sense, but Ramrot says project management requires muc more. Meeting all te project participants expectations is te most callenging goal of project management, e says. It is also te most subjective, wit te most diverse and elusive requirements. It s ironic tat it just migt be te most important goal. Given te number of ands involved in tese projects, meeting expectations can sometimes seem impossible. Clients, design firms, project managers and design team members approac a project wit differing expectations, Ramrot says. Te project manager as to work wit all of tem, bringing tem togeter to identify common goals and to agree on wat defines project success. To do tat, you need good communication skills. As part of its recent Lake Delton project a 2010 ACEC Engineering Excellence Awards Honor Award winner MSA engineers worked wit a team tat fast-tracked te rebuilding of a dam, igway and oter infrastructure destroyed after torrential rains breaced te soreline of te man-made lake and drained 600 million gallons of water in less tan two ours. Project managers communicated wit te team daily and often more frequently, says Langans. We focused on upfront communication, e says. We kept everyone informed about wat was appening all te time, so wen tere was a iccup, we ad te buy-in we needed to keep te project on track. Maintaining Relationsips MSA employs a relatively standard project management system, wit several dozen project managers operating under senior firm management. Project managers lead te team and are te primary client contact. Oter firms use differ- 22 ENGINEERING INC. JANUARY / FEBRUARY 2011

25 ent project management structures. Some large firms use te Customer Service Manager (CSM) model, in wic te CSM is te primary client contact. CSMs ave a different skill set tan project managers, says CDM s Howard. Project managers are good from a tecnical standpoint and te CSMs are better at sales, at maintaining relationsips wit te client and wit te stakeolders. Wile Ramrot says te CSM model as advantages, especially in firms tat are big enoug to carry suc a specialized position, e points out tat a project s communication requirements extend beyond te client. Someone as to lead te team, to let tem know wat is expected, and to define wat te client s needs are, e says. It s te project manager s job to pus information down to te trences so tey can do te work. Degenkolb Engineers, a 160-person structural engineering firm wit six offices on te West Coast, designates te firm s two dozen principals as its project managers. We use te terms intercangeably, says Stacy Bartoletti, president and COO of Degenkolb. Our principals and associate principals are eavily involved in project management, not only in business development, but in te tecnical responsibility of doing te project, leading te team and coordinating wit te client. Learning to Communicate Communication isn t easy, especially for many engineers, says Isaacs. Tese skills don t come naturally to a lot of tecnical people, e explains. But tey can be taugt. He lists four communication skills tat successful project managers must ave in today s market: Team building Get- ting bot internal and external people to work togeter effectively. Collaborating Working wit people and troug people to solve problems. Facilitating It all comes down to communication. It is te critical component in successful project management. jon langans msa professional services Leading groups and meetings wit a clear agenda and acieving results based on tat agenda. Negotiating Acieving a resolution tat satisfies te firm s interest. Te problem is tat we still spend most of our effort training project managers on ow to do te numbers, understand te contract and maintain a scedule, Isaacs says. All of tose are essential, but tey are not enoug. Halting Scope Creep One of te biggest consequences of a project manager s inability to effectively communicate is scope creep, or a gradual increase in te project s scope because of client canges witout commensurate increases in te budget. Typically a client incrementally makes small canges, and te project manager agrees to tem for no carge, says Ramrot. Eventually, te project manager realizes tat te project scope as significantly expanded, but e as no way to pass on te costs to te client. Tat s were better communication can elp. Wit te first cange, even if it s small, te project manager must communicate wit te client tat you re going to do it, but just tis once, and ten confirm in an , e says. Wen te next one comes along, remind tem of te first one and explain tat te scope now as to cange. Because you ve been up front wit tem, tey ll usually understand. FMI s Isaacs says tere are seven simple words tat can stop scope creep in its tracks. Wen te client asks for someting out of scope, turn to tem and say, How do you want to andle tat? Typically, tey will ask wat you mean. Now you ave te opportunity to address te issue of scope and budget. Te importance of strong communication as prompted many firms to empasize te skill in project management education. And every firm as its own process. We ave a basic training program were people develop te proper skill set to be a project manager, says Howard, wo oversees is firm s project manager certification program. For te more advanced project managers, we offer conflict management classes. And after tey complete tat, we ave leadersip and clientsip training. Degenkolb as a well-defined career track for project managers, says Bartoletti. It s still tecnically oriented, but we empasize planning and negotiating skills, giving and receiving feedback, and working togeter to solve problems. MSA relies on a combination of training and mentoring. We ave a very strong internal training program, but we also allow people to go outside te company for training if it s warranted, says Langans, an inaugural member of ACEC/ Wisconsin s Engineering Future Leaders program. As a team leader, Langans directly mentors two oter project managers and as several mentors wo elp im in is own career. It s a great way to learn about wat makes for successful project management, e says. Te most important key to remember: Communicate, communicate, communicate. n Gerry Donoue is ACEC s senior communications writer. JANUARY / FEBRUARY 2011 ENGINEERING INC. 23

26 ACEC Annual Convention and Legislative Summit Marc 30 April 2, 2011 Grand Hyatt Hotel Wasington, D.C. Opportunities & Callenges Te New Congress and te Future of te Industry Join ACEC at its Annual Convention and Legislative Summit, Marc 30 April 2, were top congressional leaders will outline te dynamics of te new Congress and wat it will mean for te engineering industry. Find out about new market opportunities from federal agency leaders. Gain valuable insigts on future industry trends and callenges from key engineering firm CEOs. Take advantage of first-class business education sessions to elp boost your firm s profitability. 24 ENGINEERING INC. JANUARY / FEBRUARY 2011 GENERAL SESSION LUNCHEON Bob Woodward an Insider s View of te Presidency Award-winning autor and investigative journalist Bob Woodward will provide a unique perspective on te Obama Wite House. Bob Woodward

27 OPENING GENERAL SESSION Political Dynamics of te New Congress Congressional leaders outline te new Congress and wat te latest canges mean for te future of our industry. Ryan McGinnis/Getty Images Speaker of te House Jon Boener (invited) PREMIER LEGISLATIVE SUMMIT AND FEDERAL MARKETS CONFERENCE Lobby New Congressional Members on Infrastructure, Water, Transportation and Oter Key Business Issues Attend Congressional Briefings Meet Wit Key Federal Officials Gain Insigts on te New Congress From Former U.S. Representative Tom Davis ACEC/PAC Fundraiser Wit Key Congressional Members Business Opportunities wit te U.S. Army Corps of Engineers, NAVFAC, GSA, Energy Department, Veterans Administration, State Department and Homeland Security NEW! Federal Markets Large Firm/Small Firm Teaming Forum INSIGHTS From Industry Leaders Keynote by AECOM CEO Jon Dionisio on Vision for 2020 General Session CEO Panel on Industry Trends and Callenges wit Robert Gomes, Stantec, Inc.; Ann E. Massey, MACTEC, Inc.; and Paul A. Yarossi, HNTB Corporation CEO Roundtables 13 Seminars to Boost Profitability Special Briefing on New Infrastructure Sustainability Rating System Robert Gomes CEO, Stantec Transportation and Infrastructure Cair Jon Mica (invited) Ann E. Massey CEO, MACTEC Former U.S. Rep. Tom Davis Jon Dionisio CEO, AECOM Paul Yarossi President, HNTB ENGINEERING EXCELLENCE AWARDS GALA Emmy Award-Winning Host Known as te Academy Awards of te engineering industry, tis annual blacktie reception, dinner and awards program celebrates te year s most outstanding engineering acievements. RECEPTION AND DINNER Te Capitol Steps Te Capitol Steps return to te Annual Convention to perform teir all-new sow Politics as Unusual! a satirical look at today s political scene. Convention Information Early Registration Fees FULL CONVENTION EARLY BIRD AFTER 2/18 Member $995 $1,075 2nd + Member, same firm $850 $950 Non-Member $1,350 $1,450 Spouse/Guest Fee $385 $385 Ross Safer Hotel Information Convention activities will be eld at te Grand Hyatt Wasington, located at 1000 H St., NW, between te Wite House and Capitol Hill and easily accessible by Metro. Te ACEC room rate is $290, single/double occupancy, plus 14.5 percent tax. Te otel reservation deadline is Friday, Feb. 18. After tis date, rooms may not be available or will be available at a iger rate. Rooms are available until te cut-off date or until rooms in te ACEC room block are gone, wicever occurs first. To make your otel reservation online, visit and click on otel, or call toll-free: (888) and reference ACEC Annual Convention. To register, or for more Convention information, meetings@acec.org or visit JANUARY / FEBRUARY 2011 ENGINEERING INC. 25

28 Business Insigts Know te Legal Risk Exposures Tat Could Harm Your Firm Engineering firms must constantly sidestep contractual pitfalls tat can negatively affect a project s profitability and a firm s bottom line. Using EJCDC contracts time-tested contract models were a full range of contingencies are addressed can offer more protection during dispute resolutions tan nonstandard contracts. But wat do you do wen faced wit a nonstandard contract tat, for watever reason, you must sign? Bottom line you still must know te various legal exposures tat, left unaddressed, can damage your firm. ACEC as developed a new course to elp firms identify tose critical legal and contracting issues Ten Major Legal Issues Facing Engineers to be eld May 12 13, 2011, in Piladelpia. Specific areas of risk to be addressed include: Healt insurance Public/private partnersips Required and voluntary disclosure and privacy issues Licensure issues Indemnification Economic loss doctrine International issues Directors and officers issues Insurance Complex contracting provisions (suc as BIM) and litigation Visit our online Events Calendar, for more information or contact Ed Bajer at ebajer@acec.org. Prospecting for Good Government Projects ACEC s Market Forecast Series presents valuable, up-to-date contracting opportunities from federal agency officials wo provide insigts on agency budget outlooks and modifications in procurement procedures. Tese 90-minute online seminars offer information on ow to do business and win projects wit federal agencies and various private-sector owner representatives. Agencies represented may include: U.S. Army Corps of Engineers, Naval Facilities Engineering Command, General Services Administration, U.S. Air Force and oters. Te first in tis series for 2011 will be An Inside View of te Programs and Funding of USDA s Rural Development by Ben Suman, senior environmental engineer, U.S. Department of Agriculture, Feb. 16. Te mission of Rural Development (RD) is to fund projects and increase economic opportunities in rural areas. In tat role, RD distributes more tan $1.5 billion annually in loans and grants for: Water and wastewater projects Environmental projects Electrification Telecommunications Renewable and energy efficiency programs Bio-energy and bio-based projects Healt clinics Emergency service facilities Visit our online Events Calendar, for more information and to register. New Professional Designations ExecEng, MgtEng, MgtPro ACEC officially launced new management and leadersip designations at te October Fall Conference. Past ACEC Cairman Edward J. Mulcay says e ll use is recently awarded ExecEng designation wit great satisfaction and pride, and Jon R. Fee, ExecEng, says tis is an onor I very muc appreciate. I am very impressed tat ACEC as initiated suc a practice. Te Executive Engineer (ExecEng), Management Engineer (MgtEng) and Management Professional (MgtPro) designations recognize business acievement. Individuals wo qualify for te ExecEng are licensed professionals wit 15 to 20 years of management experience wo ave acquired 300 professional development ours (PDHs), or a master s degree plus 200 PDHs, as well as a leadersip capstone course, suc as te ACEC Senior Executives Institute. Te Management Engineer, or MgtEng, designation is for licensed engineers wo ave seven to 10 years of management experience and ave acieved 150 PDHs, or a master s plus 50 PDHs. Professionals wo earn te MgtPro are not PEs, but ave seven to 10 years of management experience related to te engineering industry, as well as 150 PDHs, or a master s degree plus 50 PDHs. For more information about ow to apply or for a list of new designees, visit or contact Maria Buscemi at , ext. 323, or at mbuscemi@acec.org. Te ACEC Institute for Business Management provides compreensive and accessible business management education for engineering company principals and teir staffs. Visit ACEC s online educational events calendar at or bookstore at or call , ext. 338, for furter information. 26 ENGINEERING INC. JANUARY / FEBRUARY 2011

29 Advance yourself and your FIRM educational programs & publications! 2010 Design & Construction Industry Trends Survey Report 100 Years of Excellence Wit a new section on Greenen Sustainable Design David A. Stone Value Pricing For A/E and A/E/CM Firms Accurate. Competitive. Profitable. UPCOMING ACEC COURSES: Green Infrastructure and Sustainable Communities Feb. 1-4 San Antonio, TX Te Business of Design Consulting May 4-7 Las Vegas, NV Ten Major Legal Issues Facing Engineers May Piladelpia, PA B Your best read on te business of engineering OOKSTORE For more information on tese and oter upcoming seminars and webinars, go to and to ceck out products at te ACEC Bookstore, go to

30 Members in te News On Te Move AMEC appointed Dr. Hisam Mamoud president of its Eart & Environmental business. Mamoud replaces Roger Jinks, wo is retiring from te firm. J. Bryan Jordan was appointed president and CEO of Houston-based Jones & Carter, Inc., were e succeeds J.R. (Bob) Jones, wo will continue as cairman of te board of directors. Formerly, Jordan managed te Houston Metro Region of Jones & Carter. Jordan is also president- elect of te Houston Capter of te Texas Council of Engineering Companies for KCI Tecnologies, Inc., appointed Executive Vice President Harvey M. Floyd and Senior Vice President Josep J. Siemek to its board of directors. Floyd is cairman of ACEC/PAC and treasurer of ACEC/ Maryland s Political Action Committee. Siemek leads te firm s Telecom/Utilities discipline. Micael Kesler as been appointed cief operating officer at Kleinfelder, were e as spent 14 years wit te firm in a diverse set of tecnical, operational and market-development roles. Parsons appointed retired Maj. Gen. (USAF) Earnest O. Robbins II president, Parsons MENA+ (Middle East, Nort Africa and te nortern Mediterranean Sea border countries), succeeding Jeffrey F. Squires, founding president Dr. Hisam Mamoud J. Bryan Jordan Harvey M. Floyd Josep J. Siemek Micael Kesler Earnest O. Robbins II PBS&J, an Atkins company, appointed Barry J. Sculz te company s Transportation Group president. Sculz started is career at PBS&J in 1998 and as eld a number of key roles at te firm. Brig. Gen. Alexander Kozlov, U.S. Army Reserve, joined Parsons Infrastructure & Tecnology group as vice president, supporting te firm s projects in te Pacific Rim. He is based in Guam. Lee Parris as joined te firm as vice president and cief information security officer. Leonard D. Dorr was appointed vice president and power delivery and renewables sector manager of te Energy, Life Sciences & Industrial Division for te firm s Commercial Tecnology group. Steve Noonan was named assistant vice president in Parsons Brinckeroff s (PB s) Newark, N.J., office, were e will manage PB s Norteast Rail Veicle Group. Borton-Lawson appointed four new vice presidents: Mark Boris, vice president, transportation services; Scott Bus, vice president, structural services; David Summers, vice president, automation; and Mike Wilk, vice president, civil business unit. Micael A. Lucki joined CH2M HILL as senior vice president and cief financial officer. David A. Boaté as joined Gannett Fleming as vice president and director of transit and rail for te Norteast region and will be based in te New York City office. Barry J. Sculz Leonard D. Dorr Steve Noonan Micael A. Lucki David A. Boaté 28 ENGINEERING INC. JANUARY / FEBRUARY 2011

31 Members in te News of te MENA+ region. Squires will take on a new assignment reporting to te group executive for strategy/development. Robbins will be based in Parsons regional eadquarters in Abu Dabi. James D. O Reilly was also appointed vice president and west region manager of te firm s Buildings Division for its Commercial Tecnology group. He will be based in Pasadena, Calif. Welcome New Member Firms ACEC/Arizona Al Field & Associates, LLC, Poenix Gutierrez-Palmenberg, Inc., Poenix ACEC/Arkansas CWB Engineers, Inc., Heber Springs ACEC/California Ancor Engineering, Inc., Lafayette Kazra & Associates, Inc., Los Angeles Lenax Construction Services, Inc., Los Angeles MARRS Services, Inc., Fullerton Poenix Civil Engineering, Inc., Ventura ACEC/Louisiana C. H. Fenstermaker and Associates, Inc., Lafayette ACEC/Micigan LOTUS Engineering, Inc., Ann Arbor ACEC/Missouri ABNA Engineering, Inc., St. Louis ACEC/New Mexico Source Tecnologies, LLC (DBA STC Engineering), Albuquerque ACEC/New York C. V. Associates NY; PE, LS, P.C., Harriman Hudson Valley Engineering Associates, P.C., Beacon ACEC/Sout Carolina Wiser Company, LLC, Columbia ACEC/Vermont Forcier Consulting Engineers, P.C., Colcester ACEC/West Virginia H. C. Nutting Company, Carleston Triad Engineering, Inc., Morgantown ACEC/Wisconsin Osborne Engineering, Inc., Madison Saga Environmental & Engineering, Inc., Jefferson Stormwater Solutions Engineering, LLC, Hartford Jeffrey F. Squires James D. O Reilly Carol Benassi joined Tornton Tomasetti s Building Performance practice as vice president in te Irvine, Calif., office. Before joining Tornton Tomasetti, Benassi founded C Benassi Arcitecture, an independent forensic consulting firm in Irvine, Calif. ACEC/Colorado Beam, Longest and Neff, LLC, Denver Forensic Consultants Group, LLC, Morrison Sea Carr Jewell, Westminster Te Leffler Group, Arvada ACEC/Nort Carolina Engineered Designs, Inc., Raleig Genesis Engineering, Inc., Mattews ACEC/Oklaoma Midwest Transportation Engineering Consultants, P.A., Tulsa Texas/CEC Bryant Consultants, Inc., Carrollton JRB Engineering and Testing, LLC, Houston Scneider Engineering, Ltd., Boerne Simon Engineering & Consulting, Inc., Frisco ACEC/Florida Apollo Engineering, LLC, Apollo Beac Tamayo Engineering, LLC, Miami ACEC/Illinois Midwest Engineering and Testing, Inc., Campaign Wite Hawk Engineering & Design, LLC, Moore ACEC/Oregon LanPacific, Inc., Portland Pinnell Busc, Inc., Portland ACEC/Kansas J2 Engineering & Environmental Design, LLC, Olate SMH Consultants, Manattan ACEC/Pennsylvania Ackeneil Engineers, Inc., Pittsburg Raudenbus Engineering, Inc., Middletown Stone Consulting, Inc., Warren Carol Benassi JANUARY / FEBRUARY 2011 ENGINEERING INC. 29

32 FMI is pleased to ave served as advisor on te following transactions: * as been acquired by as been acquired by FMI's Investment Banking group is a leading middle market investment bank serving te engineering and construction industry, including arcitectural, engineering and planning firms. We ave been serving te design and construction market for more tan 50 years. It is our sole focus. We ave closed over 600 transactions, wit an aggregate transaction value in excess of $15 billion. We offer: Seller and buyer representation Capital structuring and sourcing and oter capital markets advisory services Valuations and fairness opinions Ownersip transfer planning ESOP planning Find your next engineer on ACEC s Job Board... were today s engineering job seekers go to find teir next jobs. * *Company noted as been represented by FMI MERGERS & ACQUISITIONS FINANCIAL ADVISORY SERVICES For more information, contact: Micael Landry at mlandry@fminet.com Hunt Davis at davis@fminet.com or visit FMI s website at Ceck out te ACEC Bookstore during Marc to save 20% on CASE documents & publications! B Your best read on te business of engineering OOKSTORE Since te ACEC Job Board s inception in August of 2005, over 2,000 member firms ave posted job openings and more tan 17,000 job seekers ave posted resumes. Find your next new ire at: 30 ENGINEERING INC. JANUARY / FEBRUARY 2011

33 Members in te News Calendar of Events January 20 Responding to Requests for Discounts or Unilateral Fee Reductions (online seminar) 26 Engineering Opportunities in te Upcoming Urban Water Crisis (online seminar) 31 Green Buildings and Marc 27 Preparing for LEED Green Associate Exam (online seminar) February 1 4 Green Infrastructure and Sustainable Communities: Opportunities in Expanding Markets, San Antonio, Texas 2 Wired to Clients: Insigts On Getting Inside Your Customers Minds for Success in Business Development (online seminar) 9 BIM for Bosses (online seminar) 16 An Inside View of te Programs and Funding of Rural Development, U.S. Department of Agriculture (online seminar) 17 Te Perfect Storm: A Bad Lawsuit; A Bad Contract; Indemnification and te Duty to Defend (online seminar) Marc 16 DOE Energy Efficiency Block Grant Funding: Market Opportunities in a $3 Billion Program (online seminar) 30 April 2 ACEC Annual Convention & Legislative Summit, Wasington, D.C. April 13 Recommended Practices for Engineering Expert Witnesses (online seminar) To sign up for ACEC online seminars, go to Additional information on all ACEC activities is available at LET Engineering Inc. Wit an ad in Engineering Inc. you can: Reac your clients and colleagues. Enance business prospects. Work For You ENGINEERING INC. MAY/JUNE 2010 >> >> >> Minuteman Fund Protects Firms Rigts Big Win On PLA Agreements 9% Tax Deduction Real Money For Member Firms THE AWARD-WINNING BUSINESS MAGAZINE A w a r d W i n n e r s E E A HDR s O n i o n s t o E n e r g y Plant Powers To T e To p Life Demands Flexibility Graduate Degrees and Certifi cates Biomedical Engineering Civil Engineering Mecanical Engineering Systems Engineering Applied Industrial/Organizational Psycology Business Administration Computer Science Green Building Statistics Tank tose important to your success. Contact ACEC Director of Advertising Nina S. Goldman at , by at ngoldman@acec.org, or visit te website at JANUARY / FEBRUARY 2011 ENGINEERING INC. 31

34 Mergers and Acquisitions Te Year in Review and a Look Aead By Mick Morrissey Consulting engineering mergers and acquisitions (M&A) got off to a slow start in Te volume of deals in te first quarter was down some 6 percent over te same period in 2009, and te early part of te year provided no int of te action tat was to follow. By mid-2010 and in quick succession, we witnessed a number of game-canging deals, including te acquisition in May of transportation engineering firm LPA, Inc. (Columbia, S.C.) by Micael Baker Corporation (Moon Townsip, Pa.); AECOM Tecnology Corporation s (Los Angeles) July acquisition of Tisman Construction Corp., a New York-based construction management services firm; and te October acquisition by WS Atkins plc (Epsom, U.K.) of Te PBSJ Corporation (Tampa, Fla.). It seemed suddenly tat te wisperings of potential mega-deals in advance of te possible expiration of te Bus tax cuts were coming to fruition. As a result, tirdquarter M&A activity spiked 24 percent over te same period te prior year. And it wasn t just te big players. Deals were taking place all across te country (see map for state-by-state overview of M&A activity troug November 2010), wit total deal activity globally up some 5 percent over Te New Year Looking to 2011, we anticipate te following temes will play out across te consulting engineering industry, providing opportunities and callenges for ACEC Member Firms: Increase in M&A activity: It is anticipated tat te pace, wic fueled te sarp 2010 tird-quarter increase in deal activity, will play out troug te fourt quarter. For 2011, we anticipate an overall year-over-year increase in M&A activity of approximately 15 percent. Continued influx of overseas capital: Overseas buyers will acquire between 30 and 40 U.S. consulting engineering firms over te next 12 monts (up from a projected 30 tis year and 19 in 2010). Investment in U.S. firms: We anticipate five of tese deals will involve firms wit more tan $50 million in revenue. Tese acquisitions will be long-term investments to position te buyers for te inevitable rebound in te U.S. A/E/C market and opportunities presented by te inevitable rise of te public-private partnersip model in te United States to develop and reabilitate infrastructure and facilities. We anticipate tat one or more of tese major acquisitions will involve a Cinese or Korean buyer. A return to growt-driven deals: One effect of te recession is tat it as compelled many struggling firms from te same state to combine to survive. As te economy rebounds and private money re-enters te market, we anticipate more cross-state growt-focused deals (at around 60 percent of te total) taking place. Mick Morrissey is managing principal of Morrissey Goodale, LLC, a strategy, M&A and uman capital solutions firm serving te A/E/C industry. He can be reaced at mmorrissey@ morrisseygoodale.com. 32 ENGINEERING INC. JANUARY / FEBRUARY 2011

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