President and CEO of Chen Moore & Associates (Best Firm Multidiscipline #26 and Hot Firm #88 for 2018), a 70-person firm based in Ft. Lauderdale, Florida.
By Liisa Andreassen Correspondent
“Even more important than a good partner, though, is making sure that a very frank conversation is had with that good partner to fully outline all the responsibilities in the project from the first day of the pursuit to the final closeout,” says Moore, referring to the design-build delivery model.
A CONVERSATION WITH PETER MOORE.
The Zweig Letter: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
Peter Moore: I would tell the owners of these firms to prepare themselves for a reality check that is going to hit them incredibly hard. Unless they are very fortunate, their lack of planning will hurt their egos, but even more importantly, it will impact their pockets.
TZL: There are A/E leaders who say profit centers create corrosive internal competition for firm resources. What’s your opinion on profit centers?
PM: When we opened our first branch office, we spent a lot of time setting up our accounting systems to compare the “home” and “branch” office, including setting up a complicated formula to apply the “corporate” overhead. During the downturn, we consolidated all of the information to focus on the overall health of the company. As we grew, instead of putting the profit centers back in place, we focused on projections for individual project managers and we now manage staffing based on different combinations of our project managers in the office where they primarily work. This has led to project profitability focus, rather than competitive offices.
TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms?
PM: We’ve grown the firm from three people to 70. We’ve done this more out of a desire to provide management and leadership opportunities for our young and mid-career talent. By developing additional offices, disciplines, and specialized teams, we’ve provided a large number of positions to fill.
We’ve also gone through an ownership change recently, and expanded the ownership group to 11 key employees, and, even more importantly, we’ve developed a procedure for identifying and processing future owners to make that process consistent.
TZL: What’s your policy on sharing the firm’s financials with your staff? Weekly, monthly, quarterly, annually? And how far down into the org chart is financial information shared?
PM: We prepare monthly financials that are shared among our executive group. We prepare more formal packages for our quarterly board meetings that, once approved, go to all the shareholders. We have annual “state of the company” presentations to all staff reviewing high level financial information. Being transparent is important in a changing economy.
TZL: The design-build delivery model appears to be trending upward. What are the keys to a successful design-build project? What are the risks?
PM: For more than 15 years, we’ve embraced design-build. I have to admit that we got very lucky in our first few pursuits, so that delayed implementation of more formal processes for these pursuits until recently. We don’t build, so the most important key to a successful project is a good partner. Even more important than a good partner, though, is making sure that a very frank conversation is had with that good partner to fully outline all the responsibilities in the project from the first day of the pursuit to the final closeout. A good partnering agreement is the key to establish that understanding. Scope creep, additional liability, and unsuccessful pursuits are the main risks, but communication up front with a good partner can mitigate that as much as possible.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
PM: We’ve done a pretty solid job in recruiting, training, and keeping our management staff, but we need a pipline of entry-level (up to five years) engineers to allow our managers to move away from split duties as the technical lead on projects as well.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
PM: All of our managers are handling both the workload they have to execute now, and the pursuits to provide their workload in the future.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
PM: In the last six years, we’ve opened additional geographic offices and added landscape architecture. Recently, we’ve focused on water resources, specifically with an emphasis on sea level rise.
TZL: What is the role of entrepreneurship in your firm?
PM: We’re not AECOM or Jacobs, so everyone that works at Chen Moore joins as part of an entrepreneurial spirit.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
PM: Interest rates are rising, so private investment will decline. All other markets are going to stay hot.
TZL: Measuring the effectiveness of marketing is difficult to do using hard metrics for ROI. How do you evaluate the success/failure of your firm’s marketing efforts when results could take months, or even years, to materialize? Do you track any metrics to guide your marketing plan?
PM: We track success “hit rates.”
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
PM: This is a pretty loaded question since I took the firm over on January 1, 2008. I would say that “cash is king” is the biggest lesson.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
PM: We’re still looking for that “perfect marriage” with another firm, so to date, all of our growth has been organic. In today’s hot market, we work very diligently to avoid overpaying for a merger.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
PM: I’d like to say that we do, but most of our projects vary so greatly based on the client, schedule, and site that a proposal can vary from 50 to 200 percent of previous project expenditures. That said, we do have a “low performing” analysis that we put in place to identify problematic clients and avoid repeat losses.
TZL: What’s your prediction for 2018?
PM: 2018 will be a strong year for growth and profits throughout all our locations and market sectors. We’ll need to bank some of that for a potential slowdown in 2020 or beyond. We expect to add, at minimum, another 10 employees.Subscribe to The Zweig Letter for free.