Morrissey Goodale, LLC | AEC Management Solutions

Vol.7 Issue 1

AEC Industry DashboardTimely, trusted insight and expert advice for AEC firm leadersStrategy BriefingMarket Watch M&A Inside TrackWorkplace 2020Technology Corner
Strategy Briefing

Thinking About Selling Your Firm?

Selling your firm is one of the single most important and risky undertakings you could experience as a leader. Here are five things to keep in mind if you are considering of going down this path... Watch Video >

Thinking About Selling Your Firm?
Market Watch

Industry Bullish About Trump Presidency

• Positive vibes: Anticipating infrastructure spending increases, regulatory reform, and tax cuts, many AEC firm leaders are bullish about the industry’s prospects in 2017 and beyond following the election of President Donald Trump and a GOP-controlled Congress. The American Council of Engineering Companies (ACEC) reports that a “burst of enthusiasm among engineering firm leaders” following the November election propelled its Engineering Business Index to its largest-ever quarterly increase, a surge of 5.1 points to close 2016 at 66.5. (Any score above 50 indicates market growth.) Those surveyed were most optimistic about the transportation, industrial/manufacturing, and water/wastewater markets.

• Trump’s cards: Details have been few, but on the campaign trail President Trump proposed as much as $1 trillion for highway, waterway, airport, and bridge projects. The new administration has already green-lighted massive construction projects, such as a wall on the Mexican border and the Keystone XL pipeline. A fiscally conservative Congress, however, could temper large spending increases, and firms will only be able to tap into a windfall of infrastructure projects if they can hire from a shrinking talent pool, which may be further constricted by enhanced scrutiny of foreign-born and H-1B workers.

• The flip side: Potential concerns under a Trump Administration? Expected rollbacks of environmental regulations and alterations to the Affordable Care Act have dampened prospects for firms working in the environmental and health care markets, which received the lowest marks for optimism among ACEC survey respondents. Any move away from open markets—combined with a continued strong dollar—could harm AEC firms working overseas.

• Strong state-ments: Election Day also brought the approval of more than $200 billion in transportation infrastructure funding in 22 states. In addition to approving $9 billion for statewide education facilities, California voters passed the largest transportation bond measures, including $120 billion in Los Angeles County, $6 billion in Santa Clara County, and $3.5 billion for the Bay Area Rapid Transit (BART). Other large bond measures included $54 billion for light rail and bus routes in Seattle, $4 billion for road and transit projects in metropolitan Atlanta, $3 billion for road projects in metropolitan Las Vegas, and $2.3 billion for commuter rail and bus rapid transit systems in North Carolina’s Wake County.

Workplace 2020

Will Salary History Questions Become History?

• Banned in Boston: Last August, Massachusetts became the first state in the country to pass legislation that bars employers from asking prospective job candidates about their salary histories before receiving a formal job offer. The measure, which unanimously passed the Massachusetts legislature, will go into effect on July 1, 2018. Under the new law, employers will still be permitted to take work experience, education, job training, or measurements of production, sales, or revenue into account when determining variations in pay for employees and applicants. Pay advocates have touted the law as a way to close wage gaps based on race and gender by preventing the perpetuation of unequal pay at prior jobs.

• Following the leader: The Massachusetts law might spur similar measures in other states. New York Governor Andrew Cuomo has signed an executive order prohibiting state agencies from asking applicants about salary histories, and a new law that took effect in California on January 1 prohibits employers from using an employee’s salary history to justify a disparity between the salaries of similarly situated employees. Bills to outright ban private-sector employers from asking job candidates about salary histories have been introduced in California as well as Virginia.

• Not in the city: The movement to ban salary history questions is also being taken up by major American cities. In January 2017, the Philadelphia City Council unanimously passed a measure that would make it the first U.S. city to bar employers from asking potential hires for their salary histories. Violators would face fines up to $2,000. Philadelphia Mayor Jim Kenney supports the measure but is awaiting a review by city attorneys before deciding whether to sign it. Similar legislation has been proposed by New York City’s public advocate’s office. Critics of such bans plan to fight the measures in court.

• Impact potential: A December 2016 survey of subscribers to Morrissey Goodale’s A/E Recruiting Flash revealed that 84% of respondents routinely ask job candidates for their salary histories, so any widespread restrictions on salary history questions would require the vast majority of architecture and engineering firms to adjust their job interview processes.

Technology Corner

Design Goes Virtual

• It’s unreal: Thanks to cutting-edge video-game technology, some AEC firms are trading in hardhats for another type of headgear—virtual reality headsets. According to a July 2016 survey of 376 architects by online magazine, 77% reported they were already experimenting with virtual reality (VR) or planning to do so in the near future. WIRED reported in November that “VR is totally changing how architects dream up buildings,” and the following month a zoning commission in Madison, Wisconsin, is believed to have been the first to don VR headsets to review a computer-generated, three-dimensional model of a proposed building before giving its approval. Large architecture firms such as SHoP Architects have begun to create positions for directors of virtual design and construction.

• Seeing clearly: Software powered by video-game development tools such as Unreal Engine and Unity can translate digital files into VR simulations that can be seen on headsets or through viewers such as Google Cardboard, which uses smartphones to offer a VR experience. Designers who have used VR technology say it can communicate plans to clients in a way that even the most detailed sketch or scale model just can’t do by giving them the ability to take a 360-degree view of a room, open doors, and even climb stairs while a project is still on the drawing board. The you-are-there perspective allows clients to discover issues early in the design process, which can lead to time and money savings.

• Game changer: Stephen R. Souter, managing partner of VR-adopter Marmon Mok Architecture, told the San Antonio Express-News last August: “We could always show locations and plans and details, but it’s been very difficult to communicate a sense of scale and volume until a building is built—and then it can be very expensive to change. With this technology, a client can really feel the scale of the space, how it feels to be in it. It’s just a revolutionary method of presentation for our clients. It’s going to change the whole way we do business.”

Upcoming Events

Mark Your Calendars

Western States M&A Symposium
June 7-8, 2017

The event for Western states firm leaders considering a merger or acquisition and leaders of AE firms looking to grow through acquisition in the West.
(Every one of our regional M&A Symposiums has directly resulted in at least one deal.)
Register Now >

5th Annual A/E CEO Event at Fenway Park
September 7-8, 2017

The 5th annual A/E CEO Event located at historic Fenway Park will bring together AE firm CEOs from around the globe for a unique opportunity to discuss the future of the industry and best practices with their peers facilitated by veteran consultants Mick Morrissey and Mark Goodale.
Register Now >

3rd Annual Texas #AE Industry Conference
October 24-25, 2017

The 3rd Annual Texas #AE Industry Conference will bring together over 100 AE and environmental firm leaders, industry experts and Texas project owners and thought-leaders for the premier business and networking event in the nation’s hottest state for AE and environmental services.
Register Now >

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