Leadership and Management in Engineering

“New Trends and Bad Results in Construction Contracting” reviews some of the more significant changes in construction contracts in the past 10 to 20 years that are the source of many problems between owners and contractors. A few of the issues and clauses covered in Part I include the current state of the construction industry, trends and the reasons for them, force majeure clauses, creative clauses governing the contractor’s schedule, and float jacking. Part II offers a review of a few additional “problem” trends that increasingly appear in the construction industry, including differing site conditions clauses that shift risks to the contractor, consequential damages clauses that could take away the contractor’s profit and more, clauses that promise alternative dispute resolution that instead set up roadblocks and hurdles that delay resolution and increase the cost of settling disputes; and clauses that give away the contractor’s claims and rights to lien the job from the outset. The pressures leading to these trends are primarily economic and have resulted in more risk for the contractor, among other things. This paper discusses areas of increased risk found in today’s construction contracts, the reasons why they have appeared, and what a contractor should do to mitigate these “new” risks.

Part II of “New Trends and Bad Results in Construction Contracting” offers a review of a few “problem” trends that increasingly appear in the construction industry, including differing site conditions clauses that shift risks to the contractor; consequential damages clauses that could take away the contractor’s profit and more; clauses that promise alternative dispute resolution that instead set up roadblocks and hurdles that delay resolution and increase the cost of settling disputes; and clauses that give away the contractor’s claims and rights to lien the job from the outset. The pressures leading to these trends are primarily economic and have resulted in (among other things) more risk for the contractor. This paper discusses areas of increased risk found in today’s construction contracts, the reasons why they have appeared and what a contractor should do to mitigate these “new” risks.

In the late 1990s, in the midst of a period of rapid growth and dramatic organizational change, PBS&J, a 40-year-old, employee-owned engineering/consulting firm, recognized the immediate need to focus company resources on the development of a new generation of leadership both for company assets recently acquired and those expanding internally as well as for future expansion and long-term success. With little shared learning available within the civil-engineering profession for creating a leadership development curriculum, the company set about the task of learning how to establish its own internal program for identifying and nurturing future generations of civil engineering leaders. This article summarizes the efforts involved in establishing the PBS&J Leadership Development Program. It offers insights gleaned from five years of operation, which have produced nearly 120 graduates and have led to profound changes within the company’s organizational structure and within its internal culture.

Several prominent engineering firms have used Employee Stock Ownership Plans (ESOPs) to facilitate shareholder liquidity and management succession. This article explains what an ESOP is and how ESOPs work. ESOPs are tax-qualified retirement plans, designed to invest primarily in employer stock. However, they are also commonly used as a succession planning method, which has been particularly useful for civil engineering firms whose key assets are their employees. In essence, an ESOP creates a friendly market for a closely held business and is a tax-favored alternative to selling a company, as ESOPs are able to be funded with pre-tax dollars. The article concludes with a case study valuable for all engineering executives, describing how a Philadelphia-based engineering firm effectively used an ESOP to transfer ownership of the firm to its key managers.