Building Nevada - November 2003

Engineering Nevada’s Future

Experts Discuss Trends and Challenges

by Kim Becker

In a business climate in which growth and prosperity are the norm despite downturns in other states, local engineering firms are still facing challenges that could impact the future of Nevada. From managing growth and infrastructure to keeping up with technological advancements, the most successful firms are finding it’s all a balancing act.

Kathy Smith, president of VPoint Engineering, a firm that provides planning, civil engineering and surveying throughout Nevada from offices in Las Vegas, Reno and Fallon, sees several challenges facing the industry, particularly in recruiting and retaining qualified professionals.

"The challenge in recruiting is that you are competing with the entire engineering community. It is an employee’s market at this time because we are all so busy," said Smith. "When interviewing, you have to be able to judge applicants’ technical ability and also how loyal they will be to the company, since people get calls each week from other engineering firms or recruiters trying to lure them to another firm."

Smith admits the practice used to upset her, but she now considers it a compliment. It means that VPoint and its people are respected and sought after. "You will always lose a certain percentage who move to companies for the promise of a larger salary or more opportunities. But I have learned that those who do leave usually end up leaving the company that lured them away within a year or two," said Smith. "The best employee is one who has left and then returned. Some employees need to experience another company’s philosophy and working conditions before they appreciate their previous position. But the employers you cannot compete with are the entities that are now offering very competitive salaries with a 40-hour work week."

Dennis Waibel, senior vice president and principal of Carter & Burgess, a multidiscipline firm with 36 offices in 20 states, including Nevada, said recruitment and retention is an ongoing concern at his firm, too, especially as the need for qualified engineers increases. According to the Bureau of Labor Statistics, the demand for engineers is projected to increase by 9 percent through 2010, but the number of students majoring in engineering has not increased accordingly.

Chip Maxfield, executive vice president of Southwest Engineering, said the tremendous growth rate in Nevada has led to shortages in personnel qualified to deal with the high-tech challenges of engineering in the 21st century. "It’s been difficult to build a base of qualified technical individuals," he said. "Eighty percent of the people at our firm have to be highly skilled, and they’re getting harder to find."

Tim Pinter, P.E., principal of Poggemeyer Design Group, Inc., predicts, "We will see more outsourcing overseas to complete engineering projects, due to the lack of people entering the engineering field, coupled with significantly lower labor costs abroad. Educational institutions need to address this issue by attracting our best students to enter the engineering field. Our country cannot afford to allow the engineering profession to start importing employment, which has already happened in manufacturing and in some service-sector jobs, such as computer programming."

"The problem is not only getting people, but getting really good people. It’s hard to recruit and retain," Waibel said. "We try to hire locally whenever we can, but we get a lot of résumés from out-of-town professionals, particularly from the Midwest." Waibel said Southern Nevada faces additional recruitment challenges beyond the need for qualified engineers – the desert heat and perceptions about Las Vegas. While the economy is robust, Waibel said it is not always easy to sell out-of-town professionals on Southern Nevada.

"The emphasis five years ago was that Las Vegas was a great place to bring the family," Waibel said. "Today, the Las Vegas Convention and Visitors Authority’s ‘Vegas Stories’ campaign conveys the message that anything goes here. I’ve spoken with friends, family and business associates from out of state, and that is their perception. It’s fine for marketing to visitors, but it’s hurting businesses in need of quality workers, including businesses in the gaming industry."

Nevada’s unprecedented growth brings with it additional concerns, such as infrastructure, drought, affordable housing and other issues that impact the quality of life in the state. "We’ve all invested a lot in Nevada’s growth. But we don’t want to end up like California," Waibel said. "Their schools are under-funded, their taxes are high, and their people are moving (to Nevada). But they bring with them a ‘not in my backyard’ mindset. If we stop or seriously limit growth in Nevada, no prosperity can happen in our economy. Businesses will take their jobs elsewhere, revenue dollars will leave, and taxes will be raised. We must get a handle on the future. We need growth and prosperity in Nevada."

It is, Waibel admitted, a balancing act. And he’s not alone in his concerns. "We see aging infrastructure and the lack of revenues to keep pace with replacement needs as becoming increasingly important in the years ahead," said Don Tulloch, P.E., Reno branch manger for AMEC Infrastructure, Inc., a full-service civil engineering firm providing planning and design for municipal water and wastewater systems, transportation, civil site designs, land development and mechanical/electrical/plumbing. Other firms see infrastructure issues as problematic, too.

"The drought is sensitizing the local population to the need for conservation measures so we can sustain the second-largest economic engine of this state. However, some people are crying out for a slowdown in growth as the answer to the drought problem, not fully understanding the nexus between the growth-related construction industry and a healthy local economy," said James A. Duddlesten, P.E., president of G.C. Wallace, Inc., a firm that provides professional engineering services to both private and public sector clients. "The lack of affordable land continues to drive the average cost of housing to record highs. As with our developer clients, the engineering professionals worry about how persons in the lower income brackets will be able to enjoy the benefits of home ownership. Eventually, escalating land and home pricing may result in a slowing of construction activity."

Thomas H. Gallagher, P.E., P.L.S., president and CEO of Summit Engineering Corporation, a multidiscipline firm offering planning, engineering, laboratory testing services, environmental services, testing and inspection and water rights, said balancing growth and infrastructure requirements are obvious issues that are not only critical to a project, but also to the area in which it is located. But he notes that construction defect litigation is also a major challenge facing his industry, as well as the construction industry as a whole.

"As long as trial lawyers are able to file class action lawsuits, which in many cases fraudulently devalue property, insurance for any construction-related activities will be unobtainable," said Gallagher. "The Legislature has gone some distance in attempting to remedy this situation, but I feel it is still a major problem. Summit has been involved in numerous legislative sessions and will remain active, as will, I assume, the trial lawyers." Maxfield said the new legislation has been beneficial to engineers, who are often named in lawsuits concerning drainage, cracked foundations and problems with roads or sidewalks. "I’m hoping it will give us a reprieve from malicious lawsuits," he stated.

Smith said the insurance issue has already impacted her company. She said medium-sized firms like VPoint can no longer take on projects that would potentially be high-risk, and they must also carefully select clients and projects. "You have seen many doctors either leave town or join in a group care practice in order to alleviate the high cost of insurance. All engineers are facing the same dilemma," Smith said. "Recent legislation tried to soften the blow, but I don’t believe that the legislation has enough substance to truly alleviate claims that take years to resolve. The larger engineering firms now have their own attorneys on staff. I see this trend continuing in the future."

Technological advancements and trends in the industry are also impacting the way engineering firms do business. For example, the design/build project delivery system is becoming more prevalent in Nevada, although to a lesser extent than in other markets. The process combines design with construction by a single entity or firm.

"It is changing the way we work," said Tom Harris, P.E., president of Harris Consulting Engineers, LLC, an HVAC, plumbing and electrical engineering design firm based in Las Vegas. "The majority of our projects are still the traditional design/bid/build, but this year we have seen a significant increase in the number of design/build projects that we have pursued and been awarded. To be successful with design/build, we have to change our process to incorporate and include the contractor in all phases of the design. When done right, design/build can be a very successful way to deliver a project."

While engineering firms continue to play a major role in shaping Nevada, it remains to be seen how their approach to existing challenges will shape the industry itself.