Our Top 250 consultants league table shows the harsh realities gripping the construction sector, and there’s no sign of improvement yet
It was always going to make grim reading, but the trends that emerged from answers to the questionnaire that accompanied this year’s Top 250 consultants league table confirm the new reality gripping the sector.
The executive summary is as follows:
- Consultant fees are 50% lower than before the downturn
- New orders have fallen off a cliff
- Workload has fallen 30% from the top of the market, but UK staff numbers have declined by only 13%
- Eighty-three per cent of respondents to our survey believe the construction economy will at best stabilise but more likely worsen
- Forty-two per cent of consultants rely on the public sector for more than half of their fee income.
You don’t need to be a mathematician to work out what these figures add up to; firms have failed to implement the changes that, objectively, they should have. The rationalisation is that the greater the resources that can be mobilised, the greater the advantage that can be gained once the domestic market returns to “normal”. Unfortunately, the definition of normality has changed. This is clear enough now, but will be obvious to a blind man at 20 paces come the Comprehensive Spending Review. The private sector is stirring in its sleep, and demand is returning to the London office market, but there will be no generalised recovery for years.
The position that that leaves you in depends on the bets you’ve placed over the past five years, and how able you are to take advantage of the distressed sales of competitors, or win work in sectors that are insulated from the downturn by overriding necessity (in the case of energy generation), or by European legal requirements (in the case of waste disposal), or mandatory investment programmes (in the case of water). Even so, demand in the UK market will not be enough to keep all those consultants in work, so foreign adventures are also required; this is never easy, but case studies such as PH Warr, the QS that has cracked the Libyan market, show what can be done (page 43).
Meanwhile, some of the industry’s best-known names are being snapped up by North American multidisciplinary outfits 10 times their size. Only Atkins, at the very top, has been able to bite back. Everyone else is trying to make the most of whatever doubts the absorbed firms’ clients have about these deals (while no doubt conscious that their phone may be the next to ring). The breaking of old patterns of doing business will provide opportunities for those firms with the acumen, the niche expertise or the dumb luck to be in the right sector at the right time. But in general, expect the big shrink to continue.
Mark Prisk begins
First schools, now child benefit. And with more pain around the corner, the coalition’s ability to implement difficult policy choices is being tested. So it was a good time to grill Mark Prisk, the new construction minister, about his plans for the industry. The former surveyor had some words of comfort. “The government,” he said, “will be buying several billion pounds’ worth of construction services over the next four years.” And its top priority is to make sure that as little of that money is lost to the friction of procurement as possible. Well, the waste up to now has been fairly grotesque, so Prisk can hardly fail to make some improvement. But what we really need is detail and delivery. So let’s hope for the best … and keep our eyes on the academies framework.
Tom Broughton, brand director