Smaller consultancies’ larger mid-sized competitors have a choice to make: continue going global or get down on the ground on service and price to win
Imagine if all the entrepreneurs who left Davis Langdon and EC Harris a few years back to set up their own boutique consultancies came together today? There was a time not long ago when a certain cluster of mid- to large-sized competitors, such as Gleeds and Gardiner & Theobald, believed their place as the preferred independent gurus up against a set of new global corporates was set in stone. And the likes of Currie & Brown, which now operates at scale under foreign-owned Dar Group, believed they could have the best of both worlds marketing themselves as having local expertise with real global backing.
But the new kids on the block are giving them a run for their money and the creation of a new unified business by these like-minded, highly skilled quantity surveying entrepreneurs could be a game changer. Most of them have been trained and raised at Davis Langdon, considered the best consulting school in the industry, and should they suddenly convene under one powerful consulting umbrella it would create a force to be reckoned with – and one likely to grow at a pace. Perhaps Paul Morrell, former senior partner of Davis Langdon, could facilitate and bring all the politics and remuneration together? Perhaps they need a wise old owl chairman who knows the game? Perhaps Morrell should have done this in the first place instead of trying to make a difference with government.
The pages of Building over the years have been full of news about the corporate bust-ups over the ownership and partnership structures of consultancies in this sector – not to mention the clashes of a few egos
Each business, whether it’s Alinea or Core Five, has been taken on by large construction clients to provide bread and butter consultancy but also informed, stellar advisory services. They have seized a massive opportunity and expressed the entrepreneurial mood of a nation, creating start-ups, cutting corporate costs and focusing on their people and knowledge-driven environments. It is history repeating itself, just like the days when Davis Langdon was growing and merging into Davis Langdon & Everest back in the 1980s.
Any coming together of consultancies today may be difficult as this new set of industry leaders have their own leadership and organisational styles, not to mention their own autonomy. And of course the pages of Building over the years have been full of news about the corporate bust-ups over the ownership and partnership structures of consultancies in this sector – not to mention the clashes of a few egos. But clients don’t care. They see an opportunity to receive value, premium services by helping to further grow an already fast growing band of firms to the benefit of all. The smaller consultancies’ larger mid-sized competitors have a choice to make: continue going global or get down on the ground on service and price to win, because otherwise the competitive threat will continue to bite at their heels.
For now though, watch as a growing band of independent entrepreneurs continues to thrive and grow their start-up businesses providing expert advice to the industry’s leading clients. And keep an eye out for game-changing mergers that can be easily done – especially between ambitious entrepreneurs who like to act fast.
When in a hole …
This week we consider life after the storm for troubled contractor Interserve and the options for chief executive Debbie White, who came in and instigated a widespread restructuring two years after the company’s problems first became public. It meant hiving off its disastrous exploration into the energy-from-waste sector which saw it lose its hat with a crippling set of losses totalling more than £200m. And it also left the boss of its construction division, Gordon Kew, having to realign its remaining core contracting business to focus on projects with much less risk to restore some financial credibility with investors. “Like everyone, we had problems with some jobs won in the recession,” says Kew, as he outlines yet another familiar de-risked post-Carillion contracting strategy.
These days the firm seeks to win more work from fewer clients and ideally win contracts that are not going to make losses at its historic run rate of £70m a year. White may well be wise to take a sale option which would be akin to pressing a giant financial reset button and to start with a clean slate. The firm will be competing in the same pool of many of its higher profile, rival contractors which are also realigning to focus on less risky contracts. The situation is exacerbated for Interserve by some softness occurring in the market, too. There are anecdotal reports of at least one large, tier-one contractor scouting for work due to the size of its labour costs and the corporate infrastructure it is servicing. So if the market turns further for the worse, which all post-Brexit forecasts are telling us it will, Interserve may well find it itself in a bigger hole than it imagined.
To not just survive, but also thrive, Interserve has a crucial 12 months ahead of it. By the end of it, White may just have wished she had gone for a sale, notwithstanding the lucrative bonuses on offer to orchestrate the turnaround.
Tom Broughton, editor-in-chief, Building