Happy hour

Happy hour

The next time the project team goes down to the pub, make sure your quantity surveyor buys the first round. QSs have a lot to celebrate – and plenty of cash. According to Mirza & Nacey Research’s latest survey, QS fees are at a stable level across most sectors, but the biggest news is that charge-out rates for surveyors have increased by as much as 50% for partners and 38% for sole principals.

Even those at the junior end of the scale have seen rises (an average of 20%). And there’s less regional divergence; an associate in Scotland now charges by the hour, on average, just £1 less than an associate in London.

It’s not that surveyors are taking more than their fair share of the project pie. QS fees as a percentage of total project value

for new-build are mainly unchanged since Mirza & Nacey’s previous survey, reported in Building on 11 October 2002. Only industrial new-build fees are noticeably up, as a percentage, compared with two years ago – and that’s only by a fraction, with fees on a £3m project now attracting 0.1% more. There has been a similarly small rise in fees charged for refurbishment work.

On a slight downer, the survey reveals new-build office and retail fees are lower by 1% on £1m projects, but most consultants are sanguine about the long-term prospects for these sectors.

The only hint of consternation on the horizon is the difficulty of finding consultants with enough experience to tackle complex projects – hence the significant rise in seniors’ charge-out rates.

Igor Rukuts, director at QS and project manager Northcroft, says the firm needs more staff. “Recruiting graduates isn’t too much of a problem but finding good people with more than five years’ experience can be a real challenge – and when you find the right people you need to reward them appropriately,” he says.

So why aren’t the factors that have led to increases in charge-out rates also affecting fee levels? For Mark van den Berg, chairman of Northcroft, the answer lies in increasing productivity levels. “Surveyors are offering a diverse range of services from cost consultancy to risk assessment, while our use of IT is continuously improving,” he says, “The net result of all this is we are getting more and more efficient at what we do.”

Another factor keeping fees stable is competition. As Vincent Clancy, managing director of cost consultancy at Turner & Townsend, explains, “For one-off projects, usually in the private sector, it is sometimes possible to charge a higher fee, but in the public sector where there is a huge volume of work there is also intense competition. Companies tend to differentiate themselves by the services they offer rather than by varying fees.”

But there is one public sector where fees have very slightly increased (admittedly by just a few points of 1%) and that’s housing. Graham Matthews, head of public sector at EC Harris, says surveyors’ services are increasingly in demand in this sector. “Increasing the supply of affordable housing has become a major challenge, and housing associations alone can’t supply enough. Local authorities are pushing hard for private developers to provide affordable housing as part of their schemes. It’s a totally new ball game for them, so we’re being asked to fill the gap.”

Though fee levels haven’t increased in the health and education sectors, consultants say the volume of work is continuing to rise. After a delayed start of over a year, the government’s £5bn Schools for the Future building programme should begin in spring 2005. And EC Harris’ Matthews says the health sector is undergoing major structural changes that mean demand remains high for consultancy work in this sector. “The health sector is moving away from 25-year long PFI hospital deals that are set in stone. It’s favouring a more flexible approach where private companies work with primary care trusts and GPs to provide specialist healthcare centres or GP surgeries that also carry out minor surgery. This is creating demand for a new generation of health buildings.” And the demand for surveyors is following suit.

Consultants are also bullish about the commercial sector’s prospects. Northcroft’s Rukuts says he can appreciate why the survey found that fees in the office and retail sector were lower than in 2002, but believes the tide is changing. “If you asked me two years ago, I’d have said the commercial market wasn’t growing. But confidence is picking up, financial institutions are busy relocating and firms are looking for office space. We’re confident the market is set for a period of growth.”

Likewise, retail also appears to be a growth market. Tony Burton, senior partner at Gardiner & Theobald, says the number of large, retail-led regeneration schemes around the UK is spurring demand for consultants. “Massive regeneration schemes like New Wembley in north-west London and Spinningfields in Manchester are boosting the retail construction market. These are super-big, long-term projects. And, of course, the larger the project the more attractive the returns. So I’d say this sector’s future looks positive.”

So the consultants’ consensus is clear; the next few years should be happy ones for quantity surveyors of all sectors. But there are a few catches: the recruitment headache will linger and no matter how much work is available fee percentages are likely to remain the same. As Burton points out, “You can’t just turn fees up and down like a flame. It’s not that simple.”